First Look

Abstract—No abstract available.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55448

Abstract—Prior advice research has focused on understanding when and why people rely on (or ignore) advice and how this impacts judgment accuracy; little is known about the interpersonal consequences of the advice-seeking process. In this paper, we investigate the interpersonal consequences when an advisor believes his or her advice will be ignored. We find that advisors interpersonally penalize seekers perceived to ignore their advice because such dismissal threatens advisors’ sense of self-worth, leading them to judge seekers more harshly. Moreover, these effects are compounded by advisor expertise: expert advisors are more likely to punish seekers who ignore their advice than are non-expert advisors. We further find this effect drives advisor reactions to one of the most widely recommended advice-seeking strategies: seeking advice from multiple advisors to leverage the wisdom of crowds. Advisors negatively judge and interpersonally distance themselves from seekers who they learn consulted others, an effect which is mediated by perceptions that their own advice will not be followed. Advice seekers fail to anticipate this negative relational impact, exposing them to unanticipated adverse consequences of their advice-seeking decisions. These findings challenge previous recommendations for optimal advice-seeking behavior.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55480

Abstract—In recent years, much has been written about how the Blockchain is poised to transform traditional industries such as banking, real estate, and healthcare. More recently, it has gained attention as a way to finance new ventures, through what is known as an Initial Coin Offering (ICO). Less noticed, though, is ICOs appear almost antithetical to the standard approach to financing a risky venture. Structured experimentation, popularized by Eric Ries’ The Lean Startup, has been widely embraced as the gold standard for how to approach the commercialization of radical new ideas. From Boston to Beijing to Bangalore, entrepreneurs and investors rattle off the importance of designing focused experiments to test hypotheses in a capital-efficient fashion in order to achieve product-market fit. But ICOs substantially limit the benefits associated with such staged experimentation for three reasons.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55432

Abstract—No abstract available.

Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55402

Abstract—This paper explores the creation and evolution of new stock exchanges around the world geared towards entrepreneurial companies, known as second-tier exchanges. Using hand-collected novel data, we document the proliferation of these new stock exchanges that were created in a large number of countries, attracted a significant volume of global IPOs, were introduced fairly cyclically, and had lower listing requirements when compared to first-tier stock exchanges. We find that increases in demand for entrepreneurial capital—as proxied for by patenting, IPOs, and stock market valuations—led to a higher likelihood of the introduction of second-tier exchanges. We find no evidence that new second-tier exchanges diverted the existing flow of IPOs from established stock exchanges. Shareholder protection strongly predicted exchange success, even in countries with high levels of venture capital activity, patenting, and financial market development. Second-tier exchanges in countries with better shareholder protection allowed younger, less profitable but faster-growing companies to raise more capital. These results highlight the importance of institutions in enabling the provision of entrepreneurial capital to young companies.

Abstract—We analyze the effects of a field experiment introducing a values-based 360-degree assessment system at an Indian retailer. The director intended to encourage store managers, rewarded based on high-powered incentives linked to financial results, to behave according to the organization’s long-term values and goals. Surprisingly, we find that the intervention drove even higher effort on performance associated with pre-existing monetary incentives, but, on average, did not affect nonfinancial performance dimensions linked to long-term goals. We integrate our statistical results with qualitative information from interviews, which highlighted the importance of reinforcing the organizational goals’ message and providing support for their attainment. We also show more favorable effects for stores with tenured managers and higher availability of inventory (a proxy for support). Our findings highlight important factors for successful implementations of 360-degree systems as complements to explicit incentives. Finally, we share some lessons learned with respect to performing field experiments.

Download working paper: https://www.hbs.edu/faculty/Pages/item.aspx?num=53888

Abstract—Is racial heterogeneity responsible for the distressed financial conditions of U.S. central cities and for their limited ability to provide even basic public goods? If so, why? I study these questions in the context of the first wave of the Great Migration (1915–1930), when more than 1.5 million African Americans moved from the South to the North of the United States. Black inflows and the induced white outflows ("white flight") are both instrumented for using, respectively, pre-migration settlements and their interaction with MSA geographic characteristics that affect the cost of moving to the suburbs. I find that black in-migration imposed a strong, negative fiscal externality on receiving places by lowering property values and, mechanically, reducing tax revenues. Unable or unwilling to raise tax rates, cities cut public spending, especially in education, to meet a tighter budget constraint. While the fall in tax revenues was partly offset by higher debt, this strategy may, in the long run, have proven unsustainable, contributing to the financially distressed conditions of several U.S. central cities today.

Download working paper: https://www.hbs.edu/faculty/Pages/item.aspx?num=54794

No abstract available.

Purchase this case:
https://hbsp.harvard.edu/product/819056-PDF-ENG

During the 2016 U.S. election, long-time politician Hillary Clinton, a Democrat, and celebrity billionaire Donald Trump, a Republican, faced off in a contentious race for president. In the primaries, candidates from both major political parties used anti-establishment messaging to appeal to the electorate, a theme that had been on the sidelines of U.S. political discourse for decades. Trump, in particular, played into the rising anti-establishment sentiment as he embraced a populist platform and emphasized his position as a Washington-outsider. He proved to be an unpredictable and incendiary candidate on the campaign trail, garnering much media attention and creating divisions within the traditional Republican base, yet his directness and promise to “Make America Great Again” resonated with several segments of the population. While many experts predicted a Clinton victory, Trump was ultimately elected president in November 2016. During his first 100 days in office, Trump tested the boundaries of the U.S. government, and observers looked on with uncertainty as he took an unconventional and unpredictable approach to policymaking.

Purchase this case:
https://hbsp.harvard.edu/product/718005-PDF-ENG

With SAR 14 billion ($3.7 billion) in 2017 revenues, Almarai was Saudi Arabia’s largest dairy producer, distributor, and marketer, with a large portfolio of branded dairy products, juices, bakery goods, and infant formula and a sales presence across the Gulf region, Jordan, and Egypt. Almarai employed some 42,000 people across its operations, from its massive dairy farms to its processing plants to its vast sales and distribution operation that reached over 100,000 outlets. Notwithstanding its diverse portfolio, the core of Almarai’s business was (1) sales of branded fresh/chilled dairy products, (2) in Saudi Arabia, (3) distributed through the traditional retail channel made up of thousands of small neighborhood shops called bakalas. In October 2018, all three of these focal points were under pressure. Under the economic-restructuring programs of Saudi Arabia’s new crown prince, Mohammed bin Salman, new taxes and subsidy cuts were squeezing household budgets. Concurrently, changes to other government policies were causing expatriates—who made up about a third of Saudi Arabia’s population and were a key consumer of Almarai’s dairy products—to leave the country in droves. This case finds Almarai’s management team, led by soon-to-retire CEO Georges Schorderet, debating how the company can defend and grow its position in Saudi Arabia while also finding new sources of future growth (e.g., bringing its production model to new markets with fragmented dairy sectors or entering new product categories such as fish or ice cream). The decision of how to move forward will be based on an assessment of Almarai’s strengths, how they can be best used to drive future growth, and how relevant they will remain in a market that is changing so dramatically. The note “Saudi Arabia: A Brief Background" (719-043) is essential supplementary reading for this case.

Purchase this case:
https://hbsp.harvard.edu/product/719020-PDF-ENG

This note provides a brief overview of the history of Saudi Arabia as well as the economic and political context in 2018.

Purchase this case:
https://hbsp.harvard.edu/product/719043-PDF-ENG

No abstract available.

Purchase this case:
https://hbsp.harvard.edu/product/818060-PDF-ENG

No abstract available.

Purchase this case:
https://hbsp.harvard.edu/product/818061-PDF-ENG

No abstract available.

Purchase this case:
https://hbsp.harvard.edu/product/218079-PDF-ENG

Olivia Nash, an analyst at leading hedge fund BlueShark Capital Management, had just finished listening to the hour-long earnings call for Twitter’s Q4 2017 results. Was Twitter doing well? That depended on which numbers she chose to believe. According to Generally Accepted Accounting Principles (GAAP), Twitter had recorded a $108M net loss for 2017. But on the earnings call, CEO Jack Dorsey and CFO Ned Segal had emphasized a slightly different and much better-looking metric: non-GAAP net income of $329M. This adjusted version of net income was a measure Twitter had defined itself when it first went public in 2013. The biggest difference between the two was that Twitter’s non-GAAP net income stripped out stock-based compensation expense. Olivia couldn’t help but wonder: Was stock-based compensation a true expense? Why did analysts and even regulators condone non-GAAP metrics? And, most importantly, how did the reporting of these metrics impact Twitter’s profitability and the way the company was managed?

Purchase this case:
https://hbsp.harvard.edu/product/119032-PDF-ENG

The case opens in 2017 with two of the five co-founders of MISHA telling the company’s CEO Michal Portz that they believe it is time for the global venture to shut down its operations and cease investments. Portz and another co-founder believe MISHA can still work. The case describes the origins of the ready-to-use capsule solution for shisha smokers and the evolution of MISHA from idea to product design, manufacturing, marketing, and distribution. Consequent mishaps slow down the performance of MISHA, and after five years of the product being in the market and four financing rounds, numbers are far behind what they were in the business plan. The case explores the pivots the company goes through. The central dilemma is this: Should the co-founders pull the plug on the company or invest more time and money to try to turn it around? When and according to which criteria should Portz make such a decision?

Purchase this case:
https://hbsp.harvard.edu/product/819019-PDF-ENG

This case updates Wanxiang Group's activities since 2012, focusing on its electric vehicle strategy and a transition of the group's leadership.

Purchase this case:
https://hbsp.harvard.edu/product/318091-PDF-ENG

After learning that most defaults were due to health, job, or marital problems, National Australia Bank revised its debt collection department to shift from penalizing people in default to assisting them in developing a workout plan, enabling more than 90% to meet their payments and get back to good credit standing, while saving the bank more than $80 million in bad debt annually.

Purchase this case:
https://hbsp.harvard.edu/product/719417-PDF-ENG

This supplement provides the answer as to what happened after the ending fact pattern in the (A) case and the imminent choices faced by the protagonist in the primary case. At the end of the (A) case, Bess Weatherman of Warburg Pincus, must chose one option of two very different alternatives as to which direction to take Bausch & Lomb. Essentially, she can either stay the course or terminate the management team she originally selected to run Bausch & Lomb only two years beforehand. At the end of the (A) case, students are asked to vote as to which alternative she should select. They are asked when is “good, good enough?” They invariably vote to stay the course. She did not. She chose to bring in new management headed by Brent Saunders. The remainder of the (B) case illustrates the results he generated. Ultimately Bausch & Lomb was sold to Valeant for an IRR of 17.6% for a MOIC of 1.6x. The (B) case answers the question whether “good is good enough.”

Purchase this case:
https://hbsp.harvard.edu/product/218029-PDF-ENG

In January 2018, Caelan Langan, an associate at KSW Partners LLC (“KSW”), was asked by Katherine Scott, the partner for whom he worked, to recommend a proposed structure to acquire a prominent office building in San Francisco for their most recent fund. Caelan was asked to review potential acquisition structures that would minimize the impact of taxes on their investors’ returns. The assignment was complicated as KSW had different categories of investors (a sovereign wealth fund, pension funds, and high net worth individuals) each of which had different tax considerations. The differing interests created significant potential conflicts in terms of how to manage the investment and when to sell the building, as the economic consequences to each category of investor were not the same. Even the economic interests of KSW were not completely aligned with their investors. The case outlines the alternative investment structures that could be considered: REITs, Limited Partnerships, C Corporations, and combinations of those entities. The case illustrates how to manage the potential conflicts and the important consequences of tax policy on how investments are structured. Students are asked to model the results of alternative investment structures and determine what Caelan’s recommendation should be.

Purchase this case:
https://hbsp.harvard.edu/product/218077-PDF-ENG

The CEO of a California-based craft brewery manages new partnership with—and potential acquisition by—industry giant Heineken.

Purchase this case:
https://hbsp.harvard.edu/product/418017-PDF-ENG

The brand management of places, such as countries, cities, and regions, has received increasing attention in recent years. The associations, impressions and reputations that people have of a certain place can have a big impact in a number of areas—from tourism, to exports, to drawing talent, to securing foreign investment, to public diplomacy, and to political leadership. Consequently, a number of stakeholders may attempt to influence the perceptions that people have about a place in a way that is conducive to their goals. This background note lays the ground for instructors to expose students to the concept of a place brand, allow them to examine the ways in which it may be influenced, and consider the motivations of the various actors. The note provides ample examples of countries and cities that have actively tried to shape their brand identity and further exposes students to recent trends and vehicles (such as social media) relevant for the branding of places. The note raises a set of issues on this topic that can serve as the basis for a rich classroom discussion.

Purchase this case:
https://hbsp.harvard.edu/product/519007-PDF-ENG

Shield AI’s quadcopter—with no pilot and no flight plan—could clear a building and outpace human warfighters by almost five minutes. This was not to say that it was better than the warfighters or would replace their jobs, but it was evidence that autonomous robots deployed in this fashion could keep up with the pace of operators, serve as a force multiplier, and help protect civilian and service member lives. But was it evidence that the Shield AI team should ask their newest potential customer for a contract 50 to 60 times more than their only two contracts to date? Would asking for what a system of coordinated, exploring robots really cost—$50 to $60 million—scare off their U.S. government customer? No one would blink if Lockheed Martin, Boeing, or other large defense companies proposed a $60 million effort to do the same, but would it make Shield AI, barely two years past founding, look arrogant, ignorant, or both?

Purchase this case:
https://hbsp.harvard.edu/product/819062-PDF-ENG