First Look

July 5, 2016

Among the highlights included in new research papers, case studies, articles, and books released this week by Harvard Business School faculty:

Using behavioral insights to promote corporate conservation

The behavioral sciences have been largely untapped as a resource for influencing conservation policy, but the new paper Advancing Conservation by Understanding and Influencing Human Behavior addresses that gap. The paper offers guiding questions that "help define the conservation problem as a behavior change problem, understand behavioral mechanisms and identify appropriate approaches for behavior change (awareness, incentives, nudges), and evaluate and adapt approaches based on new behavioral insights,” according to authors Elizabeth Keenan and colleagues.

Do campus scandals hurt admissions?

A new working paper finds a direct correlation between campus scandals and a drop in admissions applications. “For example,” write the authors, “a scandal covered in a long-form news article leads to a 10 percent drop in applications the following year. This is roughly the same as the impact on applications of dropping 10 spots in the U.S. News and World Report college rankings.” The research was conducted by Michael Luca and colleagues, and reported in The Impact of Campus Scandals on College Applications.

Creating shared value at Nestlé

Harvard professors Michael Porter and Mark Kramer have put forward the idea of Creating Shared Value (CSV), which links a company’s business goals to broader social objectives and considers new ways to think of capitalism. In the new case study Nestle's Creating Shared Value Strategy, that company’s focus on three categories of its CSV is explored: nutrition, water and rural development. Porter and Kramer joined Kerry Herman and Sarah McAra to write the case.

A complete list of new research and publications from Harvard Business School faculty follows.

— Sean Silverthorne
  • July–August 2016
  • Harvard Business Review

Beyond the Holacracy Hype: The Overwrought Claims—and Actual Promise—of the Next Generation of Self-Managed Teams

By: Bernstein, Ethan, John Bunch, Niko Canner, and Michael Lee

Abstract—Holacracy and other forms of self-organization have been getting a lot of press. Proponents hail them as "flat" environments that foster flexibility, engagement, productivity, and efficiency. Critics say they're naive, unrealistic experiments. We argue, using evidence from a multi-year research agenda at several mainstream organizations that have adopted these forms, that neither view is quite right. Although the new forms (built upon a half-century of research on and experience with self-managed teams) can help organizations become more adaptable and nimble, most companies shouldn't adopt their principles wholesale. A piecemeal approach usually makes sense. Organizations can use elements of self-management in areas where the need for adaptability is high and traditional models where reliability is paramount.

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  • forthcoming
  • Conservation Letters

Advancing Conservation by Understanding and Influencing Human Behavior

By: Reddy, Sheila M., Jensen Montambault, Yuta J. Masuda, Ayelet Gneezy, Elizabeth Keenan, William Butler, Jonathan R. Fisher, and Stanley T. Asah

Abstract—Behavioral sciences can advance conservation by systematically identifying behavioral barriers to conservation and how to best overcome them. Behavioral sciences have informed policy in many other realms (e.g., health, savings), but they are a largely untapped resource for conservation. We propose a set of guiding questions for applying behavioral insights to conservation policy. These questions help define the conservation problem as a behavior change problem, understand behavioral mechanisms and identify appropriate approaches for behavior change (awareness, incentives, nudges), and evaluate and adapt approaches based on new behavioral insights. We provide a foundation for the questions by synthesizing a wide range of behavior change models and evidence related to littering, water and energy conservation, and land management. We also discuss the methodology and data needed to answer these questions. We illustrate how these questions have been answered in practice to inform efforts to promote conservation for climate risk reduction. Although more comprehensive research programs to answer these questions are needed, some insights are emerging. Integrating two or more behavior change approaches that target multiple, context-dependent factors may be most successful; however, caution must be taken to avoid approaches that could undermine one another (e.g., economic incentives crowding out intrinsic incentives).

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Abstract—The practice and teaching of business strategy today exist largely as a set of alternative views and frameworks not entirely connected to one another. These notes contribute an integrated sequence of steps for creating or evaluating a strategy and associated company design. These notes also draw clear lines from these things to quantitative and evidence-based evaluation of enterprise performance and to financial valuation. The approach is generalizable to any modern industry and integrates existing well-known frameworks. The materials are consistent with what is known from modern graduate school training and are geared to practical use by managers or teaching by instructors of MBAs and executive MBAs.

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The Climate Custodians

By: Eccles, Robert G., and Tim Youmans

Abstract—Can custody banks become key players in climate change? Custody banks joining the battle against climate change will signal a significant shift in governance ideology for this highly regulated industry so critical to the global financial system. While global custody banks provide the unseen but essential support system that ensures the proper functioning of the capital markets, they have great untapped potential to become change-makers in climate change. This paper expands on our idea of the "Climate Custodians" first presented in the MIT Sloan Management Review within the governance context of the "Statement of Significant Audiences and Materiality (The Statement)" for these subsidiaries of large bank holding companies. By focusing on the Big Three global custody banks—State Street, BNY Mellon, and JPMorgan Chase—we make the case for large custody banks assuming the role of climate custodians. In this role, these banks would report, among other things, a measure of carbon embedded within their institutional clients’ assets under custody to help clients understand the climate risk in their portfolios.

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Finding Excuses to Decline the Ask

By: Exley, Christine L., and Ragan Petrie

Abstract—A growing body of empirical evidence documents a reluctance to make charitable gifts. Individuals avoid donation asks, and when asked, give less by viewing factors—such as ambiguity or risk—in a self-serving manner. Contrary to previous studies, this paper considers an environment where the ask is not avoided and factors that may be viewed self-servingly are neither introduced nor highlighted. In doing so, results from a field study and complementary online study document evidence that less prosocial behavior results from the mere expectation of the ask, or opportunity for individuals to find their own excuses. Additional results document heterogeneity in such behavior; the expectation of the ask is particularly detrimental to prosocial behavior among females and those with less previous support of the involved charities.

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Tort Reform and Innovation

By: Galasso, Alberto, and Hong Luo

Abstract—Current academic and policy debates focus on the impact of tort reforms on physicians’ behavior and medical costs. This paper examines whether these reforms also affect incentives to develop new technologies. We find that, on average, laws that limit the liability exposure of healthcare providers are associated with a significant reduction in medical device patenting. Tort reforms have the strongest impact in medical fields in which the probability of facing a malpractice claim is the largest, and they do not seem to affect the propensity to develop technologies of the highest and lowest quality. Our results underscore the importance of considering dynamic effects in the economic analysis of tort laws.

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Abstract—Performance feedback is ubiquitous in competitive settings where new products are developed. This paper introduces a fundamental tension between incentives and improvement in the provision of feedback. Using a sample of 4,000 commercial logo-design tournaments, I show that feedback reduces participation but improves the quality of subsequent submissions, with an ambiguous effect on high-quality output. To evaluate this tradeoff, I develop a procedure to estimate agents' effort costs and simulate counterfactuals under alternative feedback policies. The results suggest that feedback on net increases the number of high-quality ideas produced and is thus desirable for a principal seeking innovation.

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The Impact of Campus Scandals on College Applications

By: Luca, Michael, Patrick Rooney, and Jonathan Smith

Abstract—In recent years, there have been a number of high profile scandals on college campuses, ranging from cheating to hazing to rape. With so much information regarding a college’s academic and nonacademic attributes available to students, how do these scandals affect their applications? To investigate, we construct a dataset of scandals at the top 100 U.S. universities between 2001 and 2013. Scandals with a high level of media coverage significantly reduce applications. For example, a scandal covered in a long-form news article leads to a 10% drop in applications the following year. This is roughly the same as the impact on applications of dropping 10 spots in the U.S. News and World Report college rankings. Moreover, colleges react to scandals—the probability of another incident in the subsequent years falls—but this effect dissipates within five years. Combined, these results suggest important demand-side and supply-side responses to incidents with negative media coverage.

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Abstract—Organizations in the field of sports are becoming increasingly dependent on sponsors for their value creation and growth. Studies suggest that sports organizations (rights-holders) often fail to exploit the full potential of such sponsorship partnerships. The aim of the case study reported here is to explore key dimensions of value creation in sponsorship relationships from the perspective of a sports organization. The case study was constructed on the basis of interviews with an organization in the administrative structure of European football, the Union of European Football Associations (UEFA) and its major international sports event, the European Championships (EURO). Interviews were also conducted with two of its sponsors and five independent experts. The interviews were conducted beginning in 2003, over the four EURO project life cycles starting in 2000, with a primary focus on the tournaments taking place in 2016. We explore different types of sponsorship relationships based on their direct and indirect value creation function for the sports organization and propose key capabilities that are required for the sports organization to successfully integrate, coordinate, and combine resources with its major sponsors. Key capabilities that are explored in this context are collaborative, absorptive, adaptive, and learning capabilities. The ability of sport organizations to share and absorb knowledge from their partners and to integrate this knowledge into their planning and management processes was critical. The study shows how knowledge-sharing routines supported resource integration between sponsorship partners. There are few in-depth case studies on sponsorship management from the perspective of sports entities.

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  • Harvard Business School Case 716-422

Nestle's Creating Shared Value Strategy

This case considers Nestlé’s creating shared value (CSV) strategy, which focused on the three categories of nutrition, water, and rural development. In the packaged food and beverage industry, pressure had mounted since the 1990s to improve supply chain sustainability and provide healthier, more natural foods, leading to consolidation and causing sales to decline in 2010. With 150 years' experience in the industry, Nestlé had transformed into a nutrition, health, and wellness company and made its CSV strategy explicit in the early 21st century. By 2014, Nestlé CEO Paul Bulcke considered how best to fully embed the company's CSV strategy and to communicate it to shareholders and external stakeholders.

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  • Harvard Business School Case 716-432

A Brief Note on Global Antitrust

This brief note explores the critical issues in modern antitrust policy.

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  • Harvard Business School Case 216-058

Brick by Brick

No abstract available.

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