First Look

March 13, 2018

Of special interest among new research papers, case studies, articles, and books released this week by Harvard Business School faculty:

Not a bad speech…for a rookie

Let's face it: Backhanded compliments are not flattering. Understanding the art of ingratiation is part of the goal of new research by Ovul Sezer, Alison Wood Brooks, and Michael I. Norton. Backhanded Compliments: How Negative Comparisons Undermine Flattery.

What’s the next step for Redfin?

Founded in 2002, Redfin uses technology to help home buyers and sellers bypass the traditional real estate industry and save money. A new case study by Marco Di Maggio and Julia Kelley watches as CEO Glenn Kelman decides in late 2017 what Redfin’s top strategic priority should be: market share growth or bottom-line improvements? Redfin.

Do sponsorships work to promote women?

In a paper to be published in the journal Management Science, researchers look at whether company sponsorship programs effectively promote women. In sum, “sponsorship does not close the gender gap in competitiveness or earnings,” conclude researchers Nancy R. Baldiga and Katherine Baldiga Coffman. Laboratory Evidence on the Effects of Sponsorship on the Competitive Preferences of Men and Women.

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

— Sean Silverthorne
  • February 2018
  • Management Science

Laboratory Evidence on the Effects of Sponsorship on the Competitive Preferences of Men and Women

By: Baldiga, Nancy R., and Katherine Baldiga Coffman

Abstract—Sponsorship programs have been proposed as one way to promote female advancement in competitive career fields. A sponsor is someone who advocates for a protégé, and in doing so, takes a stake in her success. We use a laboratory experiment to explore two channels through which sponsorship has been posited to increase advancement in a competitive workplace. In our setting, being sponsored provides a vote of confidence and/or creates a link between the protégé’s and sponsor’s payoffs. We find that both features of sponsorship significantly increase willingness to compete among men on average, while neither of these channels significantly increases willingness to compete among women on average. As a result, sponsorship does not close the gender gap in competitiveness or earnings. We discuss how these insights from the laboratory could help to inform the design of sponsorship programs in the field.

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  • 2018
  • Business Groups in the West: Origins, Evolution and Resilience

The United States in Contemporary Perspectives: Evolving Forms, Strategy, and Performance

By: Collis, David J., Bharat Anand, and J. Yo-Jud Cheng

Abstract—In spite of surging interest in the business group organization among business scholars, economists, and historians in recent years, academic research on business groups has, to date, remained within the boundary of emerging markets. The major aim of this volume is to explore the long-term evolution of different varieties of large enterprises in today's developed economies in the West. More specifically, the volume focuses on the economic institution of the business group and aims at understanding the factors behind its rise, growth, resilience, and/or fall; its behavioral and organizational characteristics; and its contributions to national economic development. While business groups, especially those with widely diversified product portfolios, are a dominant and critical enterprise model in emerging and developing economies and have lately attracted much attention in academic circles and business presses, interestingly, their counterparts in developed economies have not been systematically examined. This contempt for business groups in mature market settings stands in sharp contrast to the intensive research that has been conducted on other major models of large modern enterprises in those economies, such as functionally organized firms with a clear product focus and multidivisional enterprises that have diversified into related product lines. The present book aims to fill in this gap in the literature by adopting a coherent approach to this elusive subject.

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  • 2018
  • Global Happiness Policy Report

Work and Well-being: A Global Perspective

By: De Neve, Jan-Emmanuel, Amy Blankson, Andrew Clark, Cary Cooper, James Harter, Christian Krekel, Jenn Lim, Paul Litchfield, Jennifer Moss, Michael I. Norton, Mariano Rojas, George Ward, and Ashley V. Whillans

Abstract—Work and employment play a central role in most people’s lives. In OECD countries, for example, people spend around a third of their waking hours engaged in paid work. We not only spend considerable amounts of our time at work, employment and workplace quality also rank among the most important drivers of happiness. This chapter presents our research on the ways in which work and workplace quality influence people’s well-being around the world. It also highlights a number of best practices that may inspire policy-makers and business leaders in putting well-being at the heart of their policies.

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  • February 2018
  • Management Science

Patent Publication and the Market for Ideas

By: Hegde, Deepak, and Hong Luo

Abstract—In this paper, we study the effect of invention disclosure through patent publication on the market for ideas. We do so by analyzing the effects of the American Inventor's Protection Act of 1999 (AIPA)—which required U.S. patent applications to be published 18 months after their filing date rather than at patent grant—on the timing of licensing deals in the biomedical industry. We find that post-AIPA U.S. patent applications are significantly more likely to be licensed before patent grant and shortly after 18-month publication. Licensing delays are reduced by about 10 months, on average, after AIPA's enactment. These findings suggest a hitherto unexplored benefit of the patent system: by requiring inventions to be published through a credible, standardized, and centralized repository, it mitigates information costs for buyers and sellers and, thus, facilitates transactions in the market for ideas.

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  • forthcoming
  • The Oxford Handbook of Corporate Social Responsibility

The Consequences of Mandatory Corporate Sustainability Reporting

By: Ioannou, Ioannis, and George Serafeim

Abstract—A key aspect of the governance process inside organizations and markets is the measurement and disclosure of important metrics and information. In this chapter, we examine the effect of sustainability disclosure regulations on firms’ disclosure practices and valuations. Specifically, we explore the implications of regulations mandating the disclosure of environmental, social, and governance (ESG) information in China, Denmark, Malaysia, and South Africa using differences-in-differences estimation with propensity score matched samples. We find that relative to propensity score matched control firms, treated firms significantly increased disclosure following the regulations. We also find increased likelihood by treated firms of voluntarily receiving assurance to enhance disclosure credibility and increased likelihood of voluntarily adopting reporting guidelines that enhance disclosure comparability. These results suggest that even in the absence of a regulation that mandates the adoption of assurance or specific guidelines, firms seek the qualitative properties of comparability and credibility. Instrumental variables analysis suggests that increases in sustainability disclosure driven by the regulation are associated with increases in firm valuations, as reflected in Tobin’s Q. Collectively, the evidence suggest that current efforts to increase transparency around organizations’ impact on society are effective at improving disclosure quantity and quality as well as corporate value.

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The Real Exchange Rate, Innovation and Productivity

By: Alfaro, Laura, Alejandro Cuñat, Harald Fadinger, and Yanping Liu

Abstract—We evaluate manufacturing firms' responses to changes in the real exchange rate (RER) using detailed firm-level data for a large set of countries for the period 2001–2010. We uncover the following stylized facts: In emerging Asia, real depreciations are associated with faster growth of firm-level total factor productivity (TFP), sales and cash-flow, higher probabilities to engage in R&D, and export. We find no significant effects for firms from industrialized economies and negative effects for firms in other emerging economies, which are less export-intensive and more import-intensive. Motivated by these facts, we build a dynamic model in which real depreciations raise the cost of importing intermediates but increase demand and the profitability to engage in exports and R&D, thereby relaxing borrowing constraints and enabling more firms to overcome the fixed-cost hurdle for financing R&D. We decompose the effects of RER changes on productivity growth into these channels and explain regional heterogeneity in the effects of RER changes in terms of differences in export intensity, import intensity, and financial constraints. We estimate the model and quantitatively evaluate the different mechanisms by providing counterfactual simulations of temporary real exchange rate movements. Effects on physical TFP growth, while different across regions, are non-linear and asymmetric.

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Seeker Beware: The Relational Costs of Advice-Seeker Decisions

By: Blunden, Hayley, Jennifer M. Logg, Alison Wood Brooks, Leslie John, and Francesca Gino

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.

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Digitizing Disclosure: The Case of Restaurant Hygiene Scores

By: Dai, Weijia (Daisy), and Michael Luca

Abstract—Collaborating with Yelp and the City of San Francisco, we revisit a canonical example of quality disclosure by evaluating—and helping to redesign—the posting of restaurant hygiene scores on Implementing a difference-in-differences strategy, we find that posting restaurant hygiene scores on Yelp leads to a 12% decrease in purchase intentions for restaurants with low scores (as predefined by the City) relative to those with higher scores. We then create a “hygiene alert”—a message that appears only for restaurants identified by the City as having “poor” operating conditions with “high-risk” hygiene violations (using the same low score threshold as above)—and find a further 9% decrease in purchase intentions. Moreover, the presence of an alert reduces the restaurant’s likelihood of getting a second alert. We conclude that disclosure policy should focus not only on what information to disclose, but also on how and where to design disclosure.

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Abstract—Internment in so-called “enemy countries” was a frequent occurrence in the 20th century and created significant obstacles for multinational enterprises (MNEs). This article focuses on German MNEs in India and shows how they addressed the formidable challenge of the internment of their employees in British camps during both WWI and WWII. We find that internment impacted business relationships in India well beyond its endpoint and that the WWI internment shaped the subsequent perception of and strategic response to the WWII experience. We show that internment aggravated existing staffing challenges, impacted the perception of racial lines of distinctions, and re-casted the category “European business.” While internment was perceived and managed as a political risk, the case also shows that it created unexpected networking opportunities, generating a tight community of German businesspeople in India.

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Backhanded Compliments: How Negative Comparisons Undermine Flattery

By: Sezer, Ovul, Alison Wood Brooks, and Michael I. Norton

Abstract—Seven studies (N = 2352) examine backhanded compliments—seeming praise that draws a comparison with a negative standard—a distinct self-presentation strategy with two simultaneous goals: eliciting liking (“Your speech was good…”) and conveying status (“…for a woman”). Backhanded compliments are common, from delivering feedback in work settings to communicating in casual conversation and take several distinct forms (Studies 1a-b). Backhanded compliments have mixed effectiveness, as people who deliver backhanded compliments erroneously believe that they will both convey high status and elicit liking (Studies 2a-2b), but recipients and third-party evaluators grant them neither (Studies 3a-3b); however, backhanded compliments are successful in reducing recipients’ motivation (Study 3c). We identify two constructs useful in determining the general effectiveness of ingratiation: excessive concern with image drives negative perceptions of backhanded compliment givers, while perceptions of low relative rank in a distribution drives the reduced motivation of backhanded compliment recipients.

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Amount and Diversity of Digital Emotional Expression Predicts Happiness

By: Vuillier, Laura, Alison Wood Brooks, June Gruber, Rui Sun, Michael I. Norton, Matthew James Samson, Emiliana Simon-Thomas, Paul Piff, Sarah Fan, Jordi Quoidbach, Charles Gorintin, Pete Fleming, Arturo Bejar, and Dacher Keltner

Abstract—Emotional expression in digital form has become increasingly ubiquitous via the proliferation of computers and handheld devices. Using online surveys and live chat experiments across four studies and 1,325 individuals (Study 1A-B and 2A-B), and a large social media dataset spanning 4.9 billion individuals (Study 3), we examine whether digital emotion expression (emojis) predicts happiness at the individual and national levels. Our studies converge on three central findings. First, people use emojis in text-based communication to convey emotional experience. Second, the amount and diversity of emojis causally increases happiness during social interactions. Third, across 122 countries, higher total amount and greater diversity of emoji usage per capita and per user correlate with higher national happiness. Across levels of analysis, our results suggest that both the amount and diversity of digital emotion expression influences well-being.

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  • Harvard Business School Case 218-067

Wellington Global Impact

Wellington Global Impact is one of the first public equities impact investing strategies in the market. The case explores how the strategy was developed at Wellington, including an analysis of the culture that supported its development. It also explores the difficulty in marketing the strategy as a first-mover and the effort to demonstrate that investments can have both positive financial and social returns. Protagonists Eric Rice and Patrick Kent must find ways to show that it is possible to drive impact through a public markets vehicle and show the rigorous financial and ESG analysis that went into building the strategy. Students will gain exposure to concepts around firm strategy, portfolio construction, risk management, marketing, and impact investing.

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  • Harvard Business School Case 218-051


Redfin, a technology-powered residential real estate brokerage, was founded in 2002 with the intention of using technology to disrupt the real estate industry. Over the next 15 years, Redfin made several changes to its business model. Initially, the company provided less support than a traditional real estate brokerage but helped home buyers and sellers save more money. Over time, in response to customer feedback, Redfin increased the level of customer service it provided while decreasing the amount customers saved, instead relying on its unique online tools to differentiate itself from other real estate brokerages. In July 2017, Redfin went public at a $1.73 billion valuation. Now, in late 2017, CEO Glenn Kelman had to decide what Redfin’s top strategic priority should be. Redfin could try to increase its market share, which was currently less than 2% even in the company’s top markets, or it could focus on balancing costs and improving its bottom line.

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  • Harvard Business School Case 818-026

Dinesh Moorjani and Hatch Labs

Dinesh Moorjani founded Hatch Labs in late 2010 as a “sandbox” for creating innovative, best-in-class businesses for the rapidly evolving mobile ecosystem. Now, after nearly two frenetic years, he faces a slew of strategic questions. In which Hatch ventures should he continue to invest money and manpower? Specifically, should he fuel a rapidly growing yet nascent online dating site or a novel customer rewards and loyalty app that has already gained commercial traction? Having nearly reached the end of Hatch’s runway, should he accept his partners’ offers to fund another Hatch vehicle, or should he pursue one of his other career options now on the table? And if he decides to continue with Hatch, what changes should he make to his business model in order to continue attracting top-level entrepreneurs, engineers, and designers? Would those proposed changes be acceptable to his backers, who include the Barry Diller—led media-giant IAC? Each decision has potentially huge consequences for Moorjani, for the young businesses he had built, and for the future of mobility.

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  • Harvard Business School Case 418-055

Robert K. Steel at Wachovia (A)

In September 2008, Robert Steel presided over the sale of Wachovia, a top U.S. bank, less than three months after becoming its CEO. Wachovia’s exposure to risky home loans led depositors and creditors to flee the bank on Friday, September 26, after the FDIC seized and sold a smaller bank with similar exposure, whose collapse nonetheless made it the biggest bank failure in U.S. history. Faced with Wachovia’s impending bankruptcy, the FDIC intervened again, voting on Monday, September 29, to sell Wachovia’s retail bank to Citigroup for $1 a share. Three days later, Wells Fargo offered $7 a share for all of Wachovia. Steel needed to decide whether to honor the terms of the deal and exclusivity agreement already sketched out with Citigroup or to approve a definitive merger agreement with Wells Fargo.

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  • Harvard Business School Case 418-056

Robert K. Steel at Wachovia (B)

Supplements the (A) case.

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  • Harvard Business School Case 718-417


No abstract available.

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  • Harvard Business School Case 715-035

Indonesia—Unity in Diversity

No abstract available.

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  • Harvard Business School Case 118-076

Whole Foods and JANA Partners

In 2017, JANA Partners decided to launch an activist campaign at struggling supermarket chain Whole Foods Market. The company had struggled for the past several years, and JANA thought the presence of new directors could help turn around its operations, while Whole Foods resisted, adding new directors and announcing ambitious new financial targets. Facing continued pressure from JANA despite the new changes, Whole Foods accepted an acquisition offer from Amazon, ending the engagement with JANA.

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