First Look

December 12, 2017

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

When President Trump comes knocking

A few days after being sworn in as president of the United States, Donald Trump called the CEO of Carrier Corp. to persuade him to dump plans to relocate a plant to Mexico. A new case study explores the fallout when political and business goals conflict. Donald Trump Calls Carrier Corporation.

How important to success is an entrepreneur's personality?

Hoping to encourage more research on links between personality and entrepreneurship, Sari Pekkala Kerr, William R. Kerr, and Tina Xu conduct a literature review since 2000. One unanswered question: Does an entrepreneur's personality correlate with firm success? Personality Traits of Entrepreneurs: A Review of Recent Literature.

What motivates us at work?

Paul Green, Eli Finkel, Grainne Fitzsimons, and Francesca Gino offer a new theory for what motivates workers. "We argue that experiences at work that confirm employees’ need fulfillment expectations yield a positive emotional state that is energizing, and that this energy is manifested in employees’ behaviors at work," they write. The Energizing Nature of Work Engagement: Toward a New Need-Based Theory of Work Motivation.

Other new publications from Harvard Business School faculty are listed below.

— Sean Silverthorne

Abstract—An enthralling historical narrative filled with critical leadership insights that will be of interest to a wide range of readers—including those in government, business, education, and the arts—Forged in Crisis spotlights five masters of crisis: polar explorer Ernest Shackleton, President Abraham Lincoln, legendary abolitionist Frederick Douglass, Nazi-resisting clergyman Dietrich Bonhoeffer, and environmental crusader Rachel Carson. What do such disparate figures have in common? Why do their extraordinary stories continue to amaze and inspire? In delivering the answers to those questions, I offer a remarkable template by which to judge those in our own time to whom the public has given its trust. The book’s five sections begin by showing each individual protagonist on the precipice of a great crisis: Shackleton marooned on an Antarctic ice floe; Lincoln on the verge of seeing the Union collapse; escaped slave Douglass facing possible capture; Bonhoeffer agonizing over how to counter absolute evil with faith; Carson racing against the cancer ravaging her in a bid to save the planet. The narrative then reaches back to each person’s childhood and shows the individual growing—step by step—into the person he or she will ultimately become. Significantly, as we follow each leader’s against-all-odds journey, we begin to glean an essential truth: leaders are not born but made. In a book dense with epiphanies, the most galvanizing one may be that the power to lead courageously resides in each of us.

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  • forthcoming
  • Journal of Service Management

Service Operations: What's Next?

By: Field, Joy M., Liana Victorino, Ryan W. Buell, Michael J. Dixon, Susan M. Goldstein, Larry J. Menor, Madeleine E. Pullman, Aleda Roth, Enrico Secchi, and Jie Zhang

Abstract—The purpose of this article is to present exciting and innovative research questions in service operations that are aligned with eight key themes and related topics determined by the Journal of Service Management (JOSM) Service Operations Expert Research Panel. By offering a good number of such research questions, this article provides a broad range of ideas to spur conceptual and empirical research related to service operations and encourages the continued creation of deep knowledge within the field, as well as collaborative research across disciplines that develops and incorporates insights from service operations.

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  • forthcoming
  • Journal of Service Management

Service Operations: What Have We Learned?

By: Field, Joy M., Liana Victorino, Ryan W. Buell, Michael J. Dixon, Susan M. Goldstein, Larry J. Menor, Madeleine E. Pullman, Aleda V. Roth, Enrico Secchi, and Jie J. Zhang

Abstract—The purpose of this article is to identify research themes in service operations that have great potential for exciting and innovative conceptual and empirical work. To frame these research themes, the article provides a systematic literature review of operations articles published in the Journal of Service Management (JOSM). The thorough review of published work in JOSM and proposed research themes are presented in hopes that they will inspire impactful research on service operations. These themes are further developed in a companion article, “Service Operations: What’s Next?”

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  • 2017
  • Research in Organizational Behavior

The Energizing Nature of Work Engagement: Toward a New Need-Based Theory of Work Motivation

By: Green, Paul, Eli Finkel, Grainne Fitzsimons, and Francesca Gino

Abstract—We present theory suggesting that experiences at work that meet employees’ expectations of need fulfillment drive work engagement. Employees have needs (e.g., a desire to be authentic) and they also have expectations for how their job or their organization will fulfill them. We argue that experiences at work that confirm employees’ need fulfillment expectations yield a positive emotional state that is energizing, and that this energy is manifested in employees’ behaviors at work. Our theorizing draws on a review of the work engagement literature, in which we identify three core characteristics of work engagement: (a) a positive emotional state that (b) yields a feeling of energy and (c) leads to positive work-oriented behaviors. These key themes provide the foundation for further theorizing suggesting that interactions at work confirm or disconfirm employees’ need fulfillment expectations, leading to different levels of engagement. We extend our theorizing to argue that confirmation, or disconfirmation, of different need expectations will yield emotional experience of varying magnitudes, with confirmation of approach-oriented need expectations exerting stronger effects than the confirmation of avoidance-oriented need expectations. We close with a review suggesting that organizational contextual features influence the expression of these needs, sustaining or undermining the positive emotional experiences that fuel work engagement.

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  • December 2017
  • Mayo Clinic Proceedings: Innovations, Quality & Outcomes

Overall Cost Comparison of Gastrointestinal Endoscopic Procedures with Endoscopist- or Anesthesia-Supported Sedation by Activity-Based Costing Techniques

By: Helmers, Richard A., James A. Dilling, Christopher R. Chaffee, Mark V. Larson, Bradly J. Narr, Derek A. Haas, and Robert S. Kaplan

Abstract—Endoscopic/Colonoscopic procedures are done either with gastroenterologist-administered conscious sedation or with anesthesia-administered sedation with propofol. Anesthesia-administered sedation has medical and patient benefits but is more expensive to administer. We used time derived activity based costing to compare the true cost of GI procedures done with gastroenterologist-administered conscious sedation versus anesthesia –administered sedation. The study showed that the incremental costs associated with anesthesia-administered sedation, when all factors are considered, are much lower than previously believed.

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  • in press
  • Journal of Personality and Social Psychology

Enacting Rituals to Improve Self-control

By: Tian, D.A., J. Schroeder, G. Haubl, J. Risen, M.I. Norton, and F. Gino

Abstract—Rituals are predefined sequences of actions characterized by rigidity and repetition. We propose that enacting ritualized actions can enhance subjective feelings of self-discipline, such that rituals can be harnessed to improve behavioral self-control. We test this hypothesis in six experiments. A field experiment showed that engaging in a pre-eating ritual over a 5-day period helped participants reduce calorie intake (Experiment 1). Pairing a ritual with healthy eating behavior increased the likelihood of choosing healthy food in a subsequent decision (Experiment 2), and enacting a ritual prior to a food choice (i.e., without being integrated into the consumption process) promoted the choice of healthy food over unhealthy food (Experiments 3a and 3b). The positive effect of rituals on self-control held even when a set of ritualized gestures enacted were not explicitly labeled as a ritual, and in other domains of behavioral self-control (i.e., prosocial decision-making; Experiments 4 and 5). Furthermore, Experiments 3a, 3b, 4, and 5 provided evidence for the psychological process underlying the effectiveness of rituals: heightened feelings of self-discipline undergirded the facilitative effect of rituals on behavioral self-control. Finally, Experiment 5 showed that the absence of a self-control conflict eliminated the effect of rituals on behavior, demonstrating that rituals affect behavioral self-control specifically because they alter responses to self-control conflicts.

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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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Brokers and Order Flow Leakage: Evidence from Fire Sales

By: Barbon, Andrea, Marco Di Maggio, Francesco Franzoni, and Augustin Landier

Abstract—Using trade-level data, we study whether brokers play a role in spreading order flow information. We focus on large portfolio liquidations, which result in temporary drops in stock prices, and identify the brokers that intermediate these trades. We show that these brokers’ best clients tend to predate on the liquidating funds: at the beginning of the fire sale, they sell their holdings in the liquidated stocks, to then cover their positions once asset prices start recovering. The predatory trades generate at least 50 basis points over ten days and cause the liquidation costs for the distressed fund to almost double. These results suggest a role of brokers in fostering predatory behavior and raise a red flag for regulators. Moreover, our findings highlight the trade-off between slow execution and potential information leakage in the decision of optimal trading speed.

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Material Sustainability Information and Stock Price Informativeness

By: Grewal, Jody, Clarissa Hauptmann, and George Serafeim

Abstract—As part of the SEC’s revision of Regulation S-K, many investors proposed the mandatory disclosure of sustainability information in the form of environmental, social, and governance (ESG) data. However, progress is contingent on collecting evidence regarding which sustainability disclosures are financially material. To inform this issue, we examine materiality standards developed by the Sustainability Accounting Standards Board (SASB). We find firms voluntarily disclosing more SASB-identified sustainability information have higher stock price informativeness. In contrast, sustainability disclosures not identified as material by SASB are not associated with informativeness. Our result is robust to including controls for sustainability performance ratings, analyst forecasts, insider trading, institutional ownership, earnings quality, and other voluntary disclosure activity. Changes in material sustainability disclosure are followed by changes in stock price informativeness. Differences-in-differences estimates suggest that following the release of SASB standards, the treatment group of firms increased SASB-identified sustainability disclosure relative to the control group of firms and that the treatment group experienced an increase in stock price informativeness. The results are stronger for firms with higher exposure to sustainability issues, greater institutional and socially responsible investment fund ownership, and coverage from analysts with lower portfolio complexity. Moreover, we document intra-industry information transfers to firms with low SASB-identified sustainability disclosure in industries where firms have higher SASB-identified sustainability disclosure.

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Personality Traits of Entrepreneurs: A Review of Recent Literature

By: Kerr, Sari Pekkala, William R. Kerr, and Tina Xu

Abstract—We review the extensive literature since 2000 on the personality traits of entrepreneurs. We first consider baseline personality traits like the Big-5 model, self-efficacy and innovativeness, locus of control, and the need for achievement. We then consider risk attitudes as well as goals and aspirations of entrepreneurs. Within each area, we separate studies by the type of entrepreneurial behavior considered: entry into entrepreneurship, performance outcomes, and exit from entrepreneurship. This literature shows common results and many points of disagreement, reflective of the heterogeneous nature of entrepreneurship. We label studies by the type of entrepreneurial population studied (e.g., Main Street vs. those backed by venture capital) to identify interesting and irreducible parts of this heterogeneity, while also identifying places where we anticipate future large-scale research and the growing depth of the field are likely to clarify matters. There are many areas, like how firm performance connects to entrepreneurial personality, that are woefully understudied and ripe for major advances if the appropriate cross-disciplinary ingredients are assembled.

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In 2012, Argentine media conglomerate Grupo Clarín and President Cristina Fernández de Kirchner were embroiled in what some called “the mother of all battles.” Grupo Clarín was one of the preeminent media companies in Argentina, with leading newspapers, cable television and Internet services, and broadcast television and radio stations. Some critics contended the company had prospered over several decades by managing relationships with governments of varying political color, such as with Néstor Kirchner (2003–2007), the popular president who helped lead the country out of the financial crisis. But its relationship with the government changed in 2008 when a divisive agricultural export tax sparked a conflict between Grupo Clarín and President Cristina Kirchner, Néstor Kirchner’s wife and successor. Then in 2009, in a call for “democratizing” the media, Cristina Kirchner introduced a media reform law that would significantly limit Grupo Clarín’s operations. By 2012, the conglomerate had delayed the law’s implementation through the courts, but would likely have to restructure to accommodate the new regulatory environment. The case allows students to consider the assumptions that underlie media regulation and to debate the role of media in society. It can also be used to discuss how to evaluate a business decision in an uncertain regulatory environment.

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Founded in 1945, Grupo Clarín expanded over several decades to become Argentina’s largest media conglomerate. With leading positions in newspapers, broadcast television, broadcast radio, cable television, and Internet services, Grupo Clarín caught the attention of U.S.-based investment bank Goldman Sachs, which acquired an 18% share of Grupo Clarín for US$500 million in 1999. While Grupo Clarín struggled during the economic crisis from 2001 to 2002, it was well positioned to grow as the economy began to recover in 2003, in part due to government policies that helped stabilize the media industry. Now in October 2007, Grupo Clarín was preparing to make an IPO in London and Buenos Aires, and fund managers at Goldman Sachs were reevaluating their position. What price would the IPO reach and how much, if any, of their stake should they sell? What was the return Goldman Sachs would obtain if it sold its entire position, or just one part?

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  • Harvard Business School Case 418-036

Merging American Airlines and US Airways (B)

Exhibit to Merging American Airlines and US Airways (A) case. In February 2013, US Airways announced that it would merge with American Airlines to create the world’s largest airline. Doug Parker, the CEO of US Airways, would become CEO of the new American Airlines Group (AAL). The case describes a number of critical decisions Parker made and actions that he took in the course of the acquisition integration process. All focused on how best to combine the two airlines’ core systems and operating processes as well as the appropriate scope and speed of strategic changes. Now, Parker must decide on the composition of AAL’s senior executive team. Should Parker select a team dominated by US Airways executives with whom he has successfully worked for decades? Or should he establish a new team with roughly equal representation from both airlines? Parker’s choice will send important signals to employees about the extent to which the transaction will be viewed as a merger of equals or as a takeover by US Airways.

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  • Harvard Business School Case 518-030 Digital Bank at a Crossroad

In March 2017, Elsa Pekmez Atan (MBA 2004), was wondering about the future of, a digital-only banking platform of QNB Finansbank. Since its launch in October 2012, Enpara had been successful in attracting over 600,000 customers by appealing to digital savvy, middle-class customers that QNB Finansbank was lacking for a long time. By the end of 2016, it accounted for 16% of QNB Finansbank's deposits. With the support of the top management, Atan was able to run Enpara as an independent company. However, as Enpara grew there were increasing pressures to integrate with the parent company. While Atan believed that this would destroy the unique culture and positioning of Enpara, senior management was wondering whether to spin it off or merge it with the parent company.

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  • Harvard Business School Case 918-009

Managing Diversity and Inclusion at Yelp

This case explores the industry-wide lack of employee diversity in the technology sector and Yelp’s decision to take a leadership position in identifying strategies to increase diversity. The goal of the case is to provide an opportunity for students to develop a framework for understanding the factors that might lead to a less diverse workforce and for evaluating approaches to increase diversity. The case opens in 2014, when Yelp hired Rachel Williams into a newly created position—the Head of Diversity and Inclusion. Rachel was tasked with developing strategies to ensure that Yelp was attracting and retaining a diverse, productive workforce and creating a welcoming environment for all employees. The case puts students in Rachel’s footsteps upon being hired and tasks them to propose a set of changes for Yelp to make in order to increase the diversity of the workforce.

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  • Harvard Business School Case 918-012

Managing Diversity and Inclusion at Yelp (B)

Supplements the (A) case.

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  • Harvard Business School Case 715-454

Steve Jobs: Leader Strategist

Strategically, Steve Jobs got it brilliantly right some times and terribly wrong other times. This case examines Jobs' development as a leader strategist over the course of his entire career. The successes and failures of Apple, NeXT, and Pixar are used to probe the role of strategy in organizational success and to examine a leader's distinctive responsibility to set (and reset) a viable course for a business. While Jobs' greatness may make him seem inaccessible at times, a closer look shows that some of his most valuable managerial capabilities were honed slowly, painfully, over time, and that there is much others can learn from his experience.

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  • Harvard Business School Case 118-031

Data Breach at Equifax

Examining the cause of and response to the 2017 data breach at Equifax that exposed the information of over 145 million consumers.

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  • Harvard Business School Case 218-036

North Forty: Managing a Microsoft Family Office

No abstract available.

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  • Harvard Business School Case 718-426


Tencent had undergone many transformations since it was founded in 1998 as a simple messaging service. In 2017, it was the largest online games provider in China with a wide range of game types, China’s largest social networking service provider with several of the largest social networking applications in the world, and China’s favorite Internet portal. It was challenging Alibaba’s Alipay as the leader in online payments systems, and it had established strategic relationships with many service providers to help exploit new opportunities in online-to-offline (O2O) services and leverage its huge user base in e-commerce and search. However, there was no room for complacency. Competition from the other big local Internet companies such as Baidu and Alibaba was fierce, and there were always thousands of start-ups looking to enter the sector. Founder and CEO Ma Huateng (“Pony” Ma) remarked, “In America, when you bring an idea to market you usually have several months before competition pops up, allowing you to capture significant market share. In China, you can have hundreds of competitors within the first hours of going live. Ideas are not important in China—execution is.”

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  • Harvard Business School Case 318-030

Donald Trump Calls Carrier Corporation

This case examines the influence of political pressure on corporate decision-making. It questions whether fidelity to domestic operations ought to be a corporate social responsibility, and thus it challenges the limits of “social responsibility” as a corporate ideal. Specifically, the case focuses on Donald Trump’s effort to encourage U.S. companies’ domestic operations, through a study of one company’s decision to backtrack on a factory relocation plan. In February 2016, the Carrier Corporation (a maker of heating, ventilation, and air-conditioning equipment and a division of United Technologies Corporation) announced a plan to relocate operations of a furnace factory from the United States to Mexico. The case notes that Carrier began to outsource and offshore operations, in an effort to reduce costs, around 1921. While Carrier’s previous United States factory closures had garnered major press coverage, the 2016 announcement ramified differently. Days later, then-presidential candidate Donald Trump referenced the relocation in a Facebook post. Soon, Carrier’s plan became a touchtone to Trump’s anti-globalization and anti-free trade campaign messaging. The case documents that he was not the only candidate or politician to reference Carrier during the 2016 campaign. Still his declaration to “call up the head of Carrier” upon winning the presidency became a stump-speech refrain popular with his audiences and contrasted with other political figures’ more measured language. Ultimately, the case outlines the events set in motion after Trump kept his campaign promise and called Carrier’s parent company’s CEO one week after his surprise presidential election victory.

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