First Look

Abstract—In many of the business scandals of the new millennium, the perpetrators were surrounded by people who could have recognized the misbehavior, yet failed to notice it. To explain such inaction, management scholars have been developing the area of behavioral ethics and the more specific topic of bounded ethicality—the systematic and predictable ways in which even good people engage in unethical conduct without their own awareness. In this paper, we review research on both bounded ethicality and bounded awareness and connect the two areas to highlight the challenges of encouraging managers and leaders to notice and act to stop unethical conduct. We close with directions for future research and suggest that noticing unethical behavior should be considered a critical leadership skill.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=50320

Abstract—This article presents a clinical study, based on a decade of ongoing research at Samsung Group, which describes how the Samsung Group and its mobile phone division competed successfully in smartphones. The ability to manage co-opetition—simultaneous forces of competition and cooperation within the business group—is a particular dimension of dynamic capability that has stood Samsung in excellent stead. Relying on internal exhortations to cooperate often leads to a lack of dynamism, whereas untrammeled competition leaves proverbial synergies entirely untapped and spawns duplicative investments. Samsung, however, has succeeded by its ability to strike a balance between the two.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51604

Abstract—Rituals are central to family life. Three studies (N = 1098) tested the relationship between family rituals and holiday enjoyment and demonstrated that family rituals improve the holidays because they amplify family closeness and involvement in the experience. In Study 1, participants who reported having family rituals on Christmas were more likely to spend the holiday with family and to enjoy the holiday more. Moreover, while simply spending the holiday with family was associated with greater enjoyment, enacting a ritual while with family added significantly to that enjoyment. Study 2 replicated these findings for family rituals pertaining to a secular holiday, New Year’s Eve. Study 3 used experimental design and had participants either describe their rituals and then report their holiday enjoyment (as in Studies 1 and 2) or report their holiday enjoyment and then describe their rituals; in both conditions, being with family and enacting a ritual was associated with the greatest enjoyment, suggesting that it is having enacted rituals—and not merely reflecting on them—that enhances enjoyment. Participants were unlikely to engage in individual rituals (that is, on their own, without family involvement) and when they did, individual rituals were not associated with holiday enjoyment. In sum, three studies consistently demonstrate that family rituals on holidays are associated with feelings of closeness and greater intrinsic interest, leading to holiday enjoyment.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=51423

Abstract—We develop a theoretical model of, and provide the first large-sample evidence on, the behavior and impact of non-practicing entities (NPEs) in the intellectual property space. Our model shows that NPE litigation can reduce infringement and support small inventors. However, the model also shows that as NPEs become effective at bringing frivolous lawsuits, the resulting defense costs inefficiently crowd out firms that, absent NPEs, would produce welfare-enhancing innovations without engaging in infringement. Our empirical analysis shows that on average, NPEs behave as opportunistic patent trolls. NPEs sue cash-rich firms—a one standard deviation increase in cash holdings roughly doubles a firm's chance of being targeted by NPE litigation. We find moreover that NPEs target cash unrelated to the alleged infringement at essentially the same frequency as they target cash related to the alleged infringement. By contrast, cash is neither a key driver of intellectual property lawsuits by practicing entities (e.g., IBM and Intel), nor of any other type of litigation against firms. We find further suggestive evidence of NPE opportunism, such as forum shopping and targeting of firms, that has reduced the ability of firms to defend themselves against litigation. We find that NPE litigation has a real negative impact on innovation at targeted firms: firms substantially reduce their innovative activity after settling with NPEs (or losing to them in court). Moreover, we neither find any markers of significant NPE pass-through to end innovators, nor of a positive impact of NPEs on innovation in the industries in which they are most prevalent.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=47648

No abstract available.

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The world’s largest peer-to-peer (P2P) lender annually disbursing over a million loans totaling $10 billion, China’s CreditEase, must decide whether to IPO in the NYSE its online lending platform, Yirendai, before the year-end window closes in 2015. Yirendai sought to capture its customers and make virtually instantaneous credit decisions online. CreditEase’s commercial success makes funding Yirendai’s growth not an issue. P2P lending in China, after explosive growth followed by notorious frauds, is increasingly controversial. On the way to becoming a global example of financial inclusion, as a result of its original business model, CreditEase also pioneered and became a leader in the wealth management industry in China, serving the country’s new mass affluent and high net worth families. With so many options, how should Ning Tang, founder and CEO, chart the future strategic direction of CreditEase?

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Augustine Heard Sr. founded Augustine Heard & Company, a commission house focused on trade between China and the United States, in 1840. He welcomed his four nephews into the family business as it expanded in the increasingly complex economic and political environment of 19th century China. By 1861, the business had been flourishing for many years, but the context for foreign trade in China was changing. The four nephews, all having been made partners in the business, faced a decision. Should (and could) they alter the business model that had served their uncle so well for two decades? How could they best take advantage of the changing environment in China? Most importantly, how could they navigate their relationships as both brothers and partners?

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In 1861, the Heard brothers faced a decision: should they continue their family firm's business model that had made them a successful commission house in China, or was it time to make fundamental adjustments to their work? This case reveals that the brothers decided to maintain the status quo, primarily because of the lack of a decision-making mechanism amongst the brothers. The firm rapidly went downhill, before declaring bankruptcy in 1875.

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No abstract available.

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