First Look

August 7, 2018

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

Let’s shake on it

Many social engagements start with a handshake, but don’t think of the ritual as a mere formality. Research by Juliana Schroeder, Jane L. Risen, Francesca Gino, and Michael I. Norton demonstrtates that “a handshake is viewed as a signal of cooperative intent, increasing people’s cooperative behavior and affecting deal-making outcomes.” Handshaking Promotes Deal-Making By Signaling Cooperative Intent.

Sowing seeds of democracy with economic integration

When a democratic country trades with a non-democratic one, the integration promotes both democracy and institutional change, according to Giacomo Magistretti and Marco Tabellini. Economic Integration and Democracy: An Empirical Investigation.

How a company focused its relief efforts

Companies are increasingly involved helping communities rebuild after natural disasters. A new case study explores how the Chaudhary Group set priorities following the 2015 Nepal earthquake. Chaudhary Group: Rebuilding Nepal

Other new research publications from Harvard Business School faculty follow.

by Sean Silverthorne
  • August 2018
  • Negotiation and Conflict Management Research

Raiffa Transformed the Field of Negotiation—and Me

By: Bazerman, Max

Abstract—Howard Raiffa was a role model, friend, and inspiration. He transformed the field of negotiation, and he transformed my career. This brief article provides a recollection of how Howard revolutionized the field of negotiation and how those insights are now affecting broader areas of the social science. Raiffa received the 1999 Lifetime Achievement Award from the International Association for Conflict Management.

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  • July–August 2018
  • Journal of Healthcare Management

Using Time-Driven Activity-Based Costing to Model the Costs of Various Process-Improvement Strategies in Acute Pain Management

By: Popat, Keyuri, Kelly Ann Gracia, Alexis B. Guzman, and Thomas W. Feeley

Abstract—Pain control for patients undergoing thoracic surgery is essential for their comfort and for improving their ability to function after surgery, but it can significantly increase costs. Here, we demonstrate how time-driven activity-based costing (TDABC) can be used to assess personnel costs and create process-improvement strategies. We used TDABC to evaluate the cost of providing pain control to patients undergoing thoracic surgery and to estimate the impact of specific process improvements on cost. Retrospective healthcare utilization data, with a focus on personnel costs, were used to assess cost across the entire cycle of acute pain medicine delivery for these patients. TDABC was used to identify possible improvements in personnel allocation, workflow changes, and epidural placement location and to model the cost savings of those improvements. We found that the cost of placing epidurals in the preoperative holding room was less than that of placing epidurals in the operating room. Personnel reallocation and workflow changes resulted in mean cost reductions of 14% with epidurals in the holding room and 7% cost reductions with epidurals in the operating room. Most cost savings were due to redeploying anesthesiologists to duties that are more appropriate and reducing their unnecessary duties by 30%. Furthermore, the change in epidural placement location alone in 80% of cases reduced costs by 18%. These changes did not compromise quality of care. TDABC can model personnel costs and process improvements in delivering specific healthcare services and justify further investigation of process improvements.

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  • in press
  • Journal of Personality and Social Psychology

Handshaking Promotes Deal-Making By Signaling Cooperative Intent

By: Schroeder, Juliana, Jane L. Risen, Francesca Gino, and Michael I. Norton

Abstract—We examine how a simple handshake—a gesture that often occurs at the outset of social interactions—can influence deal-making. Because handshakes are social rituals, they are imbued with meaning beyond their physical features. We propose that during mixed-motive interactions, a handshake is viewed as a signal of cooperative intent, increasing people’s cooperative behavior and affecting deal-making outcomes. In Studies 1a and 1b, pairs who chose to shake hands at the onset of integrative negotiations obtained better joint outcomes. Study 2 demonstrates the causal impact of handshaking using experimental methodology. Study 3 suggests one driver of the cooperative consequence of handshaking: negotiators expected partners who shook hands to behave more cooperatively than partners who avoided shaking hands or partners whose nonverbal behavior was unknown; these expectations of cooperative intent increased negotiators’ own cooperation. Study 4 uses an economic game to demonstrate that handshaking increased cooperation even when handshakes were uninstructed (vs. instructed). Further demonstrating the primacy of signaling cooperative intent, handshaking actually reduced cooperation when the action signaled ill intent (e.g., when the handshaker was sick; Study 5). Finally, in Study 6, executives assigned to shake hands before a more antagonistic, distributive negotiation were less likely to lie about self-benefiting information, increasing cooperation even to their own detriment. Together, these studies provide evidence that handshakes, ritualistic behaviors imbued with meaning beyond mere physical contact, signal cooperative intent and promote deal-making.

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Economic Integration and Democracy: An Empirical Investigation

By: Magistretti, Giacomo, and Marco Tabellini

Abstract—We study whether economic integration fosters the process of democratization and the channels through which this might happen. Our analysis is based on a large panel dataset of countries between 1950 and 2014. We instrument actual trade with predicted trade constructed by estimating a time-varying gravity equation similar to Feyrer (2009). We find that economic integration has a positive effect on democracy, driven by trade with democratic partners and is stronger for countries with lower initial levels of economic and institutional development. These results are consistent with a learning/cultural exchange process whereby economic integration promotes the spread of democracy from more to less democratic countries. We corroborate this interpretation by providing evidence against alternative mechanisms, such as income effects, human capital accumulation, and trade-induced changes in inequality.

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Abstract—In this paper, I show that political opposition to immigration can arise even when immigrants bring significant economic prosperity to receiving areas. I exploit exogenous variation in European immigration to U.S. cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s and instrument immigrants’ location decision relying on pre-existing settlement patterns. Immigration increased natives’ employment and occupational standing and fostered industrial production and capital utilization. However, despite these economic benefits, it triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower public goods provision. Stitching the economic and the political results together, I provide evidence that natives’ backlash was, at least in part, due to cultural differences between immigrants and natives, suggesting that diversity might be economically beneficial but politically hard to manage.

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  • Harvard Business School Case 318-085

Gender and Free Speech at Google

In August 2017, Google fired James Damore, a 28-year-old software engineer who had been employed by the company since 2013. The move came after Damore penned an internal company memo titled “Google’s Ideological Echo Chamber,” which posited that innate biological differences between men and women—as opposed to hiring biases, gender discrimination, or a hostile workforce—were at least partially responsible for the low numbers of women in tech. At the time, 20% of Google’s tech workforce, and 31% of its overall staff, was female. Damore also admonished Google for silencing opinions that challenged what he viewed as the company’s politically liberal belief system. Reactions to both the memo’s content and Google’s decision to fire Damore were swift and varied. Some praised the company for signaling intolerance of any marginalization of women. Others criticized Google for terminating an employee for a seemingly innocuous act of expression. Danielle Brown, Google’s new vice president and chief diversity and inclusion officer, hired just a few weeks before the memo was leaked to the public, must now advise Google’s top leadership team on dealing with the fallout.

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  • Harvard Business School Case 218-100

Chaudhary Group: Rebuilding Nepal

After the 2015 Nepal earthquake, the Chaudhary Group, a billion-dollar conglomerate in Nepal, decides to play a pivotal role in rebuilding the country. The Group's philanthropic arm (Chaudhary Foundation) works with stakeholders and develops a blue print for short- and long-term relief measures. The management needs to address several questions as they navigate the foundation's course. What element of relief work should the foundation focus on? Should they go beyond addressing the immediate need for shelters and adopt a more holistic development plan? How should they acquire technical expertise and organize themselves to successfully execute this effort? The case focuses on how businesses can drive entrepreneurship and disaster management efforts and be agents for social change in the emerging markets grappling with institutional voids. How should they work with the government in this endeavor? How do they ensure an alignment of these efforts to the group and foundation's long-term focus areas and objectives?

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  • Harvard Business School Case 218-110

Chaudhary Group: Rebuilding Nepal (B)

Supplements the (A) case. Having successfully spearheaded relief work in the aftermath of the Nepal earthquake, the Chaudhary Foundation envisions creating a more comprehensive and sustainable development model. They are keen to build a model village that integrates components of shelter, education, skill development and livelihood creation and affords residents a basic standard of living. What should the blueprint of this sustainable ecosystem include? Who are the stakeholders they should collaborate with on this effort? Can this model be replicated at scale across the country?

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  • Harvard Business School Case 518-079

Membership Rewards® from American Express

Credit and charge card issuer American Express (Amex) had developed a strong reputation among consumers due in part to its Membership Rewards (MR) loyalty program, first established in 1991. Through MR, all Amex cardholders could accumulate and redeem “points” based on how much they spent, while customers with Amex’s Gold and Platinum Cards received additional perks. By 2016, however, the U.S. credit card market had become increasingly competitive, with many credit card companies increasing their sign-on point bonuses for new customers. Chris Cracchiolo, Amex’s vice president of U.S. loyalty, strategy, and global partnerships, had to decide how to position the MR program in the face of this competition. Should Amex begin offering more competitive sign-on bonuses and point redemption rates, or would this dilute the company’s strong brand?

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