Information will be updated throughout the summer and fall.

Shelley Xin Li

Boss, Cut Me Some Slack – Employee-initiated Innovation and Execution Task Time Constraints
Prior literature in motivating innovation has largely ignored the problem of motivating innovation in the presence of existing execution tasks - a typical problem in real-world organizations. Looking inside the “black box” of a firm, this paper examines the conditions under which loosely enforcing time constraints on execution tasks is associated with a higher probability of employees initiating bottom-up innovations. Using archival data from a software company, I find that loosely enforcing the time constraints on execution tasks is significantly associated with a higher probability of self-initiated innovation at the employee level after controlling for project and individual characteristics. Consistent with the economic theory of relational contract, this effect is more positive when: (1) the looser enforcement of time constraints is likely to be anticipated by employees; (2) the supervisor values innovation; (3) the employee has a pre-existing preference for innovation. I find no statistically significant association between loosely enforcing time constraints on execution tasks and self-initiated innovation in the absence of the above conditions. Together, these findings suggest the important role of informal management control mechanisms in facilitating innovation.
Faculty Advisor(s): D. CampbellS. Datar, and V. Narayanan

Sa-Pyung (Sean) Shin

Takeover Defenses in the Era of Shareholder Activism
This paper examines the interplay between takeover defenses and shareholder activism. Takeover defense measures that evolved to protect companies from the threat of hostile takeovers are playing an important role in shareholder activism campaigns. Using a comprehensive sample of shareholder activism events between 2006 and 2013, I find that firms with a dual class structure and a staggered board are less likely to be targeted by activists while a poison pill in force draws more activism. On the other hand, the board is more likely to adopt a poison pill when activists approach, especially when they hold large ownership and make takeover-related demands. However, poison pill adoption does not seem to serve defensive purposes. Activists are more likely to demand removal of takeover defense measures and/or sale of the target firm if the firm has a staggered board or a poison pill in place. This finding suggests that when takeover defenses block the market for corporate control activists promote changes through their interventions. Finally, I find that firms with takeover defenses are more likely to be acquired following activism, which suggests that activism can act as an antidote to takeover defenses.
Faculty Advisor(s): S. SrinivasanP. Healy, and I. Gow

Business Economics

Benjamin Lockwood

Present Bias and the Optimal Taxation of Low Incomes
Labor effort often entails up-front costs in exchange for delayed benefits: pay periods are intermittent, effort may be verifiable only after time, and on-the-job training may raise future productivity. Such delays imply that present biased individuals may be tempted to work too little. Sophisticated individuals can mitigate this temptation by entering labor commitment contracts with employers, e.g., by promising to work 40 hours per week. This paper presents a model in which individuals sign such contracts with employers, and in which a social planner can employ a nonlinear income tax to improve welfare. Under general conditions, labor commitment contracts can be sustained only if a worker’s outside option (job loss) is sufficiently unattractive relative to employment. As a result, workers with low wages or high risk of job turnover may be unable to sustain their private optimum. A guaranteed basic income, of the kind deemed optimal in standard redistributive tax models, exacerbates this problem. In this environment, a stark result emerges: negative marginal tax rates are optimal at low incomes. This result provides a rationale for work subsidies such as the Earned Income Tax Credit, and may provide guidance about how to structure redistribution in the face of growing wage inequality. A calibrated model of the US economy gives rise to an optimal tax schedule with negative marginal tax rates on low incomes which are comparable to the EITC.
Faculty Advisor(s): R. ChettyN. HendrenD. Laibson, and M. Weinzierl

Health Policy (Management)

Hummy Song

Adopting Coworkers’ Best Practices: Public Relative Performance Feedback as a Tool for Standardizing Workflow
In complex service systems, standardizing all processes can be challenging due to variability in customer needs and differences in worker behaviors. In such settings, standardizing workflows may be an effective way to improve operational performance. We explore how public disclosure of relative performance feedback (RPF) on individual workers’ processing times can help standardize workflow and improve productivity by facilitating the identification and diffusion of best practices around workflow. Using three years of patient encounter data from two emergency departments, one of which changed from privately to publicly disclosing RPF to physicians, we find a significant improvement in productivity and no significant reduction in overall quality associated with implementing public RPF. We examine three potential mechanisms that may drive this effect: motivation to be top-ranked, motivation to avoid the shame of being bottom-ranked, and the identification and diffusion of best practices around workflow. We find the dominant mechanism to be the identification and diffusion of best practices that is enabled by public RPF. Accordingly, we find that the benefits of best practice adoption enabled by public RPF are greater when standardized processes are presently not in place compared to when they are.
Faculty Advisor(s): R. Huckman (Co-Chair), A. Tucker (Co-Chair), R. Buell, and S.Singer


Patricia Satterstrom

Using Multi-disciplinary Teams to Renegotiate Power in Hierarchical Organizations
Power hierarchies are ubiquitous and difficult to change, reinforced by conscious and unconscious factors as well as social-structural systems. There is evidence that power structures can change, yet we know little about the micro-processes that unfold over time that help create such change. My dissertation is based on a 31-month longitudinal inductive study of “change teams” in primary health care clinics. These teams were specifically charged with moving their organization from a hierarchical structure to a more team-based structure. Through close observation of their weekly team meetings, coupled with extensive interviews and examination of archival data, I identify the in situ moments in a team’s life when members provide information that could, over time, undermine taken-for-granted assumptions about power distribution. I induce a process theory of how small openings, which I call microwedges, allow the team to form a different understanding of how they can engage with each other and their work, relying less on hierarchy and more on individuals’ skills, experience, and interests. My dissertation extends and generates theory about power, empowerment, and heterarchy (power transitions) in teams. It also has practical implications for how team members experience and engage with power differences, how they alter power structures in their own teams, and how they can help their organizations engage more fluidly with power.
Faculty Advisor(s): J. Polzer (Chair), L. PerlowA. KnightH.Gardner, and S. Singer

Luciana Silvestri

Trajectories in Identity and Organization
My dissertation explores the microfoundations of organizing in fast-paced industries. In particular, it examines the co-evolution between role identity and organizational structure through a 2-year longitudinal, qualitative-inductive, multi-level study conducted at a leading social media company. In my first paper, I seek to explain how an evolving sense of who I am (alternatively,who we are) becoming in a role shapes the structural mechanisms that make enacting the role possible. I analyze how individuals’ role identity trajectories enable the discovery of new tasks, interdependencies, and linkages over time, and how these trajectories help co-construct the units’ identity and area of influence in the organization. In the second paper, I examine how the threat of a reorganization prompts units to surface hidden tasks, interdependencies, and linkages, and to seek legitimacy for enhanced roles and role identities from different audiences within the organization. Lastly, in the third paper I analyze how individuals attempt to reorient their identity trajectories when a reorganization irreversibly alters the structural conditions that support their role. I examine how reorganizations make individuals’ role identity trajectories in the role salient (who have I / who have we become thus far in this role?) and raise concerns regarding the continuity of one’s sense of self at work (who will I / who will we become as the role changes?).
Faculty Advisor(s): R. Gulati (Chair), M. Tushman, and R. Ely


Kate Barasz

Pseudo-Set Framing
Five studies demonstrate that arbitrarily grouping items or tasks together as part of an apparent “set” motivates people to reach perceived completion points: to finish a pseudo-set. We use both verbal (e.g., “there are four tasks in every set”) and visual cues (e.g., a four-slice pie chart that “fills in” as tasks are completed) to show that pseudo-set framing affects task completion patterns. Specifically, pseudo-set framing alters perceptions of completeness, making intermediate progress (e.g., “3 of 4 tasks done”) seem less complete; in turn, this feeling of incompleteness motivates people to persist until the pseudo-set has been fulfilled. Pseudo-set framing changes giving behavior (Studies 1 and 5), effort (Studies 2 and 3), and gambling (Study 4). The effects persist in the absence of any reward, when a cost must be incurred, and even when participants are explicitly informed that set size is completely arbitrary.
Faculty Advisor(s): M. Norton (Chair), L. John, and J. Gourville

Pavel Kireyev

Prize Allocation and Entry in Ideation Contests
Contests are a popular mechanism for the procurement of creative innovation. In marketing, firms often organize contests online, offering prizes to encourage competition and solicit high-quality ideas for ads, new products, and even marketing strategies from participants. I empirically investigate the impact of the number of prizes, prize amount and submission limit on participation and quality outcomes in ideation contests using data from a popular marketing crowdsourcing platform. I develop a structural model of participant entry and sponsor choice in contests with multiple prizes and heterogeneous participants. Counterfactual simulations reveal the impact of design parameters on participation and quality outcomes: multiple prizes discourage stronger participants and encourage weaker participants but do not have a substantial impact on outcomes in contests that attract a large number of submissions; a larger prize increases expected maximum, total and average idea quality but may not substantially increase participation; a submission limit increases the number of entrants but reduces expected maximum and total idea quality. The results provide guidance for the optimal design of ideation contests.
Faculty Advisor(s): E. OfekS. Gupta, and A. Pakes

Bhavya Mohan

Lifting the Veil: The Benefits of Cost Transparency
A firm’s costs are typically tightly-guarded secrets. However, across a field study and six laboratory experiments we identify when and why firms benefit from revealing unit cost information to consumers. A natural field experiment conducted with an online retailer suggests that cost transparency boosts sales. Six subsequent controlled lab experiments replicate this basic effect (Studies 2-6) and provide evidence for why it occurs: just as interpersonal disclosure of intimate information increases attraction, cost transparency by a firm increases brand attraction, in turn boosting consumer purchase interest. This relationship persists even after controlling for perceptions of price fairness and product quality (Study 3). Study 4 suggests that the beneficial effect of cost transparency holds when firms spend more on “less desirable” costs relative to “more desirable” costs. Studies 5-6 show that the effect of cost transparency weakens when high profit margins are made salient. Finally, Study 7 shows that the beneficial effect reverses (i.e. cost transparency backfires) when it is revealed that a firm’s profit margins are high relative to those of its competitors.
Faculty Advisor(s): R. Deshpande (Chair), R. Buell, and L. John

Lingling Zhang

The Two Faces of Size: An Analysis of Price Bargaining and Platform Competition in the US Daily Deal Market
The platform—a business model that creates value by connecting groups of users—is increasingly popular in many industries. Extant papers largely assume that platforms dominate the pricing decision, whereas in practice, prices in business-to-business transactions are often determined by a bargaining process. We study how the relative bargaining power of business partners affects pricing and competition in a two-sided market. We compile a unique and comprehensive dataset using sales data from the US daily deal market and specify a structural model based on Nash bargaining solutions. We find that Groupon, the larger deal platform, has more price-bargaining power than LivingSocial and that larger and chain merchants have more bargaining power than smaller and independent merchants. The difference in bargaining power between different types of merchant, interestingly, is more substantial on LivingSocial than on Groupon. Therefore, the size of a platform plays a double-edged role: while a larger customer base helps attract merchants, the platform’s bargaining power may motivate some merchants to also work with its smaller competitors, over which they have more influence on price setting. Our counterfactual results show that the allocation of price-bargaining power plays an important role in the daily deal markets and that the merchants are significantly worse off if the platforms dominate the pricing decision. We also estimate how much a platform might overspend on acquiring a merchant if the platform’s salesforce assumes it has more bargaining power than it actually does.
Faculty Advisor(s): D. Chung (Co-Chair), A. Elberse (Co-Chair), and S. Gupta


Megan Lawrence

Re-learning to Restock: The Impact of Prior Experience on Learning-by-Doing
Abstract forthcoming.
Faculty Advisor(s): F. Oberholzer-Gee (Chair), J. AlcacerV. Bennett, and J. Rivkin

Sarah Wolfolds

Competing Business Models, Profit Status, and Regulatory Change: An Empirical Analysis of Microfinance in Latin America
Using the unique setting of microfinance where non-profits and for-profits directly compete in the same industry, this paper investigates how different business models coexist and evolve over time. First, I model the potential objectives of microfinance organizations to develop the hypotheses and motivate the empirical work. Then, using self-reported financial and organizational data from microfinance organizations, this paper utilizes clustering analysis where I find distinct business models, characterized by differences in internal and external organizational and operational choices and outcomes. My results indicate that profit status remains an important characteristic even after clustering on these characteristics, as non-profits are not as capable of transitioning to compete “like a for-profit” following a regulatory change which incentivizes this more profit-oriented business model. The joint use of business model and profit status sheds light on both the business model literature, as profit status is an easily identifiable source of organizational variation to exploit, and on the non-profit literature, as the coexistence of for-profits and non-profits in this industry is less puzzling when one considers the use of distinct business models within an industry.
Faculty Advisor(s): D. Yao (Chair), H. Luo, and J.Siegel

Technology & Operations Management

Budhaditya Gupta

A Recombination Based Internationalization Model: Perspectives from Narayana Health’s Journey from India to the Cayman Islands
In this paper we present a longitudinal study of the expansion of Narayana Health, a healthcare provider, within India and its subsequent development of a tertiary care hospital in the Cayman Islands. Contrary to past research that suggests that the alignment of a firm’s knowledge and practices to the home country context can make internationalization difficult, we explain how the Cayman project benefited from NH’s experiences within India. First, NH sensed how the external context affects its operations and developed context based design capabilities while responding to, and shaping, the institutional context and designing multiple operating models for the different market segments in India. These, in turn, informed and enabled the Cayman project. Second, NH could selectively recombine the select practices and knowledge elements associated with the different models in India while setting up the Cayman hospital. Building on these findings, we develop a recombination-based process model of internationalization that builds on (1) the acquisition of deep understanding of context and a diverse set of knowledge and practices while adapting to the home country context, (2) retention of these elements in organizational memory and finally (3) intelligent retrieval and recombination of select home country elements in the host country. The proposed model is significant as it suggests an effective alternative to the much discussed replication versus adaptation balancing act while developing an operating model in the host country.
Faculty Advisor(s): T. Khanna (Co-Chair), S. Thomke (Co-Chair), and R. McDonald