More from these Authors

• Working Paper | HBS Working Paper Series | 2013

  Monitoring and the Portability of Soft Information

  Dennis Campbell and Maria Loumioti

  We study the portability of soft information in a decentralized financial institution. Theories from a variety of literatures suggest that difficulties in capturing, storing, and communicating soft information can inhibit its portability over time and across individuals within the organization. Using unique data on lending decisions made by employees in a highly decentralized financial services organization, we show that a monitoring system which captures soft information for vertical communication (to superiors) purposes also facilitates the horizontal communication of soft information (across employees) for decision-making purposes. Contrary to prevailing views on the limited portability of soft information, our results provide evidence that the "stock" of soft information accumulated in this system has persistent effects on the lending decisions of employees. We show that employees rely on this information to increase access to credit for borrowers, provide more favorable pricing terms, and reduce the ex post risk of their lending decisions. These effects remain even when this information was acquired by employees other than the decision-maker, and they are not diminished by the physical separation of employees working in different business units.

  Citation:

  Campbell, Dennis, and Maria Loumioti. "Monitoring and the Portability of Soft Information." Harvard Business School Working Paper, No. 13–077, March 2013.

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• Case | HBS Case Collection | 2013

  Zappos.com 2009: Clothing, Customer Service, and Company Culture (MM)

  Frances X. Frei and Robin J. Ely

  On July 17, 2009, Zappos.com, a privately-held online retailer of shoes, clothing, and other soft-line retail categories, learned that Amazon.com, a $19 billion multinational online retailer, had won its Board of Directors' approval to offer to merge the two companies. Amazon had been courting Zappos since 2005, hoping a merger would enable Amazon to expand and strengthen its market share in soft-line retail categories. While Amazon's interest intrigued Zappos' senior executives, they had not felt the time was right—until now. Amazon's offer—10 million shares of stock (valued at $807 million), $40 million in cash, restricted stock units for Zappos' employees, and a promise that Zappos could operate as an independent subsidiary—was on the table. Zappos' financial advisor, Morgan Stanley, estimated the future equity value of an IPO to be between $650 million and $905 million; this estimate skewed the Amazon offer—at least in financial terms—toward the high end of Zappos' estimated market value. Hsieh and Lin, Zappos' CEO and COO, respectively, knew that much of Zappos' growth, and hence its value, had been due to the company's strong culture and obsessive emphasis on customer service. In 2009, they were focusing on the three C's—clothing, customer service, and company culture—the keys to the company's continued growth. Hsieh and Lin had only a few days to consider whether to recommend the merger to Zappos' board at their July 21 meeting.

  Citation:

  Frei, Frances X., and Robin J. Ely. "Zappos.com 2009: Clothing, Customer Service, and Company Culture (MM)." Harvard Business School Video Case 612-701, January 2013.

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• Case | HBS Case Collection | 2012 (Revised from original 2008 version)

  Affinity Plus (A)

  Dennis Campbell and Peter Tufano

  The executive team at Affinity Plus Federal Credit Union has pushed the concept of members first deeply throughout the organization, empowering employees to put member-owners' interests ahead of either the organization's interests or their own interests. As a result of this focus, the credit union must determine what to do with its profitable indirect auto lending business, which some see as inconsistent with the strategic direction set by the management team.

  Keywords: Customer Relationship Management; Financial Institutions; Financing and Loans; Profit; Cooperative Ownership; Conflict of Interests; Strategy;

  Citation:

  Campbell, Dennis, and Peter Tufano. "Affinity Plus (A)." Harvard Business School Case 209-026, October 2012. (Revised from original July 2008 version.)

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