Rebecca M. Henderson
John and Natty McArthur University Professor
Rebecca Henderson is the John and Natty McArthur University Professor at Harvard University, where she has a joint appointment at the Harvard Business School in the General Management and Strategy units and is the Co-Director of the Business and Environment Initiative. Professor Henderson is also a research fellow at the National Bureau of Economic Research. Her work explores how organizations respond to large-scale technological shifts, most recently in regard to energy and the environment. She teaches Leadership and Corporate Accountability and the field study seminar Building Green Businesses in the MBA Program.
From 1998 to 2009, Professor Henderson was the Eastman Kodak Professor of Management at the Sloan School of the Massachusetts Institute of Technology, where she ran the strategy group and taught courses in strategy, technology strategy, and sustainability. She received an undergraduate degree in mechanical engineering from MIT and a doctorate in business economics from Harvard.
Professor Henderson sits on the boards of Amgen and of IDEXX Laboratories, and she has worked with both members of the Fortune 100 and small, technology-orientated start-ups. She was retained by the U.S. Department of Justice in connection with the remedies phase of the Microsoft trial, and in 2001 she was named Teacher of the Year at the Sloan School. Her work has been published in a range of scholarly journals including Administrative Science Quarterly, The Quarterly Journal of Economics, Strategic Management Journal, Management Science, Research Policy, The RAND Journal of Economics, and Organization Science.
Her most recent publication is Accelerating Energy Innovation: Insights from Multiple Sectors, edited jointly with Richard Newell and published by the University of Chicago Press for National Bureau of Economic Research.
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Article
| Organization Science
|
Relational Contracts and Organizational Capabilities
Robert Gibbons and Rebecca Henderson
A large literature identifies unique organizational capabilities as a potent source of competitive advantage, yet our knowledge of why capabilities fail to diffuse more rapidly—particularly in situations in which competitors apparently have strong incentives to adopt them and a well-developed understanding of how they work—remains incomplete. In this paper, we suggest that competitively significant capabilities often rest on managerial practices that in turn rely on relational contracts (i.e., informal agreements sustained by the shadow of the future). We argue that one of the reasons these practices may be difficult to copy is that effective relational contracts must solve the twin problems of credibility and clarity and that although credibility might, in principle, be instantly acquired, clarity may take time to develop and may interact with credibility in complex ways so that relational contracts may often be difficult to build.
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Article
| Management Science
|
Getting Big Too Fast: Strategic Dynamics with Increasing Returns and Bounded Rationality
Rebecca M. Henderson, John Sterman, Eric Beinhocker and Lee Newman
Keywords: Strategy;
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Article
| Journal of Economics & Management Strategy
|
Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel
Annabelle Gawer and Rebecca M. Henderson
Keywords: Ownership;
Innovation and Invention;
Markets;
Technology;
Computer Industry;
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Article
| Annales d'économie et de statistique
|
Knowledge Spillovers, Geographic Location, and the Productivity of Pharmaceutical Research
Jeffrey Furman, Margaret K. Kyle, Iain Cockburn and Rebecca M. Henderson
Keywords: Geographic Location;
Knowledge;
Health;
Research;
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Article
| Journal of Product Innovation Management
|
The Innovator's Dilemma as a Problem of Organizational Competence
Rebecca M. Henderson
Keywords: Innovation and Invention;
Problems and Challenges;
Organizations;
Competency and Skills;
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Article
| Organization Science
|
Inertia and Incentives: Bridging Organizational Economics and Organizational Competence
Rebecca M. Henderson and Sarah Kaplan
Keywords: Motivation and Incentives;
Economics;
Competency and Skills;
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Comment
| American Economic Review
|
Patent Citations and the Geography of Knowledge Spillovers: A Reassessment: Comment
Rebecca M. Henderson, Adam Jaffe and Manuel Trajtenberg
Keywords: Patents;
Knowledge;
Information;
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Article
| Advances in Strategic Management
|
Do Firms Change Capabilities by Hiring New People? A Study of the Adoption of Science-based Drug Discovery
Rebecca M. Henderson, Nicola Lacetera and Iain Cockburn
Keywords: Selection and Staffing;
Change;
Science;
Health;
Information;
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Article
| Industrial and Corporate Change
|
Discontinuities and Senior Management: Assessing the Role of Recognition in Pharmaceutical Firm Response to Biotechnology
Rebecca M. Henderson, Sarah Kaplan and Fiona Murray
Keywords: Management;
Science;
Technology;
Biotechnology Industry;
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Article
| Management Science
|
Putting Patents in Context: Exploring Knowledge Transfer from MIT
Ajay Agrawal and Rebecca M. Henderson
Keywords: Patents;
Knowledge Sharing;
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Article
| Journal of Health Economics
|
Scale and Scope in Drug Development: Unpacking the Advantages of Size in Pharmaceutical Research
Rebecca Henderson and Iain Cockburn
Keywords: Research and Development;
Health;
Size;
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Article
| Economic Institutions of Strategy
|
Putting Patents in Context: Exploring Knowledge Transfer from MIT
Rebecca M. Henderson and Ajay Agrawal
Keywords: Patents;
Knowledge Sharing;
Citation: Henderson, Rebecca M., and Ajay Agrawal. "Putting Patents in Context: Exploring Knowledge Transfer from MIT." Economic Institutions of Strategy 21 (fall 2000): 1123–1145. (Reprinted in Advances in Strategic Management, Volume 26, Economic Institutions of Strategy," edited by J. Nickerson and B. Silverman, 2009.)
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Article
| Strategic Management Journal
|
Untangling the Origins of Competitive Advantage
Rebecca M. Henderson, Iain Cockburn and Scott Stern
Citation: Henderson, Rebecca M., Iain Cockburn, and Scott Stern. " Untangling the Origins of Competitive Advantage." Strategic Management Journal 21 (fall 2000): 1123–1145. (Reprinted in The SMS Blackwell Handbook of Organizational Capabilities: Emergence, Development and Change, edited by C. Helfat. Oxford: Blackwell, 2003.)
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Article
| Research Technology Management
|
Drug Industry Mergers Won't Necessarily Benefit R&D
Rebecca M. Henderson
Keywords: Mergers and Acquisitions;
Health;
Research and Development;
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Article
| Journal of Industrial Economics
|
Absorptive Capacity, Coauthoring Behavior, and the Organization of Research in Drug Discovery
Rebecca M. Henderson and Iain Cockburn
Keywords: Behavior;
Research and Development;
Organizations;
Health;
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Article
| Production and Operations Management
|
The Perils of Excellence: Barriers to Effective Process Improvement in Product-Driven Firms
Rebecca M. Henderson, Jesus del Alamo, Todd Becker, James Lawton, Peter Moran, Saul Shapiro and Dean Vlasak
Keywords: Product;
Performance Improvement;
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Article
| Strategic Management Journal
|
The Interactions of Organizational and Competitive Influences on Strategy and Performance
Rebecca M. Henderson and Will Mitchell
Keywords: Organizations;
Competition;
Strategy;
Performance;
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Article
| Economics of Innovation and New Technology
|
University versus Corporate Patents: A Window on the Basicness of Invention
Rebecca M. Henderson, Adam Jaffe and Manuel Trajtenberg
Keywords: Higher Education;
Patents;
Innovation and Invention;
Business Ventures;
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Article
| RAND Journal of Economics
|
Scale, Scope and Spillovers: The Determinants of Research Productifity in Drug Discovery
Rebecca M. Henderson and Ian Cockburn
Keywords: Research;
Product;
Health;
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Article
| Journal of Health Economics
|
Scale and Scope in Drug Development: Unpacking the Advantages of Size in Pharmaceutical Research
Rebecca M. Henderson and Iain Cockburn
Keywords: Research and Development;
Health;
Size;
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Article
| Research Policy
|
Of Life Cycles Real and Imaginary: The Unexpectedly Long Old Age of Optical Lithography
Rebecca M. Henderson
Keywords: Health;
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Article
| Journal of Economics & Management Strategy
|
Racing to Invest? The Dynamics of Competition in Ethical Drug Discovery
Rebecca M. Henderson and Ian Cockburn
Keywords: Investment;
Competition;
Ethics;
Health;
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Article
| Strategic Management Journal
|
Measuring Competence? Exploring Firm Effects in Drug Discovery
Rebecca M. Henderson and Ian Cockburn
Keywords: Measurement and Metrics;
Competency and Skills;
Health;
Citation: Henderson, Rebecca M., and Ian Cockburn. " Measuring Competence? Exploring Firm Effects in Drug Discovery." Strategic Management Journal 15 (winter 1994): 63–84. ( Winner of Dan and Mary Lou Schendel Best Paper Prize To honor substantial work published in the Strategic Management Journal presented by Strategic Management Society .)
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Article
| Industrial and Corporate Change
|
The Evolution of Integrative Capability: Innovation in Cardiovascular Drug Discovery
Rebecca M. Henderson
Keywords: Innovation and Invention;
Health;
Integration;
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Article
| Harvard Business Review
|
Managing Innovation in the Information Age
Rebecca M. Henderson
Keywords: Management;
Innovation and Invention;
Information;
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Article
| Quarterly Journal of Economics
|
Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations
Rebecca M. Henderson, Adam Jaffe and Manuel Trajtenberg
Keywords: Knowledge Sharing;
Patents;
Geography;
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Article
| RAND Journal of Economics
|
Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Industry
Rebecca Henderson
Keywords: Investment;
Competency and Skills;
Innovation and Invention;
Fine Arts Industry;
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Article
| IEEE Transactions on Semiconductor Manufacturing
|
A Process Control Methodology Applied to Manufacturing GaAs MMICs
Rebecca M. Henderson, Peter Moran, Scott Andrew Elliott, Neil Wylie and Jesus del Alamo
Keywords: Production;
Manufacturing Industry;
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Article
| Design Management Journal
|
Breaking the Chains of Embedded Knowledge: Architectural Innovation as a Source of Competitive Advantage
Rebecca M. Henderson
Keywords: Knowledge;
Design;
Innovation and Invention;
Competitive Advantage;
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Article
| SAMPE Journal
|
Manufacturing Costs for Advanced Composites Aerospace Parts
Rebecca M. Henderson, C. Shipp and T. Gutowski
Keywords: Production;
Cost;
Aerospace Industry;
Citation: Henderson, Rebecca M., C. Shipp, and T. Gutowski. "Manufacturing Costs for Advanced Composites Aerospace Parts." SAMPE Journal 27, no. 3 (May–June 1991).
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Article
| Administrative Science Quarterly
|
Architectural Innovation: The Reconfiguration of Existing Product Technologies and The Failure of Established Firms
Rebecca M. Henderson and Kim B. Clark
Keywords: Design;
Innovation and Invention;
Product;
Technology;
Failure;
Business Ventures;
Citation: Henderson, Rebecca M., and Kim B. Clark. " Architectural Innovation: The Reconfiguration of Existing Product Technologies and The Failure of Established Firms." Administrative Science Quarterly 35, no. 1 (March 1990): 9–30. (Reprinted in The Management of Innovation, edited by John Storey, London: Elgar, 2004; Managing Strategic Innovation and Change, edited by M.Tushman and P. Anderson, Oxford University Press, 2004; and in Strategic Management of Technology and Innovation, edited by Robert Burgelman, Clayton Christensen and Steven Wheelwright. Oxford University Press, 2004. Translated into Chinese for inclusion in an ASQ sponsored collection of "best papers" in 2005.)
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Chapter
| The Rate and Direction of Inventive Activity Revisited
| 2012
Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM
Timothy F. Bresnahan, Shane Greenstein and Rebecca M. Henderson
We address a longstanding question about the causes of creative destruction. Dominant incumbent firms, long successful in an existing technology, are often much less successful in new technological eras. This is puzzling, since a cursory analysis would suggest that incumbent firms have the potential to take advantage of economies of scope across new and old lines of business and, if economies of scope are unavailable, to simply reproduce entrant behavior by creating a "firm within a firm." There are two broad streams of explanation for incumbent failure in these circumstances. One posits that incumbents fear cannibalization in the marketplace and so under-invest in the new technology. The second suggests that incumbent firms develop organizational capabilities and cognitive frames that make them slow to "see" new opportunities and that make it difficult to respond effectively once the new opportunity is identified. In this paper we draw on two of the most important historical episodes in the history of the computing industry, the introduction of the PC and of the browser, to develop a third hypothesis. Both IBM and Microsoft, having been extremely successful in an old technology, came to have grave difficulties competing in the new, despite some dramatic early success. We suggest that these difficulties do not arise from cannibalization concerns or from inherited cognitive frames. Instead they reflect diseconomies of scope rooted in assets that are necessarily shared across both businesses. We show that both Microsoft and IBM were initially very successful in creating freestanding business units that could compete with entrants on their own terms, but that as the new businesses grew, the need to share key firm-level assets imposed significant costs on both businesses and created severe organizational conflict. In IBM and Microsoft's case this conflict eventually led to control over the new business being given to the old and that in both cases effectively crippled the new business.
Citation: Bresnahan, Timothy F., Shane Greenstein, and Rebecca M. Henderson. "Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM." In The Rate and Direction of Inventive Activity Revisited, edited by Josh Lerner, and Scott Stern. University of Chicago Press, 2012.
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Chapter
| The Handbook of Organizational Economics
| Forthcoming
What Do Managers Do? Exploring Persistent Performance Differences among Seemingly Similar Enterprises
Rebecca Henderson and Robert Gibbons
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Chapter
| Next Generation Business Handbook: New Strategies from Tomorrow's Thought Leaders
| 2004
Strategic Advantage and the Dynamics of Organizational Competence
Rebecca M. Henderson and S. Chowdhury
Keywords: Competitive Advantage;
Competency and Skills;
Organizational Design;
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Chapter
| Innovation Policy and the Economy
| 2011
Publicly Funded Science and the Productivity of the Pharmaceutical Industry
Rebecca Henderson and Iain Cockburn
Keywords: Public Sector;
Science-Based Business;
Research and Development;
Sovereign Finance;
Pharmaceutical Industry;
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Chapter
| Advances in Strategic Management
| 1998
'Luck', 'Leadership' and 'Strategy': Economics Meets Sociology
Rebecca M. Henderson
Keywords: Leadership;
Situation or Environment;
Strategy;
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Chapter
| The Nature and Dynamics or Organizational Capabilities
| 2000
Measuring Competence? Exploring firm Effects in Drug Discovery
Rebecca M. Henderson and Iain Cockburn
Keywords: Competency and Skills;
Measurement and Metrics;
Research and Development;
Innovation and Invention;
Pharmaceutical Industry;
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Chapter
| Pharmaceutical Innovation
| 1999
The Economics of Drug Discovery
Rebecca M. Henderson and Iain Cockburn
Keywords: Economics;
Innovation and Invention;
Research and Development;
Pharmaceutical Industry;
Citation: Henderson, Rebecca M., and Iain Cockburn. " The Economics of Drug Discovery." Chap. 5 in Pharmaceutical Innovation, edited by Ralph Landau, Basil Achilladelis, and Alexander Scriabine, 308–331. Philadelphia: Chemical Heritage Press, 1999.
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Chapter
| Sources of Industrial Leadership: Studies of Seven Industries
| 1999
The Pharmaceutical Industry and the Revolution in Molecular Biology: Interactions Among Scientific, Institutional, and Organizational Change
Rebecca Henderson, Gary P. Pisano and Luigi Orsenigo
Keywords: Science-Based Business;
Organizational Change and Adaptation;
Transformation;
Pharmaceutical Industry;
Citation: Henderson, Rebecca, Gary P. Pisano, and Luigi Orsenigo. "The Pharmaceutical Industry and the Revolution in Molecular Biology: Interactions Among Scientific, Institutional, and Organizational Change." In Sources of Industrial Leadership: Studies of Seven Industries, edited by David Mowery, and Richard Nelson. Cambridge University Press, 1999.
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Chapter
| Technological Innovation: Oversights and Foresights
| 1997
On the Dynamics of Forecasting in Technologically Complex Environments: The Unexpectedly Long Old Age of Optical Lithography
Rebecca M. Henderson
Keywords: History;
Technology;
Situation or Environment;
Complexity;
Forecasting and Prediction;
Technology Industry;
Citation: Henderson, Rebecca M. "On the Dynamics of Forecasting in Technologically Complex Environments: The Unexpectedly Long Old Age of Optical Lithography." In Technological Innovation: Oversights and Foresights, edited by Raghu Garud, Praveen Rattan Nayyar, and Zur Baruch Shapira. New York: Cambridge University Press, 1997.
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Chapter
| Managing Product Development
| 1996
Maintaining Leadership across Product Generations: The Case of Canon in Photolighographic Alignment Equipment
Rebecca M. Henderson
Keywords: History;
Leadership;
Machinery and Machining;
Product Development;
Technology Industry;
Citation: Henderson, Rebecca M. "Maintaining Leadership across Product Generations: The Case of Canon in Photolighographic Alignment Equipment." In Managing Product Development, edited by T. Nishiguchi. New York: Oxford University Press, 1996.
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Chapter
| Managing Product Development
| 1996
Maintaining Leadership across Product Generations: The Case of Canon in Photolighographic Alignment Equipment
Rebecca M. Henderson
Keywords: History;
Product Development;
Citation: Henderson, Rebecca M. "Maintaining Leadership across Product Generations: The Case of Canon in Photolighographic Alignment Equipment." In Managing Product Development, edited by T. Nishiguchi. New York: Oxford University Press, 1996. (Winner of Shingo Prize for Excellence in Manufacturing Research presented by Jon M. Huntsman School of Business.)
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Chapter
| Competitive Strategies in the Pharmaceutical Industry
| 1996
The Determinants of Research Productivity in Ethical Drug Discovery
Rebecca M. Henderson and Ian Cockburn
Keywords: Ethics;
Health Testing and Trials;
Research and Development;
Performance Productivity;
Pharmaceutical Industry;
Citation: Henderson, Rebecca M., and Ian Cockburn. "The Determinants of Research Productivity in Ethical Drug Discovery." In Competitive Strategies in the Pharmaceutical Industry, edited by Robert B. Helms. Washington, D.C.: AEI Press, 1996.
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Chapter
| University Goals, Institutional Mechanisms and the "Industrial Transferability" of Research
| 1996
Trends in University Patenting 1965-1992
Rebecca M. Henderson, Adam Jaffe and Manuel Trajtenberg
Keywords: History;
Patents;
Higher Education;
Trends;
Non-Governmental Organizations;
Education Industry;
Citation: Henderson, Rebecca M., Adam Jaffe, and Manuel Trajtenberg. "Trends in University Patenting 1965-1992." In University Goals, Institutional Mechanisms and the "Industrial Transferability" of Research. Stanford University Press, 1996.
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Chapter
| Transforming Organizations
| 1992
Technological Change and The Management of Architectural Knowledge
Rebecca M. Henderson
Keywords: Technological Innovation;
Knowledge Management;
Citation: Henderson, Rebecca M. "Technological Change and The Management of Architectural Knowledge." In Transforming Organizations, edited by Thomas Kochan, and Michael Useem. New York: Oxford University Press, 1992. (Reprinted in Organizational Learning, edited by Michael D. Cohen and Lee S. Sproull, Calif.: Sage Publications Inc., 1996.)
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Working Paper
| HBS Working Paper Series
| 2013
Managers and Market Capitalism
Rebecca Henderson and Karthik Ramanna
In a capitalist system based on free markets, do managers have responsibilities to the system itself, and, in particular, should these responsibilities shape their behavior when they are attempting to structure those institutions of capitalism that are determined through a political process? A prevailing view—perhaps most eloquently argued by Milton Friedman—is that managers should act to maximize shareholder value, and thus that they should take every opportunity (within the bounds of the law) to structure market institutions so as to increase profitability. We maintain here that if the political process is sufficiently 'thick,' in that diverse views are well-represented and if politicians and regulators cannot be easily captured, then this shareholder-return view of political engagement is unlikely to reduce social welfare in the aggregate and thus damage the legitimacy of market capitalism. However, we contend that sometimes the political process of determining institutions of capitalism is 'thin,' in that managers find themselves with specialized technical knowledge unavailable to outsiders and with little political opposition—such as in the case of determining certain corporate accounting standards that define corporate profitability. In these circumstances, we argue that managers have a responsibility to structure market institutions so as to preserve the legitimacy of market capitalism, even if doing so is at the expense of corporate profits. We make this argument on grounds that it is both in managers' self-interest and, expanding on Friedman, managers' ethical duty. We provide a framework for future research to explore and develop these arguments.
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Working Paper
| HBS Working Paper Series
| 2012
What Do Managers Do? Exploring Persistent Performance Differences among Seemingly Similar Enterprises
Robert Gibbons and Rebecca Henderson
Social networks and social groups have both been seen as important to discouraging malfeasance and supporting the global pro-social norms that underlie social order, but have typically been treated either as pure substitutes or as having completely independent effects. In this paper, I propose that interpersonal relationships between individuals with different social identities play a key role in linking local and global norms, and in supporting social order. Specifically, I show that social identity derived from group memberships moderates the effects of social relationships on pro-social norm observance. I test my predictions using a novel empirical setting consisting of a large online virtual environment. I show that the number of within-group relationships increases and the number of an individual's across-group relationships reduces the prevalence of anti-normative behavior. Furthermore, I show that network closure has a qualitatively different effect between within-group ties and across-group ties. The effects of within-group and across-group ties are moderated by both group characteristics and actor experience, providing boundary conditions on the mechanisms presented here. My findings illustrate the need for a more nuanced view of the complex interrelations between institutions, identity, and networks.
Keywords: Social Norms;
social networks;
Triadic Closure;
Social groups;
Group Identity;
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Working Paper
| HBS Working Paper Series
| 2012
Relational Contracts and Organizational Capabilities
R. Gibbons and R. Henderson
A large literature identifies unique organizational capabilities as a potent source of competitive advantage, yet our knowledge of why capabilities fail to diffuse more rapidly-particularly in situations in which competitors apparently have strong incentives to adopt them and a well developed understanding of how they work-remains incomplete. In this paper we suggest that competitively significant capabilities often rest on managerial practices that in turn rely on relational contracts (i.e., informal agreements sustained by the shadow of the future). We argue that one of the reasons these practices may be difficult to copy is that effective relational contracts must solve the twin problems of credibility and clarity, and that while credibility might in principle be instantly acquired, clarity may take time to develop and may interact with credibility in complex ways, so that relational contracts may often be difficult to build.
Keywords: Competitive Advantage;
Motivation and Incentives;
Management Practices and Processes;
Contracts;
Competency and Skills;
Relationships;
Complexity;
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Working Paper
| HBS Working Paper Series
| 2011
Schumpeterian Competition and Diseconomies of Scope; Illustrations from the Histories of Microsoft and IBM
Timothy Bresnahan, Shane Greenstein and Rebecca Henderson
We address a longstanding question about the causes of creative destruction. Dominant incumbent firms, long successful in an existing technology, are often much less successful in new technological eras. This is puzzling, since a cursory analysis would suggest that incumbent firms have the potential to take advantage of economies of scope across new and old lines of business and, if economies of scope are unavailable, to simply reproduce entrant behavior by creating a "firm within a firm." There are two broad streams of explanation for incumbent failure in these circumstances. One posits that incumbents fear cannibalization in the marketplace, and so under-invest in the new technology. The second suggests that incumbent firms develop organizational capabilities and cognitive frames that make them slow to "see" new opportunities and that make it difficult to respond effectively once the new opportunity is identified. In this paper we draw on two of the most important historical episodes in the history of the computing industry, the introduction of the PC and of the browser, to develop a third hypothesis. Both IBM and Microsoft, having been extremely successful in an old technology, came to have grave difficulties competing in the new, despite some dramatic early success. We suggest that these difficulties do not arise from cannibalization concerns or from inherited cognitive frames. Instead they reflect diseconomies of scope rooted in assets that are necessarily shared across both businesses. We show that both Microsoft and IBM were initially very successful in creating freestanding business units that could compete with entrants on their own terms, but that as the new businesses grew, the need to share key firm-level assets imposed significant costs on both businesses and created severe organizational conflict. In IBM and Microsoft's case this conflict eventually led to control over the new business being given to the old and that in both cases effectively crippled the new business.
Keywords: Experience and Expertise;
Investment;
Technological Innovation;
Resource Allocation;
Failure;
Opportunities;
Prejudice and Bias;
Technology Adoption;
Computer Industry;
Information Technology Industry;
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Working Paper
| HBS Working Paper Series
| 2010
Making the Numbers? 'Short Termism' and the Puzzle of Only Occasional Disaster
Nelson P. Repenning and Rebecca Henderson
Much recent work in strategy and popular discussion suggests that an excessive focus on "managing the numbers"—delivering quarterly earnings at the expense of longer-term investments—makes it difficult for firms to make the investments necessary to build competitive advantage. "Short termism" has been blamed for everything from the decline of the U.S. automobile industry to the low penetration of techniques such as TQM and continuous improvement. Yet a vigorous tradition in the accounting literature establishes that firms routinely sacrifice long-term investment to manage earnings and are rewarded for doing so. This paper presents a model that can reconcile these apparently contradictory perspectives. We show that if the source of long-term advantage is modeled as a stock of capability that accumulates gradually over time, a firm's proclivity to manage short-term earnings at the expense of long-term investment can have very different consequences depending on whether the firm's capability is close to a critical "tipping threshold." When the firm operates above this threshold, managing earnings smoothes revenue with few long-term consequences. Below it, managing earnings can tip the firm into a vicious cycle of accelerating decline. Our results have important implications for understanding managerial incentives and the internal processes that lead to sustained advantage.
Keywords: Investment;
Performance Improvement;
Competitive Advantage;
Earnings Management;
Management Practices and Processes;
Revenue;
Quality;
Competency and Skills;
Motivation and Incentives;
Auto Industry;
United States;
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Working Paper
| HBS Working Paper Series
| 2010
Accelerating Energy Innovation: Insights from Multiple Sectors
Rebecca Henderson and Richard G. Newell
A combination of concerns about climate change and energy security has recently led to significant increases in public funding for energy R&D. Some commentators are suggesting that these increases need to be sustained, and are advocating for increases of as much as three or four hundred percent, suggesting that the US needs a "Manhattan project" for energy. Other observers have discussed supporting innovation through a range of additional policy interventions, including tax credits, loan guarantees, IP policy, regulatory mandates, codes and standards. It is critically important that these kinds of interventions be thoughtfully designed since it seems probable that without major advances in energy technology it is unlikely that the world will be able to reduce green house gas emissions rapidly enough to avoid a substantial increase in the risk of significant climate change. This book hopes to contribute to the public debate in this area by pulling together a group of distinguished economists who have studied the role of public support in generating innovation in other sectors of the economy. Over the last few years relatively few economists have studied energy innovation in any depth, but there has been a substantial investment in understanding the dynamics of innovation in a wide range of other industries, including pharmaceuticals and biotechnology, IT and telecommunications, defense, chemicals and agriculture. We believe that there are valuable lessons in this research for the energy sector.
Keywords: Innovation and Management;
Technological Innovation;
Knowledge Use and Leverage;
Research and Development;
Pollution and Pollutants;
Weather and Climate Change;
Energy Industry;
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Technical Note
| HBS Case Collection
|
2013
(Revised from original 2013 version)
Relational Contracts and the Roots of Sustained Competitive Advantage
Rebecca M. Henderson
This note focuses on organizational "competencies" or "capabilities" as a potential source of sustained competitive advantage. Research in this area hypothesizes that some firms outperform their competition because they can do things that their rivals cannot.
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Case
| HBS Case Collection
|
2013
(Revised from original 2013 version)
Royal DSM: Fighting Hidden Hunger
Rebecca Henderson, Noah Fisher and Mary Shelman
In 2007 Royal DSM, a leading life science and materials company, entered a partnership with the World Food Programme (WFP) to combat hidden hunger around the world by providing micronutrient solutions. The case investigates the unexpectedly large impact the partnership had on DSM and on the global nutrition discussion, and discusses the benefits and challenges of scaling up the Nutrition Improvement Program—a key component of DSM's human nutrition and health division—beyond the WFP partnership, despite the need to build significant additional capabilities and its somewhat lower margins.
Citation: Henderson, Rebecca, Noah Fisher, and Mary Shelman. "Royal DSM: Fighting Hidden Hunger." Harvard Business School Case 313-085, May 2013. (Revised from original January 2013 version.)
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Case
| HBS Case Collection
|
2013
Xylem: Let's Solve Water
Rebecca M. Henderson and James Weber
Citation: Henderson, Rebecca M., and James Weber. " Xylem: Let's Solve Water." Harvard Business School Case 313-082, January 2013.
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Case
| HBS Case Collection
|
2012
(Revised from original 2011 version)
Procter & Gamble: Marketing Capabilities
Rebecca M. Henderson and Ryan Johnson
P&G had become known and recognized as a marketing machine. It was the largest advertiser in the world, with 2010 spending of $8.68 billion. From the company's early exploitation of broadcast media (radio and television) for its soap products to more recent experiments in digital media for its men's hygiene brand Old Spice, P&G was a seasoned marketer with strong consumer research, a powerful innovation network, and the world's largest financial commitment to advertising.
Keywords: Advertising;
Change Management;
Globalized Markets and Industries;
Innovation Strategy;
Brands and Branding;
Marketing Communications;
Expansion;
Consumer Products Industry;
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Teaching Plan
| HBS Case Collection
|
2012
Sustainable Tea at Unilever (teaching plan)
Rebecca M. Henderson and Frederik Nellemann
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Module Note
|
2012
Managers and Market Capitalism
Rebecca Henderson and Karthik Ramanna
Keywords: Economic Systems;
Management;
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Teaching Note
| HBS Case Collection
|
2012
Best Practice in Consumer Packaged Goods Management (TN)
Rebecca M. Henderson and Ryan Johnson
Keywords: Consumer Products Industry;
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Case
| HBS Case Collection
|
2012
(Revised from original 2011 version)
Sustainable Tea at Unilever
Rebecca M. Henderson and Frederik Nellemann
Unilever's Lipton Tea had been successful with the first phase of its certification partnership with Rainforest Alliance. Now the company faced challenges in how to push forward with the transformation of more difficult parts of the supply chain and how to market sustainable tea in developing markets like India.
Keywords: Environmental Sustainability;
Corporate Social Responsibility and Impact;
Marketing;
Agriculture and Agribusiness Industry;
Citation: Henderson, Rebecca M., and Frederik Nellemann. " Sustainable Tea at Unilever." Harvard Business School Case 712-438, November 2012. (Revised from original December 2011 version.)
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Case
| HBS Case Collection
|
2012
(Revised from original 2011 version)
Reckitt Benckiser: Fast and Focused Innovation
Rebecca M. Henderson and Ryan Johnson
Since its 1999 merger Reckitt Benckiser (RB), a global consumer goods company, led by its CEO Bart Becht, RB developed a reputation for rapid product innovation and industry leading profit margins. RB's stated strategy was to focus on its Powerbrands and high growth categories and to nurture the Powerbrands with innovation and roll them out globally. The Powerbrands had steady double digit growth year over year, attracted a devoted customer base and typically grabbed high margins. This case examines the Powerbrands strategy, RB's devotion to fast and focused innovation and its execution of that strategy.
Keywords: Mergers and Acquisitions;
Global Strategy;
Innovation Leadership;
Leadership Style;
Growth and Development Strategy;
Brands and Branding;
Product Development;
Performance Improvement;
Commercialization;
Consumer Products Industry;
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2012
(Revised from original 2011 version)
Nestlé SA: Nutrition, Health and Wellness Strategy
Rebecca M. Henderson and Ryan Johnson
In 1997 Nestlé committed to a strategic vision of becoming the leading nutrition, health and wellness (NHW) company in the world. Over the next 13 years, the NHW strategy guided strategic decisions and choices at Nestlé including merger and acquisition choices, strategies for improving products, and packaging innovations that helped Nestlé built credibility with the consumer in NHW, raised profit margins, continued strong growth and differentiated the firm.
Keywords: Mergers and Acquisitions;
Investment;
Profit;
Innovation Strategy;
Growth and Development Strategy;
Resource Allocation;
Product;
Research and Development;
Value Creation;
Food and Beverage Industry;
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2011
(Revised from original 2011 version)
Colgate-Palmolive: Staying Ahead in Oral Care
Rebecca M. Henderson and Ryan Johnson
In 2011, Colgate-Palmolive (Colgate) was the global leader in oral care, with a dominant market share lead in toothpaste and a growing presence in toothbrushes and mouthwash. However, the firm faced stiff competition with perennial rivals P&G increasing their focus on the oral care and emerging markets where Colgate had traditionally been untouchable. To defend its lead Colgate attempted to cover all fronts, leveraging brand equity, fostering close relationships with dental professionals, innovating in underutilized markets, using its global network to quickly move products to market and reinvesting steadily in its brand.
Keywords: Innovation Strategy;
Brands and Branding;
Product Positioning;
Distribution Channels;
Relationships;
Competition;
Competitive Advantage;
Customization and Personalization;
Health Industry;
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2012
(Revised from original 2011 version)
L'Oréal: Global Brand, Local Knowledge
Rebecca M. Henderson and Ryan Johnson
Worldwide, and in the U.S. marketplace in particular, the French cachet of L'Oréal was one of its most powerful marketing tools. However, with the opening up of emerging markets, L'Oréal had to cater to a diverse customer base: an aging population in the West, ethnic groups, aspiring and younger customers in the East, emerging markets, and growing interest in health and beauty care among men all over the world. Employing both traditional and innovative marketing techniques, L'Oréal worked to double its customer base to two billion by 2020 and increase to half from a third its share of sales from emerging markets.
Keywords: Globalization;
Brands and Branding;
Marketing Communications;
Change Management;
Sales;
Emerging Markets;
Segmentation;
Innovation and Invention;
Beauty and Cosmetics Industry;
France;
United States;
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2011
Shell Nigeria: The WikiLeaks Cables
Sandra J. Sucher, Rebecca M. Henderson and Matthew Preble
In November 2010, WikiLeaks began releasing the first of hundreds of thousands of U.S. diplomatic cables that it had obtained. Among the thousands of cables published by early 2011, were several that shed light on Royal Dutch Shell's operations in Nigeria and its relationship with the Nigerian government.
Keywords: Business and Government Relations;
Energy Generation;
Operations;
Communication Technology;
Crime and Corruption;
Metals and Minerals;
Ethics;
Energy Industry;
Nigeria;
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2012
(Revised from original 2010 version)
The Smart Grid
Rebecca Henderson, Noel Maurer and Catherine Ross
The development of the smart grid—the integration of traditional elements of energy transmission and delivery with information technology—heralds a new era in the power industry. Many new business opportunities will be created as the smart grid gets developed. What strategies should Cisco employ to become a leader in this industry? What obstacles and challenges must Cisco overcome to compete successfully in this new industry?
Keywords: Energy;
Innovation Strategy;
Technological Innovation;
Problems and Challenges;
Growth and Development;
Information Technology;
Strategy;
Energy Industry;
Citation: Henderson, Rebecca, Noel Maurer, and Catherine Ross. " The Smart Grid." Harvard Business School Case 310-072, November 2012. (Revised from original May 2010 version.)
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Case
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Nike Considered: Getting Traction on Sustainability
Rebecca Henderson, C. Reavis, R. Locke and C. Liddy
Keywords: Innovation and Invention;
Product Design;
Environmental Sustainability;
Apparel and Accessories Industry;
Citation: Henderson, Rebecca, C. Reavis, R. Locke, and C. Liddy. "Nike Considered: Getting Traction on Sustainability." Cambridge, MA: Massachusetts Institute of Technology (MIT) Case, 2008.
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Case
| 2008
Corning Inc.: The Growth and Strategy Council
Rebecca Henderson and C. Reavis
Keywords: Expansion;
Business Growth and Maturation;
Consumer Products Industry;
Citation: Henderson, Rebecca, and C. Reavis. "Corning Inc.: The Growth and Strategy Council." Massachusetts Institute of Technology (MIT) Case, 2008.
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Case
| 2008
Gridlogix
Rebecca Henderson, C. Reavis and N. Hofmeister
Citation: Henderson, Rebecca, C. Reavis, and N. Hofmeister. "Gridlogix." Massachusetts Institute of Technology (MIT) Case, 2008.
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| 2008
Eli Lilly: Recreating Drug Discovery for the 21st Century
Rebecca Henderson and C. Reavis
Keywords: Innovation and Invention;
Health Care and Treatment;
Pharmaceutical Industry;
Citation: Henderson, Rebecca, and C. Reavis. "Eli Lilly: Recreating Drug Discovery for the 21st Century." Massachusetts Institute of Technology (MIT) Case, 2008.
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Case
| 2007
Eli Lilly's Project Resilience: Anticipating the Future of the Pharmaceutical Industry
Rebecca Henderson
Keywords: Projects;
Strategic Planning;
Pharmaceutical Industry;
Citation: Henderson, Rebecca. "Eli Lilly's Project Resilience: Anticipating the Future of the Pharmaceutical Industry." Massachusetts Institute of Technology (MIT) Case, 2007.
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Case
| 2007
Sun Power: Focused on the Future of the Solar Power Industry
Rebecca Henderson, J. Conkling and R. Nanda
Keywords: Projects;
Strategic Planning;
Green Technology Industry;
Citation: Henderson, Rebecca, J. Conkling, and R. Nanda. "Sun Power: Focused on the Future of the Solar Power Industry." Massachusetts Institute of Technology (MIT) Case, 2007.
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2005
(Revised from original 2004 version)
Kodak and The Digital Revolution (A)
Giovanni M. Gavetti, Rebecca Henderson and Simona Giorgi
The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case questions how CEO Daniel Carp can use digital imaging to revitalize Kodak. A rewritten version of an earlier case.
Keywords: History;
Technology;
Business Model;
Leadership;
Disruption;
Industry Growth;
Business Strategy;
Consumer Products Industry;
Citation: Gavetti, Giovanni M., Rebecca Henderson, and Simona Giorgi. " Kodak and The Digital Revolution (A)." Harvard Business School Case 705-448, November 2005. (Revised from original November 2004 version.)
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Case
| 2005
Ventures in Salt: Compass Minerals International
Rebecca Henderson, J. Sternman and R. Nanda
Keywords: Metals and Minerals;
Citation: Henderson, Rebecca, J. Sternman, and R. Nanda. "Ventures in Salt: Compass Minerals International." Massachusetts Institute of Technology (MIT) Case, 2005.
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2004
(Revised from original 2003 version)
Kodak (A)
Giovanni M. Gavetti, Rebecca Henderson and Simona Giorgi
The introduction of digital imaging in the late 1980s had a disruptive effect on Kodak's traditional business model. Examines Kodak's strategic efforts and challenges as the photography industry evolves. After discussing Kodak's history and its past strategic moves in the new landscape, the case questions how CEO Daniel Carp can use digital imaging to revitalize Kodak.
Keywords: History;
Business Model;
Leadership;
Disruption;
Industry Growth;
Business Strategy;
Consumer Products Industry;
Citation: Gavetti, Giovanni M., Rebecca Henderson, and Simona Giorgi. " Kodak (A)." Harvard Business School Case 703-503, February 2004. (Revised from original April 2003 version.)
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2004
Nokia and MIT's Project Oxygen (Abridged)
David B. Yoffie and Rebecca Henderson
Looks at how Nokia should respond to a future vision of computing and communications that was developed at MIT's Project Oxygen.
Keywords: Mobile Technology;
Adaptation;
Strategic Planning;
Telecommunications Industry;
Technology Industry;
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2003
(Revised from original 2003 version)
Nokia and MIT's Project Oxygen
Rebecca Henderson and Nancy Confrey
Pending developments in wireless networking and in embedded computing present a long-range strategic challenge to Nokia, Inc. This case outlines the ways technology is likely to develop in the next 20 years, briefly describes Nokia's history and strategic positioning, and challenges the reader to develop a coherent strategy for Nokia going forward.
Keywords: History;
Strategic Planning;
Forecasting and Prediction;
Problems and Challenges;
Wireless Technology;
Growth and Development Strategy;
Telecommunications Industry;
Citation: Henderson, Rebecca, and Nancy Confrey. " Nokia and MIT's Project Oxygen." Harvard Business School Case 703-450, November 2003. (Revised from original April 2003 version.)
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2003
Mercury Computer Systems: The Evolution from Integrated Technology to Open Standard
Rebecca Henderson and Nancy Confrey
For 20 years, Mercury Computer Systems has thrived, providing products and services that support ultrafast processing of real time data. Now Jay Bertelli, the CEO, faces a critical question: How can the firm compete once the standards on which its products are based become publicly available?
Keywords: Data and Data Sets;
Open Source Distribution;
Strategic Planning;
Competitive Strategy;
Competitive Advantage;
Information Technology;
Information Technology Industry;
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2003
(Revised from original 2003 version)
Ember Corporation: Developing the Next Ubiquitous Network Standard
Rebecca Henderson and Nancy Confrey
Ember is a venture capital-funded start-up that hopes to establish a standard for ubiquitous wireless networks. Its unique approach and proprietary technology promises to create enormous value in a wide variety of markets, particularly in local sensing and control. However, competition has emerged much faster than expected. What should Ember do next?
Keywords: Business Startups;
Wireless Technology;
Value;
Competitive Strategy;
Standards;
Technology Industry;
Telecommunications Industry;
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2003
(Revised from original 2002 version)
Corning, Inc.: Technology Strategy in 2003
Rebecca Henderson
Corning, Inc. has a 150-year history of building a strategy around innovation. Founded as a glass manufacturer in 1851, the company quickly established itself as a maker of specialty glass products and over the next 100 years diversified into light bulbs, television, cookware, silicones, medical products, and, finally, optical fiber. As the telecommunications industry boomed in the late 1990s, the optical fiber business boomed with it, and Corning's stock hit record highs. The firm made more than $9 billion worth of acquisitions in fiber and photonics (acquiring more than $6 billion worth of goodwill in the process) before the crash hit. Corning's stock collapsed, and in 2002 the company faced serious operating challenges. Designed to be used as an opening case in a course on technology strategy. Outlines the history of innovation at Corning, stressing the company's history of "patient money" and long-term commitment to technology. Briefly summarizes the firm's recent history and then the challenge that faces the firm's chief technology officer in seeking to justify spending on research and development.
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