Malcolm S. Salter

James J. Hill Professor of Business Administration, Emeritus

Malcolm Salter has been a member of the Harvard Business School faculty since 1967. His teaching and research focuses on issues of corporate strategy, organization, and governance.

Over the years, Professor Salter has taught and helped develop a wide variety of courses at HBS. Most recently, he has taught courses in Leadership and Corporate Accountability, Governance and Corporate Control, and Competition and Strategy in the MBA Program. In addition to teaching at HBS, he has also taught at the Harvard Law School (2 years) and the Kennedy School of Government (4 years).

Professor Salter is author of Innovation Corrupted (Harvard University Press, 2008), which addresses the origins and legacy of Enron’s collapse; co-author of Changing Alliances (HBS Press, 1987), a study of business-government-labor relations the world auto industry; Diversification through Acquisition (Free Press, 1979), a study of how real economic value can be created through corporate diversification; and many other articles and papers addressing issues of corporate strategy and internal governance and control.

In addition to his scholarly activities, Professor Salter served as Senior Associate Dean for External Relations from 2003 to 2006. He has also served as Chair of the Elective Curriculum in the MBA Program, Chairman of the Advanced Management Program and the International Senior Managers Program (the School's two most senior executive education programs), and Chairman of the General Management Area (a section of the faculty encompassing the subject areas of general management, entrepreneurial management, and international management).

From 1986 to 2006, Professor Salter was also president of Mars & Co., a strategy consulting firm with offices in Greenwich (CT), London, Paris, San Francisco, Tokyo, and Shanghai.

Professor Salter is a Trustee and Director of the Dana-Farber Cancer Institute where he serves on the Finance Committee and is Chair of the Trustee's Science Committee. He is also an Overseer of the Boston Symphony Orchestra. Active in civic affairs at both the municipal and state levels of government, Professor Salter served as Chair of Newton’s (MA) Citizen Advisory Group from June 1, 2008 to May 1, 2009, charged with developing a new financial and management model for this city of 85,000 residents and thirteen villages. 

He is also a founder of the Friends of Boston Art, a past Overseer of the Boston Museum of Fine Arts and the Rose Art Museum at Brandeis University, a former Trustee and Treasurer of the Shady Hill School, and a past director of Schlegel Corporation and Christie's, the London-based auction house.

Professor Salter is a graduate of Harvard University where he received his AB, MBA, and DBA degrees.

 

Journal Articles

Working Papers

  1. Crony Capitalism, American Style: What Are We Talking About Here?

    This paper seeks to reduce the ambiguity surrounding our understanding of what crony capitalism is, what it is not, what costs crony capitalism leaves in its wake, and how we might contain it.

    Keywords: democracy; industrial governance; institutional corruption; crony capitalism; lobbying; campaign finance; costs; cronyism; Business ethics; campaign finance reform; revolving door; Economic Systems; Ethics; Political Elections; Financing and Loans; United States;

    Citation:

    Salter, Malcolm S. "Crony Capitalism, American Style: What Are We Talking About Here?" Harvard Business School Working Paper, No. 15-025, October 2014. View Details
  2. How Short-Termism Invites Corruption—And What to Do About It

    Researchers and business leaders have long decried short-termism: the excessive focus of executives of publicly traded companies-along with fund managers and other investors-on short-term results. The central concern is that short-termism discourages long-term investments, threatening the performance of both individual firms and the U.S. economy.

    I argue that short-termism also invites institutional corruption. I define that as institutionally supported behavior that-while not necessarily unlawful-undermines a company's legitimate processes and core values, weakening its capacity to achieve espoused goals and eroding public trust. In the private sector, institutional corruption typically entails gaming society's laws and regulations, tolerating conflicts of interest, persistently violating accepted norms of fairness, and pursuing various forms of cronyism.

    The gaming of Securities and Exchange Commission rules by Citigroup's mortgage-banking desk in 2007 is an illuminating example of institutional corruption in the finance industry. After exploring that case, I provide a more complete definition of gaming, and explain how short-termism invites the kind of gaming and institutional corruption that occurred at Citigroup. I then examine the key drivers of short-termism in contemporary business, and their potential effects on the behavior of both executives and their organizations.

    I conclude by proposing mechanisms to deter the corrupting effects of short-termism, including changes in both business and public policy. While business leaders and policymakers have been cautious in implementing many of these countermeasures, we must seriously consider them if want to rein in the public and private costs of institutional corruption in the private sector.

    Keywords: Business and Shareholder Relations; Public Ownership; Performance Expectations; Economy; Crime and Corruption; Ethics; Trust; Financial Services Industry; United States;

    Citation:

    Salter, Malcolm S. "How Short-Termism Invites Corruption—And What to Do About It." Harvard Business School Working Paper, No. 12-094, April 2012. View Details
  3. Lawful but Corrupt: Gaming and the Problem of Institutional Corruption in the Private Sector

    This paper describes how the gaming of society's rules by corporations contributes to the problem of institutional corruption in the world of business. "Gaming" in its various forms involves the use of technically legal means to subvert the intent of society's rules in order to gain advantage over rivals, maximize reported earnings, maintain high credit ratings, preserve access to capital on favorable terms, and reap personal rewards-just to mention several possible motives. It is one of the most corrosive forms of institutional corruption in business. "Institutional corruption" refers to company-sanctioned behavior and relationships that may be lawful but either harm the public interest or weaken the capacity of the institution to achieve its primary purposes. The most salient consequence of institutional corruption is diminished public trust in the governance of the institution. In this paper, I describe the twin phenomena of gaming and institutional corruption—and how the former contributes to the latter, often with the support of professional advisors at law and auditing firms. I illustrate these phenomena with examples from Enron, which (apart from outright fraud) pursued one of the greatest gaming strategies of all time. I also point to the implementation of the Dodd-Frank Act as an excellent source of clinical data pertaining to gaming in a more contemporary setting. I then discuss how gaming and other trust-destroying behaviors have been encouraged by the short-term decision-making horizons of both corporate executives and managers of large investment funds, how those time horizons are largely driven by ways in which the performance of operating executives and investment fund managers is measured and rewarded, and how the directors of these entities become complicit in the gaming of society's rules and the spreading of institutional corruption. I end by suggesting possible remedies for curbing the ill effects of continued gaming of society's rules and restoring much needed public trust in the offending institutions.

    Keywords: Crime and Corruption; Civil Society or Community; Competitive Advantage; Earnings Management; Trust; Law; Performance; Investment Funds; Private Sector; Behavior; Relationships; Goals and Objectives;

    Citation:

    Salter, Malcolm S. "Lawful but Corrupt: Gaming and the Problem of Institutional Corruption in the Private Sector." Harvard Business School Working Paper, No. 11-060, December 2010. View Details

Cases and Teaching Materials

  1. Goldman Sachs IPO, The

    Addresses the proposed IPO and raises questions regarding how agency costs may rise or fall as Goldman converts from a private partnership to a public limited corporation.

    Keywords: Initial Public Offering; Going Public; Corporate Governance; Agency Theory; Financial Services Industry;

    Citation:

    Nanda, Ashish, Malcolm S. Salter, Boris Groysberg, and Sarah Matthews. "Goldman Sachs IPO, The." Harvard Business School Case 800-016, September 1999. (Revised April 2006.) View Details
  2. Innovation Corrupted: The Rise and Fall of Enron (A)

    Presents a brief historical overview of Enron's rise, its strategic successes and failures, the evolution of its business model, and the organizational processes relied upon by Enron's management to drive and monitor the business. A rewritten version of an earlier case.

    Keywords: Adaptation; Success; Business Model; Business History; Growth Management; Governance Controls; Innovation and Management; Failure; Business Processes; Energy Industry; United States;

    Citation:

    Salter, Malcolm S. "Innovation Corrupted: The Rise and Fall of Enron (A)." Harvard Business School Case 905-048, December 2004. (Revised October 2005.) View Details
  3. Innovation Corrupted: The Rise and Fall of Enron (B)

    Presents a brief historical overview of Enron's rise, its strategic successes and failures, the evolution of its business model, and the organizational processes relied upon by Enron's management to drive and monitor the business. A rewritten version of an earlier case.

    Keywords: Transition; Risk Management; Management Practices and Processes; Success; Business Model; Strategy; Business History; Governance Controls; Innovation and Management; Failure; Business Processes; Energy Industry; United States;

    Citation:

    Salter, Malcolm S. "Innovation Corrupted: The Rise and Fall of Enron (B)." Harvard Business School Case 905-049, December 2004. (Revised October 2005.) View Details
  4. Innovation Corrupted: The Rise and Fall of Enron

    Presents an historical overview of Enron's rise and fall and summarizes what is currently known about (1) the evolution of Enron's business model, (2) the organizational processes Enron officials relied on to drive and monitor the business, (3) emergent behavior related to the structuring of major partnerships and corporate financial reporting, and (4) oversight provided by Enron's management and board of directors. Concludes with a comment on how Enron's story as a new, post-deregulation corporate model escaped critical analysis by the financial community, the business press, and other observers for such a long time.

    Keywords: Business Model; Behavior; Governing and Advisory Boards; Success; Transformation; Failure; Business Processes; Energy Industry; United States;

    Citation:

    Salter, Malcolm S. "Innovation Corrupted: The Rise and Fall of Enron." Harvard Business School Case 904-036, October 2003. (Revised April 2005.) View Details
  5. Internal Governance and Control at Goldman Sachs: Block Trading

    Although the explicit problem presented in the case concerns pricing a block trade, the real issue involves the decision-making and oversight processes used to arrive at a price that is appropriate for both the client and Goldman Sachs. Asks students in assignment questions to map the decision and control processes used in this core activity and then to reflect on whether these processes are sustainable and scalable as Goldman Sachs grows from 5,000 employees to 20,000 employees within a 5-year period. Goldman Sachs' decision and control processes are based, at root, on trust, so the question becomes whether and how a culture based on trust is scalable.

    Keywords: Price; Governance Controls; Trust; Organizational Culture; Decision Making; Financial Services Industry;

    Citation:

    Salter, Malcolm S., and Ratna Sarkar. "Internal Governance and Control at Goldman Sachs: Block Trading." Harvard Business School Case 904-026, November 2003. (Revised April 2004.) View Details
  6. EXP Systems

    Discusses selecting investors and avoiding board-level conflicts of interest in start-ups. Using the "term sheet" in third-round financing as a negotiation over future governance and control rights. A rewritten version of an earlier case.

    Keywords: Conflict of Interests; Governance Controls; Governing and Advisory Boards; Business Startups; Management Teams;

    Citation:

    Salter, Malcolm S., and Alison Berkley Wagonfeld. "EXP Systems." Harvard Business School Case 903-022, July 2002. (Revised August 2003.) View Details
  7. Tracking Stocks at Genzyme (A)

    Genzyme, a tracking stock pioneer, has used its innovative capital structure as a way to frame and grow its R&D-intensive business. Facing the question of how best to integrate a new acquisition into its tracking stock structure, Genzyme's top management is forced to review how tracking stocks add value to Genzyme, whether this value is sustainable, what future governance and control problems the current structure might present, and how these problems might be best handled. A rewritten version of an earlier note.

    Keywords: Integration; Value Creation; Motivation and Incentives; Conflict of Interests; Stocks; Capital Structure; Research and Development; Corporate Governance; Biotechnology Industry;

    Citation:

    Salter, Malcolm S. "Tracking Stocks at Genzyme (A)." Harvard Business School Case 902-023, November 2001. (Revised December 2002.) View Details
  8. Debate Over Unbundling General Motors: The Delphi Divestiture and Other Possible Transactions, The

    Ever since General Motors (GM) announced in February 1997 its intention to divest Delphi Automotive Systems--its upstream parts manufacturing operations--Wall Street had called for further unbundling, and various stakeholders competed for their claim of value represented by GM. The case presents GM's four options for the Delphi unit and raises valuation and governance issues regarding the remaining corporate assets. A rewritten version of an earlier case.

    Keywords: Valuation; Supply Chain; Vertical Integration; Corporate Strategy; Corporate Governance; Auto Industry; United States;

    Citation:

    Salter, Malcolm S. "Debate Over Unbundling General Motors: The Delphi Divestiture and Other Possible Transactions, The." Harvard Business School Case 800-196, November 1999. (Revised June 2002.) View Details
  9. OAO YUKOS Oil Company

    This case presents the history and current position of Russia's second-largest oil company, YUKOS, as it seeks listing on the NYSE as an ADR and attempts to rid itself from a punishing "governance discount" by the capital markets. This is a company with a history of significant corporate governance abuses that is, more recently, attempting to reform its ways. Although the market value of the company has risen dramatically over the past year (2000), it is still selling at a whopping discount from the imputed market value of its gigantic oil and gas reserves. What more should YUKOS be doing to eliminate its governance discount? How can any program be implemented successfully given the current ownership structure of the company?

    Keywords: Stocks; Capital Markets; Corporate Governance; Developing Countries and Economies; Energy Sources; Energy Industry; Russia;

    Citation:

    Salter, Malcolm S., and Joshua N. Rosenbaum. "OAO YUKOS Oil Company." Harvard Business School Case 902-021, October 2001. (Revised January 2002.) View Details
  10. Japanese Financial Crisis and the Long-Term Credit Bank of Japan, The

    Illustrates the failure of Japan's banking elite to adjust to new economic conditions.

    Keywords: Financial Crisis; Banks and Banking; Behavior; Japan;

    Citation:

    Salter, Malcolm S., and Andrew Eggers. "Japanese Financial Crisis and the Long-Term Credit Bank of Japan, The." Harvard Business School Case 801-039, September 2000. View Details
  11. Deere & Company: Sustaining Value

    The question facing Deere & Co. is whether or not to adopt some of the organizational technologies of private equity investors (decentralized equity holdings, use of leverage to control the disposition of cash flows, the externalization of the capital budgeting process, partial spin-offs) to sustain over the next decade the supernormal returns created through more traditional means.

    Keywords: Budgets and Budgeting; Decision Choices and Conditions; Cash Flow; Private Equity; Wealth; Adoption; Manufacturing Industry;

    Citation:

    Salter, Malcolm S., and Marlowe Dayley. "Deere & Company: Sustaining Value." Harvard Business School Case 899-001, November 1998. (Revised July 2000.) View Details
  12. ORIX KK

    Describes the challenges facing a Japanese financial services company as it attempts to maintain its ability to attract and retain talented employees. The CEO's ideas of corporate governance and evidence from the competitive labor environment suggest the need for more performance-based compensation. But employees at all levels of the firm understand that any new compensation system must carefully consider the strategic goals of the firm, the cultural context of the Japanese workplace, and the legal framework of the Japanese corporation. Considers how a particular performance measurement system known as ORIX Value Added (OVA) might be used in the firm.

    Keywords: Corporate Governance; Compensation and Benefits; Motivation and Incentives; Management Analysis, Tools, and Techniques; Geographic Location; Financial Services Industry; Japan;

    Citation:

    Salter, Malcolm S., and Andrew Eggers. "ORIX KK." Harvard Business School Case 800-272, June 2000. (Revised July 2000.) View Details
  13. Restructuring General Motors North America (A): Pay-for-Performance

    Presents the new pay-for-performance scheme adopted by General Motors (GM) in its 1999 reorganization of its sales and marketing organization. Once in operation, many administrative problems developed requiring a reconsideration of the scheme's basic architecture.

    Keywords: Restructuring; Compensation and Benefits; Marketing; Organizational Change and Adaptation; Problems and Challenges; Sales; Auto Industry; North America;

    Citation:

    Salter, Malcolm S. "Restructuring General Motors North America (A): Pay-for-Performance." Harvard Business School Case 800-027, July 1999. View Details
  14. Block 16: Conoco's "Green" Oil Strategy (A)

    Conoco's attempted to win an oil development contract in Ecuador's tropical rain forest. The case discusses government perspectives, environmental perspectives, and indigenous people's perspectives. Allows role playing in a "negotiating forum" set up by Conoco to get their developing plan in the various interest groups. This oil development contract is key to Conoco's Latin American E&D strategy.

    Keywords: Governance; Contracts; Growth and Development Strategy; Negotiation; Practice; Business and Community Relations; Environmental Sustainability; Perspective; Culture; Corporate Strategy; Latin America;

    Citation:

    Salter, Malcolm S., and Susan E.A. Hall. Block 16: Conoco's "Green" Oil Strategy (A). Harvard Business School Case 394-001, July 1993. (Revised September 1995.) View Details
  15. Block 16: Ecuadorian Government's Perspective

    Supplements Block 16: Conoco's Green Oil Strategy (A). Provides the government perspective on Conoco's Ecuadorian strategy. Designed to be distributed to students who will be playing the role of Ecuadorian government officials.

    Keywords: Policy; Business or Company Management; Resource Allocation; Marketing Strategy; Natural Environment; Environmental Sustainability; Perspective; Corporate Strategy;

    Citation:

    Salter, Malcolm S., and Susan E.A. Hall. "Block 16: Ecuadorian Government's Perspective." Harvard Business School Supplement 394-002, July 1993. (Revised September 1995.) View Details
  16. Block 16: Indigenous Peoples' Perspective

    Supplements Block 16: Conoco's Green Oil Strategy (A). Provides the indigenous people's perspective on Conoco's Ecuadorian strategy. Designed to be distributed to students who will be playing the role of Ecuadorian indigenous people.

    Keywords: Perspective; Ethnicity Characteristics;

    Citation:

    Salter, Malcolm S., and Susan E.A. Hall. "Block 16: Indigenous Peoples' Perspective." Harvard Business School Supplement 394-003, July 1993. (Revised September 1995.) View Details
  17. Block 16: Environmental Groups' Perspectives

    Supplements Block 16: Conoco's Green Oil Strategy (A). Provides the environmental groups' perspective on Conoco's Ecuadorian strategy. Designed to be distributed to students who will be playing the role of Ecuadorian environmentalists.

    Keywords: Resource Allocation; Marketing Strategy; Natural Environment; Environmental Sustainability; Perspective; Corporate Strategy;

    Citation:

    Salter, Malcolm S., and Susan E.A. Hall. "Block 16: Environmental Groups' Perspectives." Harvard Business School Supplement 394-004, July 1993. (Revised September 1995.) View Details
  18. Block 16: Management's Perspective

    Supplements Block 16: Conoco's Green Oil Strategy (A). Reviews the environmental challenges facing the oil industry throughout upstream and downstream operations, and oil companies' competitive responses. Reviews Conoco's and Du Pont's environmental initiatives in more detail. Provides a multinational and competitive context to deepen management's appreciation of the strategic significance of the Block 16 development.

    Keywords: Local Range; Operations; Environmental Sustainability; Perspective; Competitive Strategy; Corporate Strategy;

    Citation:

    Salter, Malcolm S., and Susan E.A. Hall. "Block 16: Management's Perspective." Harvard Business School Supplement 394-075, November 1993. (Revised September 1995.) View Details
  19. Asahi Breweries Ltd.

    Focuses on competitive repositioning, organizational renewal, and personal leadership. Describes how Asahi Breweries was faced with a major capacity expansion decision after succeeding in increasing market share dramatically in the traditionally stable Japanese beer industry. This has been done through the creation of a new product category, "Dry Beer." Information on industry economics, Asahi's organizational process, and competitive interaction are provided as well as an in-depth description of top management's profile and management posture at Asahi. Designed to allow discussion on how to make a balanced decision incorporating such market strategy issues as product strategy, competitor retaliation, advertising policy, rebate policy, and distributor relations management, as well as such organizational elements as corporate goals, financial integrity, quality control, personnel policy, management philosophy, and leadership style.

    Keywords: Competitive Strategy; Expansion; Leadership; Organizational Structure; Product Launch; Management Teams; Business or Company Management; Marketing Strategy; Supply Chain Management; Mission and Purpose; Food and Beverage Industry; Japan;

    Citation:

    Salter, Malcolm S. "Asahi Breweries Ltd." Harvard Business School Case 389-114, February 1989. (Revised October 1994.) View Details
  20. U.S. Auto Industry: Scenarios and Choices for the 1990s

    Asks students to prepare a capacity utilization scenario for the U.S. auto industry in 1992 and to propose proper courses of action for Ford and General Motors in the face of globalizing competition. The subject is "corporate strategy in an overcapacitized world." Rewritten version of earlier case.

    Keywords: Globalization; Business or Company Management; Competitive Strategy; Corporate Strategy; Auto Industry; United States;

    Citation:

    Salter, Malcolm S. "U.S. Auto Industry: Scenarios and Choices for the 1990s." Harvard Business School Case 391-001, July 1990. (Revised August 1994.) View Details
  21. Moet-Hennessy Group

    Presents the strategic and organizational problems of a venerable French firm pursuing product and financial diversification in an international context.

    Keywords: Globalization; Product Marketing; Organizations; Diversification; France;

    Citation:

    Salter, Malcolm S. "Moet-Hennessy Group." Harvard Business School Case 386-191, May 1986. (Revised October 1993.) View Details
  22. Conoco's: "Green" Oil Strategy (A)

    Conoco faces challenges in formulating a proactive environmental strategy for its proposed oil development in Ecuador's pristine tropical rain forest region. The case outlines the innovative process in which Conoco collaborated with a wide range of often conflicting constituency groups to define and implement its policies, along with Conoco's successes and failures in reaching constituency consensus.

    Keywords: Decision Choices and Conditions; Ethics; Collaborative Innovation and Invention; Corporate Social Responsibility and Impact; Outcome or Result; Problems and Challenges; Business and Stakeholder Relations; Conflict Management; Ecuador;

    Citation:

    Salter, Malcolm S., and Joseph L. Badaracco Jr. Conoco's: "Green" Oil Strategy (A). Harvard Business School Case 392-133, April 1992. (Revised July 1993.) View Details
  23. Airbus vs. Boeing (A): Turbulent Skies

    Presents the economic and political dimensions of competition in the commercial aircraft industry, as demonstrated by Airbus of Europe and Boeing of the United States.

    Keywords: Economics; Government and Politics; Competition; Aerospace Industry; Europe; United States;

    Citation:

    Salter, Malcolm S. "Airbus vs. Boeing (A): Turbulent Skies." Harvard Business School Case 386-193, May 1986. (Revised November 1990.) View Details
  24. Airbus vs. Boeing (B): The Storm Intensifies

    Discusses the growing competition faced by U.S. producers of civil aircraft due to the success and expanding product line of Airbus Industries. Designed to foster discussion of international trade policy as it affects producers in the industry and to encourage firm managers to consider competitive strategies, given their influence over trade policy negotiations. A rewritten version of an earlier case.

    Keywords: Trade; Policy; Negotiation; Competition; Competitive Strategy; Aerospace Industry; United States;

    Citation:

    Salter, Malcolm S. "Airbus vs. Boeing (B): The Storm Intensifies." Harvard Business School Case 388-145, May 1988. (Revised November 1990.) View Details
  25. Airbus vs. Boeing (C): Steps Toward Dispute Resolution

    Presents partial resolution of problem. Cites points still to be resolved in trade dispute between U.S. aircraft manufacturers and Airbus Industrie. To be used as a handout after discussion of the case.

    Keywords: Trade; Problems and Challenges; Conflict and Resolution; Aerospace Industry; United States;

    Citation:

    Salter, Malcolm S. "Airbus vs. Boeing (C): Steps Toward Dispute Resolution." Harvard Business School Supplement 388-146, May 1988. (Revised November 1990.) View Details
  26. Note on Diversification as a Strategy

    Presents a discussion of corporate diversification. Covers historical background, the concept of strategy for a diversified company, and concepts of value creation.

    Keywords: Diversification; Strategy; Value Creation;

    Citation:

    Porter, Michael E., and Malcolm S. Salter. "Note on Diversification as a Strategy." Harvard Business School Background Note 382-129, March 1982. (Revised June 1986.) View Details
  27. Hudepohl Brewing Co.

    Presents the problem of how an established regional brewer can survive the onslaught of national breweries, some of which are being cross-subsidized by diversified parent companies. Requires detailed analysis of what operations are profitable and unprofitable for Hudepohl, in addition to industry and competitive analysis. Hudepohl is a private company.

    Keywords: Business Subsidiaries; Profit; Management Analysis, Tools, and Techniques; Industry Growth; Private Ownership; Problems and Challenges; Competition; Diversification;

    Citation:

    Salter, Malcolm S. "Hudepohl Brewing Co." Harvard Business School Case 381-092, December 1980. (Revised December 1984.) View Details
  28. Ford Motor Co. (B): The Automobile Crisis and Ford's Political Strategy--1980

    Keywords: Strategy; Crisis Management; Government and Politics; Business and Government Relations; Auto Industry; United States;

    Citation:

    Salter, Malcolm S. "Ford Motor Co. (B): The Automobile Crisis and Ford's Political Strategy--1980." Harvard Business School Case 382-162, May 1982. (Revised February 1983.) View Details