Executive Education
in Asia-Pacific

Senior Executive Program for China

Begins August 2009, taking place in Beijing, Shanghai, and Boston

The Senior Executive Program for China was created by HBS, the School of Economics and Management at Tsinghua University, and the China Europe International Business School, to specifically address the business and management demands on executives in China today.

Private Equity and Venture Capital - China

Begins October 2009 in Shanghai

This program is jointly offered by HBS and the School of Economics and Management, Tsinghua University (Tsinghua SEM), and explores the inner workings of private equity and venture capital investing in China and beyond.

All Global Executive Education Programs

Asia-Pacific

2009

Pioneering Entrepreneur Yoshiko Shinohara on Turning Temporary Work into Big Business in Japan

Mayo, Anthony J., and Mayuka Yamazaki.
October 2009

At age 74, Yoshiko Shinohara is a towering figure in Japanese business. She has created a wealth of job opportunities, including many for women, by founding the temporary-staffing agency Tempstaff and lobbying to strike down laws that stifled the temp industry. Tempstaff now has approximately 3,300 employees and is a public company. For the past nine years, Shinohara has been on Fortune's list of the 50 most powerful women in global business. It all started, she told Harvard Business School's Anthony J. Mayo and Mayuka Yamazaki, with a personal choice she made when she was young.

Financial Literacy, Financial Decisions, and the Demand for Financial Services: Evidence from India and Indonesia

Cole, Shawn, Thomas Sampson, and Bilal Zia
April 2009

Why is demand for formal financial services low in emerging markets? One view argues that limited cognitive ability and financial literacy stifle demand. A second view argues that demand is rationally low, because formal financial services are expensive and of relatively low value to the poor. This paper uses original surveys and a field experiment to distinguish between two competing answers to this question. Using original survey data from India and Indonesia, we first show that financial literacy is a powerful predictor of demand for financial services. To test the relative importance of literacy and price, we implement a field experiment, offering randomly selected unbanked households financial literacy education, crossed with small incentive (ranging from U.S. $3 to $14) to open a bank savings account. We find that the financial literacy program has no effect on the likelihood of opening a bank savings account in the full sample but do find modest effects for uneducated and financially illiterate households. In contrast, small subsidy payments have a large effect on the likelihood of opening a savings account. These payments are more than two times more cost-effective than the financial literacy training, though this calculation does not take into account any ancillary benefits of financial education.

The Review of Economics and Statistics (forthcoming)

Regional Trade Integration and Multinational Firm Strategies

Antrás, Pol, and C. Fritz Foley
April 2009

This paper analyzes the effects of the formation of a regional trade agreement on the level and nature of multinational firm activity. We examine aggregate data that captures the response of U.S. multinational firms to the formation of the ASEAN free trade agreement. Observed patterns guide the development of a model in which heterogeneous firms from a source country decide how to serve two foreign markets. Following a reduction in tariffs on trade between the two foreign countries, the model predicts growth in the number of source-country firms engaging in foreign direct investment, growth in the size of affiliates that are active in reforming countries both before and after the tariff reduction, and an increase in the extent to which the sales of affiliates in reforming countries are directed towards other reforming countries. Analysis of firm-level responses to the creation of the ASEAN free trade agreement yields results that are consistent with these predictions.

Journal of Macromarketing 29, no. 3 (2009).

Capitalizing On Innovation: The Case of Japan

Dujarric, Robert, and Andrei Hagiu
April 2009

Japan's industrial landscape is characterized by hierarchical forms of industry organization, which are increasingly inadequate in modern sectors, where innovation relies on platforms and horizontal ecosystems of firms producing complementary products. Using three case studies-software, animation, and mobile telephony-we illustrate two key sources of inefficiencies that this mismatch can create. First, hierarchical industry organizations can "lock out" certain types of innovation indefinitely by perpetuating established business practices. Second, even when the vertical hierarchies produce highly innovative sectors in the domestic market, the exclusively domestic orientation of the "hierarchical industry leaders" can entail large missed opportunities for other members of the ecosystem, who are unable to fully exploit their potential in global markets. We argue that Japan has to adopt several key legislative measures in order to address these inefficiencies and capitalize on its innovation: strengthening antitrust and intellectual property rights enforcement; improving the legal infrastructure (e.g., producing more business law attorneys); lowering barriers to entry for foreign investment; and facilitating the development of the venture capital sector

Harvard Business School Working Paper, No. 09-118, April 2009

Female Empowerment: Impact of a Commitment Savings Product in the Philippines (pdf)

Ashraf, Nava, Dean Karlan, Wesley Yin
March 2009

Female 'empowerment' has increasingly become a policy goal, both as an end to itself and as a means to achieving other development goals. Microfinance in particular has often been argued, but not without controversy, to be a tool for empowering women. Here, using a randomized controlled trial, we examine whether access to, and marketing of, an individually held commitment savings product leads to an increase in female decision-making power within the household. We find positive impacts, particularly for women who have below-median decision-making power in the baseline, and we find this leads to a shift towards female-oriented durables goods purchased in the household.

Harvard Business School Working Paper, No. 09-100, March 2009

When Dreaming Is Believing: The (Motivated) Interpretation of Dreams

Morewedge, Carey K., and Michael I. Norton
February 2009

This research investigated laypeople's interpretation of their dreams. Participants from both Eastern and Western cultures believed that dreams contain hidden truths (Study 1) and considered dreams to provide more meaningful information about the world than similar waking thoughts (Studies 2 and 3). The meaningfulness attributed to specific dreams, however, was moderated by the extent to which the content of those dreams accorded with participants' preexisting beliefs-from the theories they endorsed to attitudes toward acquaintances, relationships with friends, and faith in God (Studies 3-6). Finally, dream content influenced judgment: Participants reported greater affection for a friend after considering a dream in which a friend protected rather than betrayed them (Study 5) and were equally reluctant to fly after dreaming or learning of a plane crash (Studies 2 and 3). Together, these results suggest that people engage in motivated interpretation of their dreams and that these interpretations impact their everyday lives.

Journal of Personality and Social Psychology

Spousal Control and Intra-Household Decision Making: An Experimental Study in the Philippines (pdf)

Ashraf, Nava
January 2009

Using an experimental design I elicit causal effects of spousal observability and communication on financial choices of married individuals in the Philippines. Making choices public moves men from putting money into their own account to consumption; communication with their spouse drives men to put income in their wives' account. The strong effect on men but not women of information and communication appears to be driven not as much by gender as by control: men whose wives control household savings are much more likely to exhibit this treatment effect, and women whose husbands control savings exhibit the same pattern as men. These results suggest that existing household models and policies are incomplete without taking into account the bargaining process and, in particular, the way in which this process interacts with underlying control structures in the household.

American Economic Review

From Regional Star to Global Leader

Nohria, Nitin
January 2009

Yang Jianguo was recently promoted from country manager for China to global head of product development at a staid French perfume maker. He was chosen for his technical smarts and his knowledge of emerging markets-a critical avenue for growth, given that sales in the company's core markets have stalled. Eager to succeed in his new role in Paris, Jianguo has lots of fresh ideas, but they seem to be falling on deaf ears. Members of the executive team, for their part, find Jianguo to be largely indifferent to their input. Can Jianguo adjust to this new culture? And can he succeed without sacrificing his identity? Three experts comment on this fictional case study in R0901A and R0901Z. Katherine Tsang, the CEO of Standard Chartered Bank in Shanghai, explains the cultural differences between China and France and recommends that Jianguo push his thinking beyond the Chinese market. She also suggests that the company give all its executive team members multicultural training so they have the tools to understand one another and work together effectively. Mansour Javidan, the dean of research and a professor at Thunderbird School of Global Management, acknowledges that Jianguo's transition would be easier if he had the full support of the CEO, Alain Deronde. But since that isn't forthcoming, he advises Jianguo to work with Alain to develop targets for growth in emerging and traditional markets and a plan for building an infrastructure to achieve those goals. James Champy, the chairman of consulting for Perot Systems, is surprised that a family business would choose an "outsider" for this important post, but he recognizes it as a wise strategic move. He says that Jianguo needs a coach and should focus on learning the home market first, before trying to make inroads further afield.

Harvard Business Review 87, no. 1, January 2009

When Does Domestic Saving Matter for Economic Growth? (pdf)

Comin, Diego, Philippe Aghion, Peter Howitt, and Isabel Tecu
January 2009

Can a country grow faster by saving more? We address this question both theoretically and empirically. In our theoretical model, growth results from innovations that allow local sectors to catch up with frontier technology. In poor countries, catching up requires the cooperation of a foreign investor who is familiar with the frontier technology and a domestic entrepreneur who is familiar with local conditions. In such a country, domestic saving matters for innovation, and therefore growth, because it enables the local entrepreneur to put equity into this cooperative venture, which mitigates an agency problem that would otherwise deter the foreign investor from participating. In rich countries, domestic entrepreneurs are already familiar with frontier technology and therefore do not need to attract foreign investment to innovate, so domestic saving does not matter for growth. A cross-country regression shows that lagged savings is positively associated with productivity growth in poor countries but not in rich countries. The same result is found when the regression is run on data generated by a calibrated version of our theoretical model.

Harvard Business School Working Paper, No. 09-080, January 2009

Cultural Notes on Chinese Negotiating Behavior (pdf)

Sebenius, James K., and Cheng (Jason) Qian
January 2009

Western businesses negotiating with Chinese firms face many challenges, from initiating and smoothing communication to establishing long-lasting relationships and mutual trust, and from bargaining and drafting agreements to securing their implementation. Chinese negotiators can be at once warm hosts and friends and tough bargainers. Unique Chinese cultural elements such as complicated local etiquette, obscured decision-making processes, and heavy reliance on interpersonal relationships instead of legal instruments all add to the complexities of Sino-foreign business negotiations and can make the process tiresome and protracted. Besides talking past each other, Chinese and western negotiators often harbor mutually unfavorable perceptions. Many westerners find Chinese negotiators to be inefficient, indirect, and even dishonest; Chinese negotiators frequently perceive their western counterparts to be aggressive, impersonal, and insincere. The way to decipher the Chinese negotiating style and bring about mutually beneficial results is to better understand the key elements of Chinese culture to which Chinese negotiators attune their business mentality and manners.

Harvard Business School Working Paper, No. 09-076, December 2008

Etiquette and Process Puzzles of Negotiating Business in China: A Questionnaire (pdf)

Sebenius, James K., and Cheng (Jason) Qian
January 2009

Cultural differences can affect negotiations in many ways, from influencing the basic motivations and perceptions of the players to guiding the surface aspects, such as etiquette, protocol, and process, of business interactions. Navigating the challenges of these surface behavioral issues is useful to plumb some of the deeper cultural factors and differences in governance and decision-making of cross-border business negotiation. As suggested by an iceberg analogy, though etiquette, protocol, and deportment comprise the visible tip, they might be linked to more deeply rooted, less obvious forces that are fully capable of sinking the ship. This working paper, through a questionnaire format-intended as an instrument to collect data from a range of people with varying China-related negotiating experience-presents a series of situations of a typical Sino-foreign business negotiation to address both the surface and the root cultural factors. This questionnaire will serve not only to evaluate subjects' appreciation for Chinese culture as it bears on negotiation, but also to better understanding of the process aspects of cross-border negotiation in general.

Harvard Business School Working Paper, No. 09-077, December 2008

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2008

The Supply Side of Innovation: H-1B Visa Reforms and U.S. Ethnic Invention

Kerr, William R., and William F. Lincoln
December 2008

This study evaluates the impact of high-skilled immigrants on U.S. technology formation. Specifically, we use reduced-form specifications that exploit large changes in the H-1B visa program. Fluctuations in H-1B admissions levels significantly influence the rate of Indian and Chinese patenting in cities and firms dependent upon the program relative to their peers. Most specifications find weak crowding-in effects or no effect at all for native patenting. Total invention increases with higher admission levels primarily through the direct contributions of ethnic inventors.

Harvard Business School Working Paper, No. 09-005, December 2008

An Exploration of the Japanese Slowdown during the 1990s (pdf)

Comin, Diego A.
November 2008

No summary available.

Harvard Business School Working Paper, No. 09-065, November 2008

Wellsprings of Creation: Perturbation and the Paradox of the Highly Disciplined Organization (pdf)

Brunner, David James, Bradley R. Staats, David M. Upton, Michael L. Tushman and David M. Upton
July 2008

Organizations face simultaneous imperatives to exploit and explore. Paradoxically, exploitation tends to drive out exploration, rendering organizations rigid and vulnerable to environmental change. Drawing on the Carnegie School, we propose a model where perturbation moderates the relationship between exploitation and exploration. We posit that highly disciplined organizations can sustain virtuous cycles of exploitation and exploration by deliberately perturbing their own processes. We provide illustrations from Toyota and formulate testable hypotheses about the mechanisms of perturbation.

Harvard Business School Working Paper, No. 09-011, July 2008

The Agglomeration of U.S. Ethnic Inventors

Kerr, William R.
July 2008

The ethnic composition of U.S. inventors is undergoing a significant transformation-with deep impacts for the overall agglomeration of U.S. innovation. This study applies an ethnic-name database to individual U.S. patent records to explore these trends with greater detail. The contributions of Chinese and Indian scientists and engineers to U.S. technology formation increase dramatically in the 1990s. At the same time, these ethnic inventors became more spatially concentrated across U.S. cities. The combination of these two factors helps stop and reverse long-term declines in overall inventor agglomeration evident in the 1970s and 1980s. The heightened ethnic agglomeration is particularly evident in industry patents for high-tech sectors, and similar trends are not found in institutions constrained from agglomerating (e.g., universities, government).

Harvard Business School Working Paper, No. 09-003, July 2008

America the Difficult

Desai, Mihir
June 2008


The American (May - June 2008)

Accountability and Inequality in Single-Party Regimes: A Comparative Analysis of Vietnam and China (pdf)

Abrami, Regina, Edmund Malesky, and Yu Zheng
May 2008

Over the past two decades, no two economies have averaged more rapid economic growth than China and Vietnam. But while China's income inequality has risen rapidly over that same time frame, Vietnam's has only grown moderately. Structural and socio-cultural determinants fail to account for these divergent pathways. Existing political variables are also unhelpful. China and Vietnam are coded in exactly the same way, even in the path-breaking work on authoritarian regimes. In this paper, we take a deeper look at political institutions in the two countries, demonstrating that profound differences between the polities directly impact distributional choices. In particular, we find that Vietnamese elite institutions require construction of broader coalitions of policymakers, place more constraints on executive decision making, and have more competitive selection processes. As a result, there are stronger political motivations for Vietnamese leaders to provide equalizing transfers that limit inequality growth.

Harvard Business School Working Paper, No. 08-099, May 2008

Excess Comovement of Stock Returns: Evidence from Cross-sectional Variation in Nikkei 225 Weights

Greenwood, Robin
February 2008

Relative to their weights in a value-weighted index, a number of stocks in Japan's Nikkei 225 stock index are overweighted by a factor of 10 or more. I document a strong positive relation between overweighting and the comovement of a stock with other stocks in the Nikkei index, and a negative relationship between index overweighting and comovement with stocks outside of the index. The cross-sectional approach resolves endogeneity problems associated with event study demonstrations of excess comovement. A trading strategy that bets on the reversion of stock prices of overweighted stocks generates economic profits, confirming that the observed comovement patterns are excessive, and providing further evidence that comovement of stock returns can be a consequence of commonality in trading behavior.

Review of Financial Studies (forthcoming)

'Chimerica' and Global Asset Markets

Ferguson, Niall, and Moritz Schularick
February 2008

In this essay we present a potential explanation for the persistent and, to some eyes, puzzling buoyancy of global asset markets in recent years. We argue that the current world economic conjuncture is the product of a large and unusual divergence or "wedge" between the returns on capital and the cost of capital. Globalization-in particular the integration of the massive Asian labor force into the world economy-has significantly increased the returns on capital. However, contrary to what economic theory might lead us to expect, the cost of capital as measured by long-term real interest rates has not increased, but actually fallen. We call this phenomenon "Chimerica" because it is a consequence of the symbiotic economic relationship that has developed between the People's Republic of China and the United States of America. The entry of Chinese labor into the world economy has significantly boosted the returns on capital relative to the returns on labor. At the same time, by accumulating large currency reserves and channeling them (until very recently) almost exclusively into U.S.government securities, China has kept nominal and real long-term interest rates artificially low. In our view, it is this wedge between returns on capital and the cost of capital, rather than excess liquidity or a shortage of financial assets, that explains the boom in global asset markets as well as the recent upsurge of leveraged buy-out activity.

International Finance 10, no. 3 (winter 2007): 215-239

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2007

China + India: The Power of Two

Khanna, Tarun
December 2007

China and India are burying the hatchet after four-plus decades of hostility. A few companies from both nations have been quick to gain competitive advantages by viewing the two as symbiotic. If Western corporations fail to do the same, they will lose their competitive edge-and not just in China and India but globally. The trouble is, most companies and consultants refuse to believe that the planet's most populous nations can mend fences. Not only do the neighbors annoy each other with their foreign policies, but they're also vying to dominate Asia. Moreover, the world's fastest-growing economies are archrivals for raw materials, technologies, capital, and overseas markets. Still, China and India are learning to cooperate, for three reasons. First, these ancient civilizations may have been at odds since 1962, but for 2,000 years before that, they enjoyed close economic, cultural, and religious ties. Second, neighbors trade more than non-neighbors do, research suggests. Third, China and India have evolved in very different ways since their economies opened up, reducing the competitiveness between them and enhancing the complementarities. Some companies have already developed strategies that make use of both countries' capabilities. India's Mahindra & Mahindra developed a tractor domestically but manufactures it in China. China's Huawei has recruited 1,500 engineers in India to develop software for its telecommunications products. Even the countries' state-owned oil companies, including Sinopec and ONGC, have teamed up to hunt for oil together. Multinational companies usually find that tapping synergies across countries is difficult. At least two American corporations, GE and Microsoft, have effectively combined their China and India strategies, allowing them to stay ahead of global rivals.

Harvard Business Review 85, no. 12 (December 2007)

Facts and Fallacies about U.S. FDI in China

Branstetter, Lee, and Foley, C. Fritz
October 2007

Despite the rapid expansion of U.S.-China trade ties, the increase in U.S. FDI in China, and the expanding amount of economic research exploring these developments, a number of misconceptions distort the popular understanding of U.S. multinationals in China. In this paper, we seek to correct four common misunderstandings by providing a statistical portrait of several aspects of U.S. affiliate activity in the country and placing this activity in its appropriate economic context.

NBER Working Paper Series, No. 13470, October 2007

Private Power in Indonesia

Wells, Louis T.
July 2007

The Asian Currency Crisis led to the collapse of agreements Indonesia had negotiated for private electric power only a few years earlier. The ensuing struggle meant bad publicity and several hundred million dollars in costs for Indonesia. As Indonesia in 2007 was designing a new law that would pass the constitutional test and encourage private investors in electric power, it was not clear that officials had fully understood the lessons of the recent disputes. Problems lay less in the legal framework than in lack of information about deals elsewhere, the institutional structure for negotiations and renegotiations, and the personal interests of highly placed individuals. The resulting power purchase agreements had led to high prices for electricity, imbalances of risks and rewards, and an unwillingness of officials to use the most effective defenses when disputes arose. Learning from the past should help officials not to make similar mistakes in the future.

Bulletin of Indonesian Economic Studies, December 2007

Land Titling and Rural Transition in Vietnam

Iyer, Lakshmi, and Quy-Toan Do
June 2007

We examine the impact of the 1993 Land Law of Vietnam which gave households the power to exchange, transfer, lease, inherit and mortgage their land-use rights. We use household surveys before and after the law was passed, together with the considerable variation across provinces in the speed of implementation of the reform to identify the impact of the law. We find that the additional land rights led to statistically significant increases in the share of total area devoted to long-term crops and in labor devoted to non-farm activities. However, these changes are not large in magnitude and appear to be driven mainly by the increased security of tenure provided by the law, rather than by increased access to credit markets or greater land market participation.

Economic Development and Cultural Change

Trading Patterns and Excess Comovement of Stock Returns

Greenwood, Robin, and Nathan Sosner
June 2007

We study the effects of index-linked trading on the excess comovement of stock returns. In April 2000, 30 stocks were replaced in the Nikkei 225 index in Japan. We document a large increase in the correlation of trading volume of stocks added to the index with the volume of stocks that remain in the index, with opposite results for the deletions. After replacement, daily index return betas of the additions rose by an average of 0.45, while the index return beta of the deleted stocks fell by an average of 0.63. We predict changes in autocorrelations and cross-serial correlations of returns, both confirmed with our data. The results are consistent with the idea that trading patterns are associated with short-run excess comovement of stock returns. Our findings suggest that multi-factor risk models could be enhanced by adding factors capturing correlated demand.

Financial Analysts Journal (forthcoming)

Trading Restrictions and Stock Prices

Greenwood, Robin
May 2007

Firms can manipulate their stock price by limiting the ability of their investors to sell. I examine a series of corporate events in Japan in which firms actively reduced their float--the fraction of shares available to trade--for periods of one to three months, locking investors into their long positions. Theory predicts that the greater the restrictions, the greater the impact of trading on price. Particularly severe restrictions are associated with returns of over 30 percent, most of which are reversed when the restrictions are removed. Firms are more likely to issue equity or redeem convertible debt during the restricted period, suggesting strong incentives for manipulation.

Review of Financial Studies (forthcoming)

Contingent Political Capital and International Alliances: Evidence from South Korea

Siegel, Jordan I.
April 2007

Prior research has suggested that a company's ties to political networks carries only two values, positive and zero, while the results of this study suggest that political network ties can also be a significant liability for companies. Analyzing South Korea as a representative emerging economy, I find that being tied through elite sociopolitical networks to the regime in power significantly increased the rate at which South Korean companies formed cross-border strategic alliances, but also that being tied through elite sociopolitical networks to the political enemies of the regime in power significantly decreased that rate. The present study sheds further light on the so-called dark side of embeddedness by focusing on who is negatively targeted by having the "wrong friends" at the wrong time.

Administrative Science Quarterly (forthcoming)

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2006

Bit Player or Powerhouse? China and Stem-Cell Research

Spar, Debora, and Fiona Murray
September 2006

New England Journal of Medicine 355, no. 12 (September 21, 2006): 1191-1194

Recovery in Aceh: Towards A Strategy of Emergence

Daniel Curran, Leonard, Herman B.
June 2006

Harvard Business School Working Paper No. 05-082, 2005 (Revised May 2006)

Political Relationships, Global Financing and Corporate Transparency: Evidence from Indonesia

Christian Leuz, Oberholzer-Gee, Felix
February 2006

Journal of Financial Economics 81, no. 3 (September 2006): 411-439

Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines

Ashraf, Nava, Dean S. Karlan, and Wesley Yin
September 2005

We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology. The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism. We conducted a baseline survey on 1777 existing or former clients of a bank. One month later, we offered the commitment product to a randomly chosen subset of 710 clients; 202 (28.4 percent) accepted the offer and opened the account. In the baseline survey, we asked hypothetical time discounting questions. Women who exhibited a lower discount rate for future relative to current trade-offs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. After twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group. We conclude that the savings response represents a lasting change in savings, and not merely a short-term response to a new product.

Quarterly Journal of Economics

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