Global Reach. Global Knowledge.

Executive Education
in Europe

Business-to-Business Marketing Strategy

May 2012
Hertfordshire, England
Senior and mid-level managers develop a more nuanced view of business buyers in this program focused on today's global B2B marketing challenges. Exploring the latest research along with proven best practices, you will enhance your ability to implement successful marketing and selling strategies and develop profitable long-term customer relationships.

Changing the Game

May 2012
Hertfordshire, England
Assess and improve your personal dealmaking and decision-making skills in this hands-on program designed to build confidence and business results. Examining the psychology of decision making, the elements of successful negotiation, and multiparty dealmaking, you will audit your own strategies while exploring alternative approaches. Practice and feedback will enhance your ability to negotiate high-stakes deals and make decisions under pressure.

Leading High-Performance Healthcare Organizations

June 2012
Hertfordshire, England
With a focus on strategy, this program helps healthcare executives around the world enhance leadership skills while improving operations and clinical outcomes. You will examine best practices for optimizing medical advances and information technology, implementing new models of care delivery, and enhancing processes and budgetary controls. Cross-industry insight helps you overcome barriers to innovation and improve the performance of your organization.

All Global Executive Education Programs

2011

Inducement Prizes and Innovation

Brunt, Liam, Josh Lerner, and Tom Nicholas
December 2011

We examine the effect of prizes on innovation using data on awards for technological development offered by the Royal Agricultural Society of England at annual competitions between 1839 and 1939. We find that the effects of prizes on competitive entry are large, and we also detect an impact of the prizes on the quality of contemporaneous patents, especially when prize categories were set by a strict rotation scheme, thereby mitigating the potentially confounding effect that they targeted only "hot" technology sectors. Prizes encouraged competition and medals were more important than monetary awards. The boost to innovation we observe cannot be explained by the redirection of existing inventive activity.

Journal of Industrial Economics

Does Planning Regulation Protect Independent Retailers?

Sadun, Raffaella
December 2011

Entry regulations against big-boxes have been introduced in many countries to protect independent retailers. Analyzing a planning reform launched in the U.K. in the 1990s, I show that entry regulations may in fact accelerate the decline of independents by increasing the attractiveness of smaller in-town store formats for retail chains. The causal impact of planning regulation is estimated using variation in local political control across the U.K., which exogenously affects the ease of entry for big-boxes in this specific institutional framework. The analysis shows that up to 17% of the independents' employment decline between 1998 and 2004 can be attributed to the regulatory reform.

Harvard Business School Working Paper, No. 12-044, December 2011

Resources or Power? Implications of Social Networks on Compensation and Firm Performance

Horton, Joanne, Yuval Millo, and George Serafeim
November 2011

Using a sample of 4,278 listed U.K. firms, we construct a social network of directorship-interlocks that comprises 31,495 directors. We use social capital theory and techniques developed in social network analysis to measure a director's connectedness and investigate whether this connectedness is associated with their compensation level and their firm's overall performance. We find connectedness is positively associated with compensation and with the firm's future performance. The results do not support the view that executive and outside directors use their connections to extract rents. Rather the company compensates these individuals for the resources these better connections provide to the firm.

State of the Region Report 2011: The Top of Europe's Quest for Resilience-A Competitive Region Facing a Fragile Global Economy

Ketels, Christian H.M.
November 2011

The State of the Region Reports provide an annual discussion of competitiveness and collaboration across the Baltic Sea Region, covering the Nordic countries, the Baltic countries, Northern Germany, Northern Poland, and Northwestern Russia. The 2011 edition, the 8th in this series, documents in its first part how this region has been able to recover more strongly after the crisis than many of its peers. It provides updated information about underlying competitiveness as well as key policy initiatives. A special section is devoted to Poland. The second part then discusses the level of collaboration in the region, covering the activities of the many cross-regional institutions and networks. It looks in particular at the progress made in the context of the EU Baltic Sea Region Strategy, the European Union's first macroregional strategy. The third section then provides a discussion of entrepreneurship across the region.

Free to Punish? The American Dream and the Harsh Treatment of Criminals

Di Tella, Rafael, and Juan Dubra
October 2011

We describe the evolution of selective aspects of punishment in the U.S. over the period 1980-2004. We note that imprisonment increased around 1980, a period that coincides with the "Reagan revolution" in economic matters. We build an economic model where beliefs about economic opportunities and beliefs about punishment are correlated. We present three pieces of evidence (across countries, within the U.S., and an experimental exercise) that are consistent with the model.

NBER Working Paper Series, No. 17309, August 2011

Carbon Tariffs: Impacts on Technology Choice, Regional Competitiveness, and Global Emissions

Drake, David F.
October 2011

Carbon regulation is intended to reduce global emissions, but there is growing concern that such regulation may simply shift production to unregulated regions, potentially increasing overall carbon emissions in the process. Carbon tariffs have emerged as a possible mechanism to address this concern by imposing carbon costs on imports at the regulated region's border. Advocates claim that such a mechanism would level the playing field, whereas opponents argue that such a tariff is anti-competitive. This paper analyzes how carbon tariffs affect technology choice, regional competitiveness, and global emissions through a model of imperfect competition between "domestic" (i.e., carbon-regulated) firms and "foreign" (i.e., unregulated) firms, where domestic firms have the option to offshore production and the number of foreign entrants is endogenous. Under a carbon tariff, results indicate that foreign firms would adopt clean technology at a lower emissions price than domestic producers, with the number of foreign entrants increasing in emissions price only over intervals where foreign firms hold this technology advantage. Further, domestic firms would only offshore production under a carbon tariff to adopt technology strictly cleaner than technology utilized domestically. As a consequence, under a carbon tariff, foreign market share is non-monotonic in emissions price, and global emissions conditionally decrease. Without a carbon tariff, foreign share monotonically increases in emissions price, and a shift to offshore production results in a strict increase in global emissions.

Harvard Business School Working Paper, No. 12-029, October 2011

The Enabling Role of Social Position in Diverging from the Institutional Status Quo: Evidence from the U.K. National Health Service

Battilana, Julie
September 2011

This study examines the relationship between social position, both within the field and within the organization, and the likelihood of individual actors initiating organizational changes that diverge from the institutional status quo. I explore this relationship using data from 93 change projects conducted by clinical managers at the National Health Service in the United Kingdom. The results show social position, both within the field and within the organization, influences actors' likelihood to initiate two types of organizational change that diverge from the institutional status quo, namely, (1) changes that diverge from the institutionalized template of role division among organizations and (2) changes that diverge from the institutionalized template of role division among professional groups in a field. The findings indicate that these two types of divergent organizational change are likely to be undertaken by individual actors with different profiles in terms of social position within the field and the organization.
Organization Science 22, no. 4 (July-August 2011): 817-834

Economic Impacts of Immigration: A Survey

Pekkala Kerr, Sari, and William R. Kerr
August 2011

This paper surveys recent empirical studies on the economic impacts of immigration. The survey first examines the magnitude of immigration as an economic phenomenon in various host countries. The second part deals with the assimilation of immigrant workers into host-country labor markets and concomitant effects for natives. The paper then turns to immigration's impact for the public finances of host countries. The final section considers emerging topics in the study of immigration. The survey particularly emphasizes the recent experiences of Northern Europe and Scandinavia and relevant lessons from traditional destination countries like the U.S.

Finnish Economics Papers 24, no. 1 (spring 2011)

The Organization of Firms Across Countries

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen
August 2011

We argue that social capital as proxied by trust increases aggregate productivity by affecting the organization of firms. To do this we collect new data on the decentralization of investment, hiring, production, and sales decisions from Corporate Headquarters to local plant managers in almost 4,000 firms in the United States, Europe, and Asia. We find that firms headquartered in high trust regions are more likely to decentralize, with trust accounting for about half of the variation in decentralization in our data. To help identify causal effects, we look within multinational firms, and show that higher levels of bilateral trust between the multinational's country of origin and subsidiary's country of location increases decentralization, even after instrumenting trust using religious and ethnic similarities between the countries. Trust raises aggregate productivity through two channels: (1) trust facilitates reallocation between firms by allowing more efficient firms to grow as CEOs can decentralize more decisions and (2) trust complements the adoption of new technologies, thereby increasing productivity within firms during times of rapid technological change.

Harvard Business School Working Paper, No. 12-005, August 2011

Managing Political Risk in Global Business: Beiersdorf 1914-1990

Jones, Geoffrey, and Christina Lubinski
July 2011

This working paper examines corporate strategies of political risk management during the twentieth century. It focuses especially on Beiersdorf, a German-based pharmaceutical and skin care company. During World War I the expropriation of its brands and trademarks revealed its vulnerability to political risk. Following the advent of the Nazi regime in 1933, the largely Jewish owned and managed company faced a uniquely challenging combination of home and host country political risk. The paper reviews the firm's responses to these adverse circumstances, challenging the prevailing literature which interprets so-called "cloaking" activities as one element of businesses' cooperation with the Nazis. The paper departs from previous literature in assessing the outcomes of the company's strategies after 1945. It examines the challenges and costs faced by the company in recovering the ownership of its brands. While the management of distance became much easier over the course of the twentieth century because of communications improvements, this working paper shows that the costs faced by multinational corporations in managing governments and political risk grew sharply.

Harvard Business School Working Paper, No. 12-003, July 2011

What Do CEOs Do?

Bandiera, Oriana, Luigi Guiso, Andrea Prat, and Raffaella Sadun
March 2011

We develop a methodology to collect and analyze data on CEOs' time use. The idea-sketched out in a simple theoretical set-up-is that CEO time is a scarce resource and its allocation can help us identify the firm's priorities as well as the presence of governance issues. We follow 94 CEOs of 600 top Italian firms over a pre-specified week and record the time devoted each day to different work activities. We focus on the distinction between time spent with insiders (employees of the firm) and outsiders (people not employed by the firm). Individual CEOs differ systematically in how much time they spend at work and in how much time they devote to insiders vs. outsiders. We analyze the correlation between time use, managerial effort, quality of governance, and firm performance and interpret the empirical findings within two versions of our model, one with effective and one with imperfect corporate governance. The patterns we observe are consistent with the hypothesis that time spent with outsiders is on average less beneficial to the firm and more beneficial to the CEO and that the CEO spends more time with outsiders when governance is poor.

Harvard Business School Working Paper, No. 11-081, February 2011

Do Not Trash the Incentive! Monetary Incentives and Waste Sorting

Bucciol, Alessandro, Natalia Montinari, and Marco Piovesan
March 2011

This paper examines whether monetary incentives are an effective tool for increasing domestic waste sorting. We exploit the exogenous variation in the pricing systems experienced during the 1999-2008 decade by the 95 municipalities in the district of Treviso (Italy). We estimate with a panel analysis that pay-as-you-throw (PAYT) incentive-based schemes increase by 12.2% the ratio of sorted to total waste. This increase reflects a change in the behavior of households, which keep unaltered the production of total waste but sort it to a larger extent. In addition, we show that several factors that may discourage local administrators from adopting PAYT-illegal dumping and higher cost of management-are not important at the aggregate level. Hence, our results support the use of PAYT as an effective tool to increase waste sorting.

Harvard Business School Working Paper, No. 11-093, March 2011

An Empirical Decomposition of Risk and Liquidity in Nominal and Inflation-Indexed Government Bonds

Pflueger, Carolin E., and Luis M. Viceira
March 2011

This paper decomposes the excess return predictability in inflation-indexed and nominal government bonds into effects from liquidity, market segmentation, real interest rate risk, and inflation risk. We estimate a large and variable liquidity premium in U.S. Treasury Inflation Protected Securities (TIPS) from the co-movement of breakeven inflation with liquidity proxies. The liquidity premium is around 70 basis points in normal times, but much larger during the early years of TIPS issuance and during the height of the financial crisis in 2008-2009. The liquidity premium explains the high excess returns on TIPS as compared to nominal Treasuries over the period 1999-2009. Liquidity-adjusted breakeven inflation appears stable, suggesting stable inflation expectations over our sample period. We find predictability in both inflation-indexed bond excess returns and in the spread between nominal and inflation-indexed bond excess returns even after adjusting for liquidity, providing evidence for both time-varying real interest rate risk premia and time-varying inflation risk premia. Liquidity appears uncorrelated with real interest rate and inflation risk premia. We test whether bond return predictability is due to segmentation between nominal and inflation-indexed bond markets but find no evidence in either the U.S. or in the U.K.

Harvard Business School Working Paper, No. 11-094, March 2011

Inflation-Indexed Bonds and the Expectations Hypothesis

Pflueger, Carolin E., and Luis M. Viceira
March 2011

This paper empirically analyzes the Expectations Hypothesis (EH) in inflation-indexed (or real) bonds and in nominal bonds in the U.S. and in the U.K. We strongly reject the EH in inflation-indexed bonds and also confirm and update the existing evidence rejecting the EH in nominal bonds. This rejection implies that the risk premium on both real and nominal bonds varies predictably over time. We also find strong evidence that the spread between the nominal and the real bond risk premium, or the breakeven inflation risk premium, also varies over time. We argue that the time variation in real bond risk premia most likely reflects both a changing real interest rate risk premium and a changing liquidity risk premium, and that the variability in the nominal bond risk premia reflects a changing inflation risk premium. We estimate significant time series variability in the magnitude and sign of bond risk premia.

Harvard Business School Working Paper, No. 11-095, March 2011

Sustainability and Capital Markets: How Firms Can Manage the Crucial Link

Ioannou, Ioannis, and George Serafeim
March 2011

No abstract available

European Business Review

Do U.S. Market Interactions Affect CEO Pay? Evidence from U.K. Companies

Gerakos, Joseph J., Joseph D. Piotroski, and Suraj Srinivasan
February 2011

This paper examines the extent that interactions with U.S. markets impact the compensation practices of non-U.S. firms. Using a sample of large U.K. companies, we find that the total compensation of U.K. CEOs is positively related to the extent of the firm's interactions with U.S. markets, as captured by the percentage of total sales generated in the U.S., the presence of prior U.S. acquisition activity, the presence of a U.S. exchange listing, and CEO and director-level U.S. board experience. More importantly, we find that exposure to U.S. product markets is associated with the adoption of U.S.-style compensation arrangements (i.e., incentive-based pay packages). In contrast, we find no such association with exposures to other (non-U.S.) foreign product markets. Together, our evidence is consistent with U.S. market interactions impacting U.K. compensation practices through two mechanisms: 1) to alleviate internal and external pay disparities arising from the presence of U.S. operations and businesses (proxied by the percent U.S. sales and prior U.S. acquisitions) and 2) to compensate CEOs for bearing the additional risk and responsibility associated with exposure to foreign securities laws and legal environments (proxied by both U.S. and non-U.S. exchange listings).

Harvard Business School Working Paper, No. 11-075, January 2011

Happiness Adaptation to Income and to Status in an Individual Panel

Di Tella, Rafael, and Robert MacCulloch
February 2011

We study adaptation to income and to status using individual panel data on the happiness of 7,812 people living in Germany from 1984 to 2000. Specifically, we estimate a "happiness equation" defined over several lags of income and status and compare the long-run effects. We can (cannot) reject the hypothesis of no adaptation to income (status) during the four years following an income (status) change. In the short run (current year) a one standard deviation increase in status and 52% of one standard deviation in income are associated with similar increases in happiness. In the long run (five-year average) a one standard deviation increase in status has a similar effect to an increase of 285% of a standard deviation in income. We also present different estimates of adaptation across subgroups. For example, we find that those on the right (left) of the political spectrum adapt to status (income) but not to income (status). We can reject equal relative adaptation (to income versus status) for these two subgroups.

Journal of Economic Behavior and Organization

An Angel Investor with an Agenda

Herzlinger, Regina E., and Beatriz Muñoz-Seca
February 2011

No abstract available

Harvard Business Review 89, no. 3 (March 2011)

Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China, 1880-1930

Chaudhary, Latika, Aldo Musacchio, Steven Nafziger, and Se Yan
February 2011

Our paper provides a comparative perspective on the development of public primary education in four of the largest developing economies circa 1910, BRIC-Brazil, Russia, India, and China. These four countries encompassed almost 50% of the world's population in 1910, but remarkably few of their citizens attended any school in the early 20th century. We present new, comparable data on school inputs and outputs for BRIC that are drawn from a variety of archival and published sources. Similar to recent studies that emphasize the importance of income, political decentralization, and the level of political voice to the spread of primary education in developed economies, we also find these factors to be important in the context of BRIC. We also outline other factors such as local ethnic and religious heterogeneity, the institutional legacies of colonialism and serfdom, and, especially, the characteristics of the political and economic elite that help explain the low achievement levels of these countries and the incredible amount of heterogeneity within each BRIC.

Harvard Business School Working Paper, No. 11-083, February 2011

Why You Aren't Buying Venezuelan Chocolate

Deshpandé, Rohit
January 2011

The article discusses the "provenance paradox," wherein consumers are unwilling to buy high-quality products from regions not commonly associated with excellence in certain product categories. Venezuelan chocolate maker Chocolates El Rey does little international business because consumers associate premium chocolate more with Belgium or Switzerland than with Venezuela. Companies in this position have difficulty charging prices sufficient to fuel international expansion. The author presents advice on overcoming the paradox but warns it can be a lengthy process.

Harvard Business Review 88, no. 12 (December 2010).

The Euro as a Reserve Currency for Global Investors

Viceira, Luis M., and Ricardo Gimeno
January 2011

This article explores the demand for the euro for risk management purposes and the evidence of stock market integration in the euro area. We define a reserve currency as one that investors demand either because it helps them hedge real interest risk and inflation risk, or because it helps them reduce the volatility of their portfolio of stocks and bonds because its return is negatively correlated with the returns on those assets. This article re-examines the role of the euro as a reserve currency in the sense of Campbell, Viceira, and White (2003), updating their evidence, and reviews the evidence of Campbell, Serfaty-de Medeiros, and Viceira (2010) in detail. Consistent with the intuition that an integrated capital market is one in which there is a common discount factor pricing securities, we also investigate whether stocks in the euro area have moved from a regime in which national stock markets were priced with discount rates that were predominantly country specific, to a regime in which national stock markets are predominantly priced by a euro area-wide common discount rate. We adopt the beta decomposition approach of Campbell and Vuolteenaho (2004) and Campbell, Polk, and Vuolteenaho (2010) to test for capital market integration and find robust evidence of increased capital market integration in the euro zone and, consequently, improved risk sharing among euro zone economies.

What Makes the Bonding Stick? A Natural Experiment Involving the Supreme Court and Cross-Listed Firms

Licht, Amir N., Xi Li, and Jordan I. Siegel
January 2011

Using a natural experiment to overcome the empirical challenges facing the debate over the bonding hypothesis, we analyze markets' reaction to a sudden radical change in the world of U.S.-listed foreign firms. In March 2010, the U.S. Supreme Court signaled its intention to geographically limit the reach of the U.S. antifraud regime. The Court thus excluded the overwhelming majority of investors in U.S.-listed foreign firms from the protection of the U.S. civil liability regime and cast at least partial limitations on the SEC's regulatory authority. This event nonetheless was met with positive abnormal returns of U.S.-listed foreign firms all over the world. These abnormal returns are actually higher the greater the percentage of a firm's capital listed on non-U.S. exchanges. We find no evidence that markets' reaction to this event related to the corporate governance and legal environment in foreign issuers' home country. These results challenge the legal bonding hypothesis while suggesting that the U.S. regime of civil liability as currently designed may not have been seen as a source of economic value for outside investors.

Harvard Business School Working Paper, No. 11-072, January 2011

Disaster Politics: International Politics and Relief Efforts

Werker, Eric
January 2011

No abstract available

Harvard International Review

2010

Competitiveness: Business Model Reconfiguration for Innovation and Internationalization

Casadesus-Masanell, Ramon, and Joan E. Ricart
December 2010

The purpose of this paper is to reflect on competitiveness by using the business model concept and to understand the need to adapt business models to changes in the environment.

Management Research 8, no. 2 (2010): 123-149

Between Family Heritage and Global Market. Changes in Ownership and Management of Large West German Family Firms (1960-2008)

Lubinski, Christina
December 2010

Large family firms fall between two theoretical accounts. They neither follow the development path described by Alfred D. Chandler nor do they resemble small- and medium-sized Mittelstand firms, which Gary Herrigel highlighted as a successful alternative. That is why so far there has been little research about them beyond individual case studies. This article focuses on large family firms in Germany during the second half of the twentieth century. Based on a regionally focused sample of 310 businesses, the article offers insights into their ownership and management in 1960 and asks how the firms developed until 2008. The majority of large family firms had surprisingly homogenous characteristics, such as concentrated long-term family ownership, few shareholders, and family management. This structure was successful within the historical context of the 1960s but came under attack during the crisis-ridden decades that followed. By tracing these changes, the paper simultaneously shows that the theoretical dichotomy of family and managerial firms is misleading. Instead of interpreting the family firm as a static organization, the focus should shift to the family influence, which evolves with time and with the evolution of business's macroeconomic and political environments.

Zeitschrift für Unternehmensgeschichte

A Note on Fairness and Redistribution

Di Tella, Rafael, and Juan Dubra
December 2010

We note some problems in Alesina and Angeletos (2005) and suggest a way to maintain the key insight of that paper, which is that a demand for fairness could lead to different economic systems such as those observed in France versus the U.S. (multiple equilibria).

Harvard Business School Working Paper, No. 11-059, December 2010

Regulating for Legitimacy: Consumer Credit Access in France and America

Trumbull, Gunnar
November 2010

Theories of legitimate regulation have emphasized the role of governments either in fixing market failures to promote greater efficiency or in restricting the efficient functioning of markets in order to pursue public welfare goals. In either case, features of markets serve to justify regulatory intervention. I argue that this causal logic must sometimes be reversed. For certain areas of regulation, its function must be understood as making markets legitimate. Based on a comparative historical analysis of consumer lending in the United States and France, I argue that national differences in the regulation of consumer credit had their roots in the historical conditions by which the small loan sector came to be legitimized. Americans have supported a liberal regulation of credit because they have been taught that access to credit is welfare promoting. This perception emerged from a historical coalition between commercial banks and NGOs that promoted credit as the solution to a range of social ills. The French regulate credit tightly because they came to see credit as both economically risky and a source of reduced purchasing power. This attitude has its roots in the early postwar lending environment, in which loans were seen to be beneficial only if they were accompanied by strong government protections. These cases suggest that national differences in regulation may trace to historically contingent conditions under which markets are constructed as legitimate.

Harvard Business School Working Paper, No. 11-047, November 2010.

Americans Do I.T. Better: U.S. Multinationals and the Productivity Miracle

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen
October 2010

The U.S. has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectors that intensively use information technologies (IT). This has not occurred in Europe. If the U.S. "productivity miracle" is due to a natural advantage of being located in the U.S., then we would not expect to see any evidence of it for U.S. establishments located abroad. This paper shows in fact that U.S. multinationals operating in the U.K. do have higher productivity than non-U.S. multinationals in the U.K., and this is primarily due to the higher productivity of their IT. Furthermore, establishments that are taken over by U.S. multinationals increase the productivity of their IT, whereas observationally identical establishments taken over by non-U.S. multinationals do not. One explanation for these patterns is that U.S. firms are organized in a way that allows them to use new technologies more efficiently. A model of endogenously chosen organizational form and IT is developed to explain these new micro and macro findings.

American Economic Review (forthcoming).

Investor Behaviour in a Nascent Capital Market: Scottish Bank Shareholders in the Nineteenth Century

Acheson, Graeme, and John D. Turner
September 2010

This article uses the records of nineteenth-century Scottish banks in an attempt to understand investor behaviour in the early British capital market. It presents four main findings, some of which do not conform to the basic assumptions of standard asset pricing theories. First, in an era when efficient portfolio diversification was not possible, the intrinsic risk of an equity security was an important input into investor decision making. Second, our evidence suggests that businesspeople initially regarded bank stock as a consumption good, as being a stockholder gave them privileged access to bank finance. When bank lending practices changed in the middle of the century, this access-to-credit advantage associated with owning bank stock largely disappeared. Third, investors typically exhibited a bias towards banks that conducted business in the areas where they resided. Fourth, a sizeable proportion of investors were stockholders in more than one bank.

Economic History Review

Law and Finance c. 1900

Musacchio, Aldo
September 2010

How persistent are the effects of legal institutions adopted or inherited in the distant past? A substantial literature argues that legal origins have persistent effects that explain clear differences in investor protections and financial development around the world today (La Porta et al., 1998, 1999 and passim). This paper examines the persistence of the effects of legal origins by examining new estimates of different indicators of financial development in more than 20 countries in 1900 and 1913. The evidence presented does not yield robust results that can sustain the hypothesis of persistence effects of legal origin, but it is not powerful enough to reject it either. Then the paper examines whether there were systematic differences in the extent of investor protections across countries, since that is the main channel through which legal origin affects financial development, and shows that all the evidence supports the idea of relative convergence in corporate governance practices across legal families circa 1900. The paper concludes that, if the evidence presented is representative, the variation observed in financial development around the world today is likely a product of events of the twentieth century rather than a consequence of long-term (and persistent) differences occasioned by legal traditions.

NBER Working Paper Series, No. 16216, July 2010

Recent Advances in the Empirics of Organizational Economics

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen
September 2010

We present a survey of recent contributions in empirical organizational economics, focusing on management practices and decentralization. Productivity dispersion between firms and countries has motivated the improved measurement of firm organization across industries and countries. There appears to be substantial variation in management practices and decentralization not only between countries, but also especially within countries. Much of the poorer average management quality in countries like Brazil and India seems to result from a long tail of poorly managed firms, which barely exist in the United States. Some stylized facts include the following: (1) competition seems to foster improved management and decentralization; (2) larger firms, skill-intensive plants, and foreign multinationals appear better managed and are more decentralized; (3) firms that are both family owned and managed appear to have worse management and are more centralized; and (4) firms facing an environment of lighter labor market regulations and more human capital specialize relatively more in people management. There is evidence for complementarities between information and communication technology, decentralization, and management, but the relationship is complex, and identification of the productivity effects of organizational practices remains a challenge for future research.

Annual Review of Economics Vol. 2 (2010)

Protecting Outside Investors in a Laissez-faire Legal Environment: Corporate Governance and Dividends in Victorian Britain

Campbell, Gareth, and John D. Turner
September 2010

Companies in Victorian Britain operated in a laissez-faire legal environment from the perspective of outside investors, implying that such investors were not protected by the legal system. This article seeks to identify the alternative mechanisms that outside shareholders used to protect themselves by examining the dividend policy and governance of over 800 publicly traded companies at the beginning of the 1880s. We assess the importance of these mechanisms by estimating their impact on Tobin's Q. Our evidence suggests that dividends and well-structured and incentivized boards of directors may have played a role in protecting the interests of outside investors.

Economic History Review

Technology Diffusion and Postwar Growth

Diego Comin, Bart Hobijn
September 2010

In the aftermath of World War II, the world's economies exhibited very different rates of economic recovery. We provide evidence that those countries that caught up the most with the U.S. in the postwar period are those that saw an acceleration in the speed of adopting new technologies. This acceleration is correlated with the incidence of U.S. economic aid and technical assistance in the same period. We interpret this as supportive of the interpretation that technology transfers from the U.S. to Western European countries and Japan were an important factor in driving growth in these recipient countries during the postwar decades.

NBER Macroeconomics Annual

Wealth Inequality in the European Periphery, Ireland, 1858-2001

Turner, John D.
September 2010

Using annual will indexes, a series of wealth concentration is constructed for the north of Ireland on a decennial basis for the period 1858 to 2001. Wealth was highly concentrated at the beginning of the sample period, but inequality falls towards the end of the nineteenth century and continues to fall until the 1970s. However, there does not appear to be a Kuznets-type process at work. Instead, using data on socio-occupational status, it is suggested that the fall in wealth concentration appears to be associated with the demise of the titled classes. Interestingly, similar to the findings of other studies, wealth has become more concentrated since the 1970s.

Oxford Economic Papers 62, no. 4 (October 2010)

The Profits of Power: Commercial Realpolitik in Europe and Eurasia.

Rawi Abdelal
September 2010

No abstract available

Harvard Business School Working Paper, No. 11-028, September 2010

Inducement Prizes and Innovation

Brunt, Liam, Josh Lerner, and Tom Nicholas
May 2011

We examine the effect of prizes on innovation using data on awards for technological development offered by the Royal Agricultural Society of England at annual competitions between 1839 and 1939. We find large effects of the prizes on competitive entry and the quality of contemporaneous patents, especially when prize categories were set by a strict rotation scheme, thereby mitigating the potentially confounding effect that they targeted only "hot" technology sectors. The prizes encouraged competition and medals were particularly effective. The boost to innovation we observe can only be partly explained by the re-direction of existing inventive activity.

Harvard Business School Working Paper, No. 11-118, May 2011

Historical Trajectories and Corporate Competences in Wind Energy

Jones, Geoffrey, and Loubna Bouamane
May 2011

This working paper surveys the business history of the global wind energy turbine industry between the late nineteenth century and the present day. It examines the long-term prominence of firms headquartered in Denmark, the more fluctuating role of U.S.-based firms, and the more recent growth of German, Spanish, Indian, and Chinese firms. While natural resource endowment in wind has not been very significant in explaining the country of origin of leading firms, the existence of rural areas not supplied by grid electricity was an important motivation for early movers in both the U.S. and Denmark. Public policy was the problem rather than the opportunity for wind entrepreneurs before 1980, but beginning with feed-in tariffs and other policy measures taken in California, policy mattered a great deal. However, Danish firms, building on inherited technological capabilities and benefitting from a small-scale and decentralized industrial structure, benefitted more from Californian public policies. The more recent growth of German, Spanish, and Chinese firms reflected both home country subsidies for wind energy and strong local content policies, while successful firms pursued successful strategies to acquire technologies and develop their own capabilities.

Harvard Business School Working Paper, No. 11-112, May 2011

Mandatory IFRS Adoption and Financial Statement Comparability

Brochet, Francois, Alan Jagolinzer, and Edward J. Riedl
May 2011

This study examines the effect of mandatory International Financial Reporting Standards (IFRS) adoption on financial statement comparability. To isolate the effects of changes in comparability, we examine changes to information asymmetry for firms domiciled in the U.K. Domestic standards in the U.K. that preceded IFRS adoption are considered very similar to IFRS (Bae et al., 2008); accordingly, we use the U.K. as a setting to isolate changes to the information environment relating to IFRS adoption that is more likely to reflect changes in comparability versus information quality. If IFRS adoption improves financial statement comparability across firms, we predict this should reduce private information benefits. Empirical results confirm these predictions. Specifically, abnormal returns to two proxies for private information (insider purchases and analyst recommendation upgrades) are reduced following IFRS adoption. Similar results are obtained for subsamples that further isolate the reduction in private information as attributable to increases in comparability: firms having low amounts of reconciling items between U.K. GAAP and IFRS, and firms having ex ante high quality information environments. Together, the results are consistent with mandatory IFRS adoption leading to enhanced comparability.

Harvard Business School Working Paper, No. 11-109, April 2011

The Impact of Forward-Looking Metrics on Employee Decision Making

Casas-Arce, Pablo, F. Asís Martínez-Jerez, and V.G. Narayanan
April 2011

This paper analyzes the effects of providing forward-looking metrics on employee decision making. We use data from a southern European bank that, in April 2002, started providing its branch managers with customer lifetime value (CLV) information about mortgage applicants. The data allow us to gauge the effects of enriching the information set of these employees in an environment where incentives and the allocation of decision rights remained unchanged. We find that CLV availability resulted in a significant shift in attention towards the more profitable client segments (the weight of the top segment in the portfolio of customers increases from 26% to 34%), but we do not find evidence of improved cross-selling (except for an increase in the sale of insurance products). Moreover, the use of CLV information did not have a negative impact on pricing, as some of the literature suggests, nor on default risk, indicating that managers increased sales to more profitable customers by providing better customer service.

Harvard Business School Working Paper, No. 11-106, April 2011

2010

The Effect of Financial Development on the Investment Cash Flow Relationship: Cross-Country Evidence from Europe

Becker, Bo, and Jagadeesh Sivadasan
March 2010

We investigate financing constraints in a large cross-country data set covering most of the European economy. Firm-level investment sensitivity to cash flow is used to identify financing constraints. We find that the sensitivities are significantly positive, on average, controlling for country and industry fixed effects, as well as firm-level controls. Most importantly, the cash flow sensitivity of investment is lower in countries with better-developed financial markets. This suggests that financial development may mitigate financial constraints. This effect is weaker in conglomerate subsidiaries, which are likely to have access to internal capital markets and depend less on the outside financial environment, and possibly for firms in industries with highly liquid assets as well. This result sheds light on the link between financial and economic development.

B.E. Journal of Economic Analysis & Policy (forthcoming).

Labor Regulations and European Private Equity

Bozkaya, Ant, and William R. Kerr
January 2010

European nations substitute between employment protection regulations and labor market expenditures (e.g., unemployment insurance benefits) for providing worker insurance. Employment regulations more directly tax firms making frequent labor adjustments than other labor insurance mechanisms. Venture capital and private equity investors are especially sensitive to these labor adjustment costs. Nations favoring labor expenditures as the mechanism for providing worker insurance developed stronger private equity markets in high volatility sectors over 1990-2004. These patterns are further evident in U.S. investments into Europe. In this context, policy mechanisms are more important than the overall insurance level provided.
Harvard Business School Working Paper, No. 08-043, December 2009

Assess, Don't Assume, Part II: Negotiating Implications of Cross-Border Differences in Decision Making, Governance, and Political Economy

Sebenius, James K.
January 2010

When facing a negotiation that crosses national borders and/or cultures, the standard preparatory assessments-of the parties, their interests, their no-deal options, opportunities for and barriers to creating and claiming value, the most promising sequence and process design, etc.-should be informed and modified by potentially relevant factors. Drawing on considerable literature in cross-border and cross-cultural negotiation, a two-paper series develops a four-level prescriptive framework for effectively carrying out such assessments. The first paper in this series ("Etiquette and National Culture in Negotiation") described 1) common expectations for surface behavior, and 2) some implications of deeper cultural characteristics for the negotiation process itself, as well as cross-border caveats such as stereotyping and overemphasizing national culture to the exclusion of other factors. The current paper carries this analysis further by systematically analyzing a third and fourth class of factors that often prove critical in cross-border dealmaking: 3. The decision-making and governance processes that are the targets of influence efforts. While negotiations take place with individuals, those individuals are typically enmeshed in organizational processes and cultures. Thus, a key assessment focuses on the organization's decision-making and governance processes. Several questions guide this analysis: Who has what decision rights? Is it a one-person authoritarian process? A simple consensus? A multi-stage consensus process? A key subgroup? How does the formal decision-making and governance process differ from the informal one? 4. The broader economic and political context for negotiation as well as salient "comparable" deals. Several questions guide this analysis: Is there a formal or informal government policy toward the kind of arrangements under negotiation such as the requirement that the majority of a joint venture be owned by a local partner? Are high-tech deals particularly sought after by the state? What recent deals by others, successful or not, will be salient in the minds of your local hosts and authorities when they contemplate yours? Does the political ethos favor state control or privatization? Does a wrenching political transition foster managerial uncertainty and decision paralysis? And so on.
Harvard Business School Working Paper, No. 10-050, December 2009

Price Pressure in the Government Bond Market

Greenwood, Robin, and Dimitri Vayanos
January 2010

American Economic Review Papers and Proceedings

Does Product Market Competition Lead Firms to Decentralize?

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen
January 2010

There is a widespread sense that over the last two decades firms have been decentralizing decisions to employees further down the managerial hierarchy. Economists have developed a range of theories to account for delegation, but there is less empirical evidence, especially across countries. This has limited the ability to understand the phenomenon of decentralization. To address the empirical lacuna we have developed a research program to measure the internal organization of firms-including their decentralization decisions-across a large range of industries and countries. In this paper we investigate whether greater product market competition increases decentralization. For example, tougher competition may make local manager's information more valuable, as delays to decisions become more costly. Since globalization and liberalization have increased the competitiveness of product markets, one explanation for the trend towards decentralization could be increased competition. Of course there are a range of other factors that may also be at play, including human capital, information and communication technology, culture, and industrial composition. To tackle these issues we collected detailed information on the internal organization of firms across nations. The few datasets that exist are either from a single industry or (at best) across many firms in a single country. We analyze data on almost 4,000 firms across 12 countries in Europe, North America, and Asia. We find that competition does indeed seem to foster greater decentralization.
Harvard Business School Working Paper, No. 10-052, January 2010.

2009

Siegmund Warburg, the City of London and the Financial Roots of European Integration

Ferguson, Niall
September 2009

The process of European economic integration slackened in the 1960s. National markets for goods, most services, and labor were not being integrated because they were not really being liberalized. The exception to this rule was financial services, one of which-the sale of long-term corporate and public sector bonds to relatively wealthy investors-became integrated in a quite novel way in the course of the 1960s. The rise of the so-called 'Eurobond' market was a major breakthrough in the history of European integration, but it was a largely spontaneous result of innovation by private sector actors, led by Siegmund Warburg. In some measure, no doubt, the bankers' primary motive was the profit motive. Yet there is also compelling evidence that Warburg and his associates also had a political agenda. They regarded it not only as a way of making money but also as a potent device for advancing Europe's political integration. In particular, they appreciated that European capital market integration could reinforce the case for British membership of the EEC. The resurrection of London as Europe's principal financial center, even at a time of economic and exchange rate weakness, was a major achievement in its own right. But it was also crucial for the resumption of European integration in the 1970s.

Business History 51, no. 3 (May 2009)

What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns (pdf)

Kerr, William R., Glenn D. Ellison, and Edward L. Glaeser
May 2009

Why do firms cluster near one another? We test Marshall's (1920) theories of industrial agglomeration by examining which industries locate near one another, or coagglomerate. We construct pairwise coagglomeration indices for U.S. manufacturing industries from the Economic Census. We then relate coagglomeration levels to the degree to which industry pairs share goods, labor, or ideas. To reduce reverse causality, where co-location drives input-output linkages or hiring patterns, we use data from U.K. industries and from U.S. areas where the two industries are not co-located. All three of Marshall's theories of agglomeration are supported, with input-output linkages particularly important.

The American Economic Review (forthcoming)

Measuring the Financial Sophistication of Households

Campbell, John Y., Laurent Calvet, and Paolo Sodini
May 2009

This paper constructs an index of financial sophistication that, in comprehensive data on Swedish households, best explains a set of three investment mistakes: underdiversification, risky share inertia, and the tendency to sell winning stocks and hold losing stocks (the disposition effect). The index of financial sophistication increases strongly with financial wealth and household size, and to a lesser extent with education and proxies for financial experience. The index is strongly positively correlated with the share of risky assets held by a household.

Market Reaction to the Adoption of IFRS in Europe

Riedl, Edward J., Christopher S. Armstrong, Alan D. Jagolinzer and Mary E. Barth
May 2009

This study examines European stock market reactions to 16 events associated with the adoption of International Financial Reporting Standards (IFRS) in Europe. European IFRS adoption represented a major milestone towards financial reporting convergence yet spurred controversy reaching the highest levels of government. We find an incrementally positive reaction for firms with lower quality pre-adoption information, which is more pronounced in banks, and with higher pre-adoption information asymmetry, consistent with investors expecting net information quality benefits from IFRS adoption. We find an incrementally negative reaction for firms domiciled in code law countries, consistent with investors' concerns over enforcement of IFRS in those countries. Finally, we find a positive reaction to IFRS adoption events for firms with high-quality pre-adoption information, consistent with investors expecting net convergence benefits from IFRS adoption.

The Accounting Review (forthcoming).

Explicit Relative Performance Evaluation in Performance-vested Equity Grants

Ferri, Fabrizio
April 2009

Carter, Ittner, and Zechman (2009) examine the use of explicit relative performance evaluation (RPE) conditions in performance-vested equity plans in a sample of United Kingdom firms in 2002. They find that factors suggested by economic theories (for example, removal of common shocks and tournament theory) are more closely associated with specific features of the plan than with the firm-level decision to use an RPE equity plan. My discussion focuses on the interpretation of these findings and the opportunities and implications for future research. I also summarize the views of five U.K. directors who were involved in the design and use of performance-vested equity plans.

NBER Working Paper Series, No. 14891, April 2009

Leadership Competencies for Implementing Planned Organizational Change Leadership

Battilana, Julie, M.J. Gilmartin, A.-C., Pache, M. Sengul, and J. Alexander
February 2009

This paper bridges the leadership and organizational change literatures by exploring the relationship between managers' leadership competencies (namely, their effectiveness at person-oriented and task-oriented behaviors) and the likelihood that they will emphasize the different activities involved in planned organizational change implementation (namely, communicating the need for change, mobilizing others to support the change, and evaluating the change implementation). We examine this relationship using data from 89 clinical managers at the United Kingdom National Health Service who implemented change projects between 2003 and 2004. Our results lend overall support to the proposed theory. This finding suggests that treating planned organizational change as a generic phenomenon might mask important idiosyncrasies associated both with the different activities involved in the change implementation process and with the unique functions that leadership competencies might play in the execution of these activities.

Leadership Quarterly

Global Currency Hedging

Campbell, John Y., Karine Serfaty-de Medeiros, and Luis M. Viceira
February 2009

Over the period 1975 to 2005, the U.S. dollar (particularly in relation to the Canadian dollar) and the euro and Swiss franc (particularly in the second half of the period) have moved against world equity markets. Thus these currencies should be attractive to risk-minimizing global equity investors despite their low average returns. The risk-minimizing currency strategy for a global bond investor is close to a full currency hedge, with a modest long position in the U.S. dollar. There is little evidence that risk-minimizing investors should adjust their currency positions in response to movements in interest differentials.

Harvard Business School Working Paper, No. 09-089, January 2009

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

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2008

Happiness Adaptation to Income beyond 'Basic Needs'

Di Tella, Rafael, and Robert MacCulloch
December 2008

We test for whether, once "basic needs" are satisfied, there is happiness adaptation to further gains in income using three data sets. Individual German Panel Data from 1985 to 2000, and data on the well-being of over 600,000 people in a panel of European countries from 1975 to 2002, shows different patterns of adaptation to income across the rich and poor. We find evidence that for wealthy Germans, and for the rich half of European nations, higher levels of per capita income don't buy greater happiness. The reason appears to be adaptation. However even for the rich half of European nations such habituation may take more than five years so the happiness gains that they experience, whilst not permanent, can still be relatively long-lasting. Finally we study a cross section of nations in 2005 from the World Gallup Poll and find that the past 45 years of economic growth (from 1960 to 2005) in the rich half of nations has not brought happiness gains above those that were already in place once the 1960s' standard of living had been achieved. However in the poorest half of nations we cannot reject the null hypothesis that the happiness gains they have experienced from the past 45 years of growth have been the same as the gains that they experienced from growth prior to the 1960s.

NBER Working Paper Series, No. 14539, December 2009

Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies (pdf)

Reid, Erin M., and Michael W. Toffel
August 2008

The challenges associated with climate change will require governments, citizens, and corporations to work collaboratively to reduce greenhouse gas emissions, a task that requires information on companies' emissions levels, risks, and reduction opportunities. This paper explores the conditions under which firms respond to shareholders' requests for this information. Building on previous theories of how social activists inspire field-level change, we hypothesize that shareholder actions and regulatory threats are likely to prime firms to cooperate with shareholder requests for information disclosure. Using a unique dataset, we find evidence of both direct and spillover effects. In the domain of private politics, shareholder resolutions filed against a firm, and against others in its industry, increase its propensity to acquiesce to these shareholder requests. Similarly, in the realm of public politics, the threat of state regulations that target a firm's industry-as well as those that target other industries-increases the likelihood that the firm will acquiesce to shareholder requests to disclose related information. These findings extend existing theory by showing how organizational change can be sparked by both activist groups and government policymakers and that challenges mounted against a single firm (and industry) can inspire field-level (and state-level) changes.

Harvard Business School Working Paper, No. 09-019, August 2008

Economic Impacts of Immigration: A Survey

Pekkala Kerr, Sari, and William R. Kerr
August 2008

This paper surveys recent empirical studies on the economic impacts of immigration. Particular emphasis is given to the experiences of Northern Europe and Scandinavia. The survey first examines the magnitude of immigration as an economic phenomenon in various host countries. The second part deals with the assimilation of immigrant workers in host-country labor markets and the use of social benefits by immigrants. The survey then considers the effect of immigration on the labor market outcomes of natives. The paper concludes with studies of immigration's impact for the public sector of host countries.

Harvard Business School Working Paper, No. 09-013, July 2008

Fight or Flight? Portfolio Rebalancing by Individual Investors

Calvet, Laurent E., John Y. Campbell, and Paolo Sodini
July 2008

This paper investigates the dynamics of individual portfolios in a unique dataset containing the disaggregated wealth of all households in Sweden. Between 1999 and 2002, we observe little aggregate rebalancing in the financial portfolio of participants. These patterns conceal strong household-level evidence of active rebalancing, which on average offsets about one half of idiosyncratic passive variations in the risky asset share. Wealthy, educated investors with better diversified portfolios tend to rebalance more actively. We find some evidence that households rebalance towards a higher risky share as they become richer. We also study the decisions to trade individual assets. Households are more likely to fully sell directly held stocks if those stocks have performed well and more likely to exit direct stockholding if their stock portfolios have performed well; but these relationships are much weaker for mutual funds, a pattern which is consistent with previous research on the disposition effect among direct stockholders and performance sensitivity among mutual fund investors. When households continue to hold individual assets, however, they rebalance both stocks and mutual funds to offset about one sixth of the passive variations in individual asset shares. Households rebalance primarily by adjusting purchases of risky assets if their risky portfolios have performed poorly and by adjusting both fund purchases and full sales of stocks if their risky portfolios have performed well. Finally, the tendency for households to fully sell winning stocks is weaker for wealthy investors with diversified portfolios of individual stocks.

NBER Working Paper Series, No. 14177, July 2008.

Industrial Specialization and Regional Clusters in the Ten New EU Member States (Special Issue on Macro and Micro Level Competitiveness)

Solvell, Orjan, Christian H.M. Ketels, and Goran Lindqvist
June 2008

The purpose of this paper is to provide an analysis of regional concentration patterns within ten new European Union (EU) member states, EU10, and make comparisons with EU15 and the U.S. economy

Competitiveness Review: An International Business Journal Incorporating Journal of Global Competitiveness 18, nos. 1/2 (2008): 104-130.

Industrial Specialization and Regional Clusters in the Ten New EU Member States

Solvell, Orjan, Christian H.M. Ketels, and Goran Lindqvist
June 2008

The purpose of this paper is to provide an analysis of regional concentration patterns within ten new European Union (EU) member states, EU10, and make comparisons with EU15 and the U.S. economy.

Competitiveness Review: An International Business Journal Incorporating Journal of Global Competitiveness 18, nos. 1/2 (2008): 104-130

America the Difficult

Desai, Mihir
June 2008

The American (May - June 2008)

Review of Stig Tenold's Tankers in Trouble

Ketels, Christian H.M.
May 2008

In Tankers in Trouble, Stig Tenold looks at the experience of the Norwegian shipping industry during the 1970s and 1980s, specifically of those companies active in the tanker business. The review discusses some complementary insights that can be gained from applying Michael Porter's cluster framework to the analysis of Norwegian shipping and the crisis of the 1970s and 1980s. It shows how the cluster perspective contributes to the understanding of why Norwegian shipping was so strong in the first place, it helps to distinguish whether the Norwegian crisis of the 1970s and 1980s was mainly demand or supply driven, and it can explain the drivers of the resurgence of Norwegian shipping in the 1990s and 2000s.

International Journal of Maritime History 21, no. 2 (December 2007): 407-411

Learning to Live with Governments: Unilever in India and Turkey, 1950-1980

Jones, Geoffrey G.
March 2008

A noteworthy characteristic of the contemporary global economy is the uneven distribution of world foreign direct investment (FDI). In 2007 three-quarters of world FDI was located in developed countries. The residual was concentrated in a small number of emerging countries. Large countries with little inward FDI included India and Turkey. This is puzzling, given that both countries have greatly liberalized their regulations on inward FDI. After 1945 many developing governments pursued policies which restricted foreign-owned firms. India and Turkey were among the countries with particularly difficult policy environments. This paper explores why Unilever, the Anglo-Dutch consumer products company, was able to sustain large businesses in developing countries such as India and Turkey. The paper argues that the explanation is multi-causal. Unilever held first-mover advantages, but was also prepared to accept low dividend remittances for years. It pursued flexible business strategies beyond its "core" business, even distributing condoms. It maintained a high standard of corporate ethics. It was effective at building contacts with local business and government elites, primarily through localization of management.

Entreprises et Histoire 49 (December 2007)

Embracing Commitment and Performance: CEOs and Practices Used to Manage Paradox(pdf)

Fredberg, Tobias, Michael Beer, Russell Eisenstat, Nathaniel Foote, and Flemming Norrgren.
January 2008

We tend to assume that great leaders must make difficult choices between two or more conflicting outcomes. In an interview study with 26 CEOs of top American and European companies (including IKEA, Campbell Soups, Nokia, H&M), we find that instead of choosing between conflicting outcomes such as long-term strategy or short-term performance drivers, top-tier managers argue that their role is to embrace such paradoxes to make both things happen simultaneously. The study identifies five groups of practices that make this possible. Together, they reveal a systematic approach to managerial work at the top, which is seldom found in the literature. By building on the engagement of many in the development of the organization, the practices are important for our understanding of how a CEO facilitates the partaking of many in strategy making. The paper contributes to theory by relating the current findings to the literature on the connection between commitment and performance and on the strategic management literature that focuses on the proliferation of strategy and strategy as practice.

Harvard Business School Working Paper, No. 08-052, 2008

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2007

Identity Incentives As an Engaging Form of Control: Revisiting Leniencies in an Aeronautic Plant

Anteby, Michel J.
November 2007

Research has long shown that organizations shape members' identities. However, the possibility that these identities might also be desired and that members might benefit from this process has only recently been explored. In a qualitative study of a French aeronautic plant, I demonstrate how an implicitly negotiated leniency between management and workers around the use of company materials and tools, on company time, to produce artifacts for personal use, enhances workers' identities. This leniency applies to a select subset of workers and enhances their desired occupational identity. This practice produces an engaging form of control that relies on management's selective allocation of identity incentives. These findings document a previously overlooked type of control: one reliant on desired identities that engage rather than constrain. Desired identities, specifically previously enacted ones, constitute potent incentives for inducing efforts or actions.

Organization Science (forthcoming)

Pharmaceutical Regulation in the United States and Europe

Daemmrich, Arthur
November 2007

The Division for Public Education of the American Bar Association. Focus on Law Studies 23, no. 1 (fall 2007): 8-11

Design, Meanings, and Radical Innovation: A Meta-model and a Research Agenda

Verganti, Roberto
November 2007

Recent studies on design management have helped us to better comprehend how companies can apply design to get closer to users and better understand their needs; an approach usually referred to as "user-centered design". Yet, analysis of design-intensive manufacturers such as Alessi, Artemide and other leading Italian firms, show that their innovation process hardly starts from a close observation of user needs and requirements. Rather, they follow a different strategy that we call "design-driven innovation". This strategy aims at radically changing the emotional and symbolic content of products, i.e., their meanings and languages, through a deep understanding of broader changes in society, culture and technology. Rather than being pulled by user requirements, design-driven innovation is pushed by a firm's vision about possible new product meanings and languages that could diffuse in society. Design-driven innovation, that plays such a crucial role in the innovation strategy of design-intensive firms, has still remained largely unexplored. This article aims at providing a possible direction to fill this empty spot in innovation management literature. In particular, first we propose a meta-model for investigation of design-driven innovation. In this meta-model a manufacturer's ability to understand, anticipate and influence emergence of new product meanings is built by leveraging on external interpreters (designers, firms in other industries, suppliers, schools, artists, the media, etc) who share its same problem: to understand the evolution of socio-cultural models, and propose new visions and meanings. Managing design-driven innovation therefore implies to manage the interaction with these interpreters, in order to access, share and internalize knowledge on product languages and influence shifts in socio-cultural models. Second, we propose a possible direction to scientifically investigate the management of this networked and collective research process. In particular we show that the process of creating breakthrough innovations of meanings partially mirrors the process of creating breakthrough technological innovations. Studies of design-driven innovation may therefore benefit significantly from the existing body of theories in the field of technology management. The analysis of the analogies between these two types of radical innovations (of meanings and technologies) allow to set a research agenda for exploration of design-driven innovation, a relevant as well as underinvestigated phenomenon.

Journal of Product Innovation Management (forthcoming)

Mondialisation: la French Touch

Abdelal, Rawi, and Sophie Meunier
October 2007

Telos, October 2007

Streaming Knowledge - A Hidden History of Codetermination: The Schmalenbach Society and the Dinkelbach School of German Management (pdf)

Fear, Jeffrey
April 2007

This article uncovers a virtuous circular network of people and ideas, between the theories of the Schmalenbach Society and the management practices of the so-called Dinkelbach School that created one of the most influential impulses for post-1945 German political economy and business management. This group remained exceptional for their time, but broke the ice and, over time, paved the way for postwar consensus regarding codetermination (labor representation on supervisory boards). Codetermination has become one of the most important, unique aspects of German political economy and corporate governance. On one hand, this network of people formed an autonomous German management tradition, which introduced allegedly American methods into German business prior to Americanization after 1945. On the other hand, this network of people begins the hidden history of employer acceptance of codetermination in the heart of the reactionary Ruhr. Although most recent literature demonstrates a profound continuity of bourgeois figures and values with the prewar period, the shattering of the war experience also opened a path for a new, non-bourgeois, and Catholic group of individuals dedicated to reinventing German business. As such, the article examines the software of German capitalism rather than its hardware.

Harvard Business School Working Paper No. 06-042, April 2006

Initiating Divergent Organizational Change: The Enabling Role Of Actors' Social Position(pdf)

Battilana, Julie
March 2007

This study addresses the paradox of embedded human agency, or the contradiction between actors' agency and institutional determinism. It helps to resolve this paradox by considering the enabling role of actors' social position. Adopting a relational view of human agency, I model the impact of their social position on the likelihood that actors will initiate changes that diverge from the existing institutions. I test this model using data from 93 change projects conducted by clinical managers at the National Health Service in the United Kingdom. My findings suggest that social position is an important enabling condition for divergent organizational change, and is a determinant as well of the type of divergent organizational change an actor may undertake.

Harvard Business School Working Paper, No. 07-053, 2007

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2006

Le Consensus de Paris: la France et les Règles de la Finance Mondiale (pdf)

Abdelal, Rawi
March 2006

Critique Internationale, no. 28, July/September 2005: 87-115

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2005

Functional Change and Bank Strategy in German Corporate Governance

Crane, Dwight B., and Ulrike Schaede
December 2005

International Review of Law and Economics

How to Evaluate Clusters. Special Issue "Pôles de Compétitivité"

Keels, Christian H.M.
October 2005

La Revue Parlementaire, July 2005

Competitiveness Assessment of Stockholm and the Mälardalen-Region

Ketels, Christian H.M.
October 2005

Background Paper for OECD Territorial Analysis Unit Series, Paris, 2005

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