Program for Research in Markets and Organizations (PRIMO)
Project Descriptions for Summer 2012
Behavioral Biases, Financial Liberalization, and Decision-Making
Shawn Cole and Santosh Anagol (Wharton)
As financial liberalization advances around the world, tens of millions of people enter markets (insurance, equities, annuities) with which they have no experience, and little framework for evaluating products. This project examines the role of behavioral biases (e.g., present-bias, exponential growth bias) in the financial decision-making.
Building a Republic: Historical Foundations of American Democracy
At a time when numerous democracies around the world seem to be struggling, even as new ones are taking root, understanding the history of democratic governance is more important than ever. This project explores the history of American democracy, focusing on the development (and early role) of critical democratic institutions, from the constitution itself to organized interest groups and an independent press.
Consumer Review Websites
Technological advances over the past decade have led to the proliferation of consumer review websites such as Yelp.com, where consumers can share experiences about product quality. With the click of a button, we can now acquire information from countless other consumers about products ranging from restaurants to movies to physicians. My research investigates the way consumers use this information, how this affects markets, and the motivations that drive people to leave reviews. This project will be part of this research agenda, and will use field data from Yelp and other sources. Tasks will include data collection and data analysis.
Deadwood
Lauren Cohen, Joshua Coval, and Chris Malloy
In this project, we plan to analyze the impact of inefficient labor on firm-level productivity and stock return performance. In particular, we plan to estimate the average age and composition of the workforce at each firm in the United States, and study the impact of various labor characteristics on firm-level performance. This project is part of a larger research agenda studying "Capitalist Capital" that seeks to identify and measure the generation of positive externalities or "spillovers" stemming from capitalist activities, as well as the reduction of these spillovers due to inefficient investments in human and physical capital.
Decision Making and Behavioral Economics
Francesca Gino, Michael Norton, and Leslie John
Our research focuses on judgment and decision making, with applications to organizational and consumer behavior as well as behavioral economics. Some of the diverse set of topics we investigate include: ethical decision-making (including cheating and self-deception), team and organizational dynamics and performance, the impact of rituals on mourning and consumption, and whether money makes people happy.
The Diffusion of Locomotives in Brazil during the Early 20th Century
Diego Comin and Aldo Musacchio
Technology is the key factor to understand why there are rich and poor countries. In previous work, we and others have shown that it can account directly for at least 25% of cross-country differences in income per capita and indirectly for at least another 45%. The question then becomes what factors affect the speed of diffusion and adoption of technologies. In this project, we intend to answer this question using a unique data set we have put together. The data records all the purchases of locomotives by Brazilian railways companies between 1900 and 1932. This provides us with information of what type of locomotive and who bought it. The goal of this project is to combine this with other data sets to understand what factors drove the adoption and diffusion of a key technology such as locomotives.
Direct Investments and Co-investments by Large Institutional Investors
Lily Fang (INSEAD), Victoria Ivashina, and Josh Lerner
Lily Fang (INSEAD), Victoria Ivashina, and Josh Lerner are undertaking a project on direct investments and co-investments by large institutional investors. We have obtained data from five such investors, and have data outstanding from an addition two or three such investors. Working under the supervision of a doctoral student and ourselves, the project will involve benchmarking the performance of these investments and determining the relative performance of these deals.
The Dynamics of Technology Adoption and their Effects on the Dynamics of Income Per Capita, PART 1 - THEORY
Diego Comin and Marti Mestieri (Univerity of Toulouse)
The dynamics of technology adoption are very persistent. Cross-country measures of current adoption are nicely predicted by technology adoption over 150 years ago. But the persistence of adoption dynamics goes far beyond that. Cross-country differences in growth during the post-war period can also be predicted by technology in 1850 even after controlling for income differences in 1960. One interpretation of this finding is that historical technology adoption reflects the state of the adoption capabilities of a country and that the effect that these capabilities have on future development are much larger than their current or even in 100 years) effect on income. This finding implies that existing models of dynamics of technology are basically wrong and that we need to rethink about the dynamics of technology adoption. This project intends to do that by developing mathematical models of adoption. We will work closely with the student to teach him/her about growth and adoption and to develop those mathematical models.
The Dynamics of Technology Adoption and their Effects on the Dynamics of Income Per Capita, PART 2-NARRATIVES
Diego Comin and Marti Mestieri (Univerity of Toulouse)
Of course, theory is no good without evidence that supports it. This project intends to continue my effort to document the persistence of the dynamics of technology (as described in the project above). This requires studying the history of technology adoption and development. In the past, we have studied advances in navigation and printing technologies and have documented how early adopters of specific technologies, through a variety of mechanisms, were in a unique position to continue to lead in the adoption of new related technologies. The task ahead consists in exploring the prevalence of these kind of dynamics by studying case studies related to the diffusion of the printing press, optical lens, navigation, engineering tools, and the creation of naval and engineering schools.
Requirements:
Skills: This project would be best suited for historians, especially for historians of science and technology.
The Giant Fib and Globalization/Competitiveness
I'm working on two projects that I need some help (data collection, case writing and data analysis) with. The first extends the essay on "The Giant Fib" that was just published in the March Harvard Business Review by exploring the rapid rise of alternative assets in the last twenty years and the pension funds and endowments that gave rise to them. The second explores the meaning of the term competitiveness for policy makers in today's globalizing world.
The Globalization of Accountability
As capital moves more freely across the world, systems of accountability that ensure that such capital is being used appropriately must keep pace. My research explores how standards, organizations, and individuals in the area of accountability across the world are responding to globalization. These include standards for corporate accounting, organizations that combat corporate corruption, and individual activists promoting greater corporate transparency. My particular countries of focus are China, India, Japan, Russia, and the United States. The PRIMO fellow will be involved in various aspects of qualitative field research and some quantitative data analysis in some of the topics described above. The PRIMO fellow can expect to gain some familiarity of evolving practices and theory in the globalization of accountability.
Globalization of the Wireless Telecommunications Industry
Juan Alcacer and Susan Perkins (MIT)
Are you interested in how global markets evolve? How companies compete with each other in multiple markets? How local governments sell off their assets with the hopes to privatize and build larger, more efficient industries? Our research project team invites Harvard undergraduate students with interests in international business, foreign direct investment and international institutions. Our research explores the global wireless telecommunications industry in over 210 countries. This terrain captures most of the economic movement on the planet. Our team explores a broad range of research questions related to how markets evolve, how firms compete and how firms respond strategically to the institutional environment.
How Star Women Succeed
A major focus of my research and teaching at the business school is talent and career management including how high achieving professionals build and manage their own individual careers. In one of our studies, we found that there were gender differences in star men and women building their careers. Why this difference?
Humanitarian Supply Chain Mapping for Time-sensitive Medical Materials
Douglas Fearing and Ozlem Ergun (SEAS)
The project would be co-advised by Ozlem Ergun, a visiting faculty member in SEAS. The summer project would be to map out the humanitarian supply chain for time-sensitive medical materials. These could be either perishable goods, such as certain types of vaccines, or medical supplies to prevent a disease outbreak, such as cholera or meningitis. The project would require creativity in searching for resources as well as a willingness to speak to humanitarian organizations to understand their freight requirements. The work would support a larger effort to understand the value provided by, as well as new opportunities for, air cargo in the humanitarian sector. Some research will have already been done in this area, so the PRIMO student would not have to start from scratch. Additionally, depending on the interests and capabilities of the student, there could be opportunities to develop models of proposed changes to the existing supply chain. Please let me know if you have any questions or concerns about the topic.
Innovating for Sustainability
Robert G. Eccles and George Serafeim
Companies, the investment community, and civil society are increasingly focused on sustainability. While the term "sustainability" has many meanings, we start from the definition of a "sustainable strategy" for a company which is one that "enables the company to create value for shareholders over the long term by contributing to a sustainable society." In order to do so, companies must minimize negative externalities and maximize their environmental, social, and governance performance in a way that also contributes to improved financial performance. This requires innovation in processes, products, and business models. Even with innovation, tradeoffs are inevitable (such as reducing carbon emissions through clean energy sources that result in a loss of jobs in "dirty industry" sources of energy, and thus there is an "optimal degree of sustainability." Over time, cumulative innovations shift this boundary. Professors Eccles and Serafeim are teaching both an MBA and executive education course on "Innovating for Sustainability," for which they have an active research and course development program. There are a variety of opportunities for undergraduates to participate in this project including case studies, conceptual notes, archival research regarding trends over the past 20 years which have made sustainability an important topic, and potentially empirical research depending on the students' background in quantitative methods.
Innovation for Sustainability in the Built Environment: Understanding Smart Cities
Robert G. Eccles and Amy C. Edmondson
The world's population is rapidly urbanizing, with 50% of people today and 70% by 2050 expected to live in cities. Most of this urbanization will occur in developing countries as people leave rural areas for greater opportunities in cities. The growth of cities will be accompanied by a growth in resource consumption and will put further pressure on city governments to create jobs, provide education and health care, and ensure meaningful lives for their citizens. In response to these real-world challenges, a number of innovative technologies, business models, and governance structures have emerged, with the potential to play various roles in transforming the urban landscape. In this broad arena, we are particularly interested in studying cross-sector collaborations in which experts from diverse fields and organizations are working together. We are thus studying both large and small companies in several related industries. These groups have in common an interest in contributing to the development of sustainable (defined in environmental, social, and governance terms) urban environments. Our methodology is largely qualitative, involving interviews in the field, along with reviews of secondary source material. Two undergraduates have participated in this research project to date with Professors Eccles and Edmondson, who are interested in identifying PRIMO candidates to get involved in various aspects of their ongoing research. Potential projects include case studies, conceptual notes, research for articles, books, and book chapters, and a structured analysis of various methodologies that have been developed for ranking cities. Participants will join a research team that includes the professors and several doctoral students and research associates.
Innovation in Media
Bharat Anand and Felix Oberholzer-Gee
Newspapers, magazines, and other forms of media are facing considerable challenges as they confront numerous threats to their existing business models. These threats are diverse and include changes in technology, the development of new mediums, and changes in the preferences of readers and advertisers.
International Strategy
In spite of the recent global financial crisis many firms are increasing their share of international sales and activities as they adapt to the increasing importance of emerging markets in the global economy. As they do so, companies are confronted by a number of fundamental choices and are struggling to align those decisions into a coherent international strategy. There have been a number of recent books on this subject, such as Ghemawat's "Redefining Global Strategy", but none that provide an integrated and contemporary perspective that draws on all the recent literature. The author is in the process of completing such a book based on his MBA course "International Strategy" that is designed for use both by MBA level students and practitioners. The project involves a review of the course materials and accompanying video lectures, reading the manuscript and then diving into the relevant international business, strategy, and organizational economics literature to ensure that ideas and references behind each of the topics are complete and up to date. Chapters cover issues such as the location of a multinational's activities, the organizational design of the firm, selection of markets in which to compete, and what (broadly defined) product and positioning to adapt around the world. The author will look to the student to suggest additional examples and references, identify weaknesses in the manuscript, and is encouraged to make their own contribution to the text. At the completion of the project, the student should have developed a mastery of international strategy.
Internet Culture
John Deighton and Leora Kornfeld
Media create their own cultures, and cultures create opportunities for commerce. Media like television, for example, have for decades mediated between an industry with the power to produce content and those who consumed the content. The Internet is disrupting this mediation process, giving us a glimpse of entertainment without an entertainment industry, in which audiences produce content directly. One measure of this new audience power is the extent to which media like television play a diminished role in the creation of celebrity and people rise to celebrity without reliance on an entertainment industry. It explores how, and to what extent, we the people make cultural content, and how commerce co-opts that content. It studies the new balance between celebrity manufactured for us, and celebrity manufactured by us.
Morals and Markets
Markets permeate society. Yet the development of legal markets for "goods" previously deemed off-limits to trade, such as human life and death, has proven surprising and raised anew the question of morals and markets. Despite calls for banning commerce in many goods, particularly human anatomical goods like blood, cadavers, and organs, the gradual emergence of such commerce testifies to the growing reach of markets. This project focuses on the legal trade in the United States of human cadaver parts for medical education and research. It follows, and is directly informed by, a study I completed a few years ago on whole body donations and trade in New York State.
Outsourcing and Innovation in High-tech Industries
Juan Alcacer and Susan Perkins (MIT)
What happens with firms and industries that outsource their activities all over the globe? De-integration of in-house vertical value chains and outsourcing of business functions to external (and often foreign) providers has become a standard practice in high tech industry over the last several decades. Often a highly contested topic in politics, public policy and management, outsourcing spawned a rich stream of academic literature. However, the full long-term effects of outsourcing on firms, industries and industrial clusters operating in a global production system remain relatively unexplored. Without a doubt, outsourcing practices of manufacturing and design work to other countries and gradual decoupling of these two activities have had significant impact on high-tech industry both at home and abroad: absorptive capacities, product and process innovation, workforce skilling/de-skilling were arguably all affected. In addition, the vertical specialization of R&D and increasing modularization of product development led to more transferrable and separable activity chain, further enhancing global distribution of work. While major "outsourcers" can (and often do) suffer loss of high-tech manufacturing ability and impairment of design capacity at their home bases, at the same time they often shift their strategic focus on more high-value added activities like system integration and advanced custom design. In addition, these firms can utilize joint ventures and alliances to compensate for forfeited knowledge that could have been generated from integrated in-house activity chain. If present, inter-firm multi-directional knowledge flow allows complementary innovation to take place, permitting the continuous advancement of the industry as a whole. Also, an elimination of high initial investment as operational requirement (such as integrated semiconductor manufacturing capacity for example) can reduce barriers to entry and introduce Schumpeterian dynamics in otherwise inert industrial segments. Finally, decoupling of products and processes has a potential to reduce organizational inertia and increase rates and quality of product innovation in the industry.
Origin of Corporate Malfeasance
Over the past decade, a considerable number of executives of leading firms have been incarcerated following acts of fraud and corporate malfeasance. Immediately prior to these events, many of these executives were celebrated for their leadership. The project seeks to understand the environment surrounding these managers decisions that ultimately led to their downfall.
Politicians' Equity Transactions
Since 2006, the Stop Trading on Congressional Knowledge (STOCK) Act has been introduced several times in the House of Representatives, with no success. The Act would prohibit members of Congress from trading stocks based on nonpublic information obtained on the job. U.S. Congresspeople and Senators currently report their personal finances, including equity transactions, on an annual basis. However, little is known about how informative they may be (i.e., whether they precede abnormal stock performance). I plan on investigating determinants of the informativeness of politicians' equity purchases and sales. For example, do politicians buy (sell) shares of companies in a more profitable manner (i) when they share social/political ties with top executives of directors of those firms, (ii) when the companies are headquartered in the State they represent, etc? The goal of this study is to inform the debate regarding the need for Congress to self-regulate on this issue, but also to come up with other regulatory suggestions (e.g., should politicians be required to disclose their transactions in a more timely fashion?)
Rating Hospital Efficiency
The need for hospitals to provide high quality healthcare for the lowest possible cost is an imperative for the national economy. This project aims to use publicly available data to develop a measure of the efficiency of hospital care and then to use this metric to identify hospitals that are the most efficient, controlling for quality. Depending on data availability, the project could examine hospitals throughout the world rather than just the U.S. Ultimately, the goal of this project would be to learn from these hospitals-through a combination of site visits and possibly a conference that convenes the most efficient hospitals-and write a working paper on their organizational routines that outline their routines and structure that results in high efficiency.
Reaching For Yield
Bo Becker and Victoria Ivashina
The project aims to understand the scope, incentives and implications behind the "reaching for yield" phenomena. Regulators and practitioner had alluded to "reaching for yield" as one of the causes behind the failure of risk assessment leading to the recent financial crisis, in particular in the context of securitization. It is a concept that is closely related to regulatory arbitrage, but it is broader in nature. The idea is that when retail investors' (e.g., households') understanding of risk is pinned down by regulation or mandate based on some discrete and/or static benchmark (such as credit ratings), portfolio managers are incentivized to maximize priced risk that is not reflected by the benchmark.
Recent Developments in Corporate Governance
Jay Lorsch and Suraj Srinivasan
A number of recent developments such as proxy access, the Dodd-Frank Act, and say on pay regulations (to name a few) are changing the landscape of corporate governance in the United States. These changes affect the functioning of the board of directors, director elections, executive compensation, and the nature of institutional investor engagement with companies, among other things.
Research in Family Business
John Davis and Belen Villalonga
We invite Harvard undergraduate students with an interest in family business to work with us on our research in this area. Our research seeks to address a broad range of questions related to family business, such as: How do family ownership and control influence the management of firms and, ultimately, their performance? How do family dynamics impact family businesses' strategy, organization, and performance? Why do certain business families succeed and others fail in regenerating their wealth over generations? How do family businesses around the world cope with ever-increasing globalization? How do private family firms finance their growth?
Social Ties in Entrepreneurship and Venture Capital
This project is exploring the important impact that social ties have in the venture capital and entrepreneurial markets.
Using a comprehensive panel data set of information on venture capitalists and entrepreneurs covering 1986 through 2003, we are exploring how investing, syndication, recruiting, and ultimate investment success are influenced by social ties among venture capitalists and entrepreneurs. The data set includes information on investments, boards of directors, outcomes, as well as demographic information (such as gender, ethnicity, work history and education) on entrepreneurs and venture capitalists.
Topics in Online Advertising Markets
Online advertising continues to grow rapidly — offering dramatic efficiencies but also sharp increases in complexity and potential abuse.