Faculty & Research

• HBS Book

How do societies identify and promote merit? Enabling all people to fulfill their potential, and ensuring the selection of competent and capable leaders are central challenges for any society. These are not new concerns. Scholars, educators, and political and economic elites in China and India have been pondering them for centuries and continue to do so today, with enormously high stakes. In Making Meritocracy, Tarun Khanna and Michael Szonyi have gathered over a dozen experts from a range of intellectual perspectives—political science, history, philosophy, anthropology, economics, and applied mathematics—to discuss how the two most populous societies in the world have addressed the issue of building meritocracy historically, philosophically, and in practice.

• Financial Analysts Journal 78, no. 4 (2022): 37-58.

Using measures of physical risk from climate change, we develop a methodology to allocate currency pairs according to a country’s vulnerability and construct portfolios with decreasing vulnerability to physical risk. We show that non-G10 currencies are more vulnerable to physical risk, have become less vulnerable over time, and that the vulnerability measure is correlated with higher losses from natural disasters. Portfolios exposed to currencies with decreasing vulnerability have exhibited positive abnormal returns, with the abnormal return coming from currencies that have relatively high levels of vulnerability. These results exist in non-G10 currencies, while no relation is found within G10 currencies.

• Private Capital Project

Black- and Hispanic-owned funds control a very modest share of assets in the private capital industry. We find that the sensitivity of follow-on fundraising to fund performance is greater for minority-owned groups, particularly for underperforming groups. We find little support for a number of explanations for these patterns: that minority fund valuations are overstated, that minority funds encounter difficulties in hiring personnel, or that deploying capital is more difficult for these funds. We do find that the ability of minority groups to raise capital increases during periods of high racial awareness and when the chief investment officer of local public pension plans and endowments are minorities.

• Featured Case

On June 21, 2022, the Uyghur Forced Labor Prevention Act (UFLPA) went into effect, requiring companies to prove that goods imported from the People’s Republic of China were not made with forced labor. The bill was a reaction to reports of products being made with forced labor from Uyghurs and other Muslim minorities being held in camps in the PRC, chiefly in the Xinjiang Autonomous Region. However, implementation of the bill would be difficult. The PRC government denied the existence of forced labor, and this would make it nearly impossible for importers to trace their supply chains all the way to the origins of primary goods and prove that no forced labor was involved.

• Featured Case

Wedbush Securities analyst Michael Pachter said “hell freezing over” was more likely than him upgrading the “sell” rating he had maintained on movie and television streaming giant Netflix since 2011, despite meteoric subscriber and share price growth. In 2022, however, Pachter raised his rating – twice. The case explores the sell-side equity analyst industry, Netflix from the perspective of an equity analyst, Pachter’s “bear” thinking through the years, and his logic in becoming a “bull.”

• HBS Working Paper

The retention of inventor-employees represents a core strategic concern for firms in innovative industries. In this paper, we examine the impact of reduced patent enforceability on the mobility of inventor-employees and explore the related influence on firms’ innovative activities. To analyze this potential relationship, we use the US Supreme Court ruling eBay Inc. v. MercExchange, L.L.C., which decreased the use of injunctions in patent infringement cases and, consequently, the risk firms and individuals faced from being sued for patent infringement. Our analyses rely on difference-in-differences specifications that include state-year, firm, and technological fixed effects, and a host of other controls.

• Working Paper

This article examines the consequences and causes of low enrollment of Black patients in clinical trials. We develop a simple model of similarity-based extrapolation that predicts that evidence is more relevant for decision-making by physicians and patients when it is more representative of the group that is being treated. This generates the key result that the perceived benefit of a medicine for a group depends not only on the average benefit from a trial, but also on the share of patients from that group who were enrolled in the trial. In survey experiments, we find that physicians who care for Black patients are more willing to prescribe drugs tested in representative samples, an effect substantial enough to close observed gaps in the prescribing rates of new medicines.