David F. Drake - Faculty & Research - Harvard Business School
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David F. Drake

Assistant Professor of Business Administration (Leave of Absence)

Technology and Operations Management

David Drake is an assistant professor in the Technology and Operations Management (TOM) Unit at Harvard Business School and an emerging authority in sustainable operations management. Through his research, Professor Drake studies firms’ environmental and social performance. In his work related to environmental operations, he pays particular focus to industry’s role in combating climate change, exploring how emissions regulation influences the capacity portfolios that firms invest in; how such regulation, when unilaterally imposed, impacts technology choice, offshoring, and regional competitiveness; and how creative collaboration can improve the economic feasibility of clean technology development and adoption. Professor Drake’s work in socially responsible operations explores the design and implementation of innovative business models that improve quality of life in areas of extreme poverty through the products and services offered, the resources preserved, and the opportunities for economic gain created. Professor Drake has published his research in the field’s premier journals and authored pedagogical cases used to teach concepts at the intersection of sustainability, operations strategy, and supply chain management to students and executives worldwide.

Professor Drake has taught the TOM course in the MBA required curriculum and currently teaches an elective course in operations strategy. Through his research, Professor Drake has worked closely with a number of firms experiencing emission regulation under the EU-ETS, and attended the Copenhagen Climate Change Conference (UN COP15) as a delegate. Professor Drake spent five years at Random House where he led the publishing operations projects and the production purchasing groups. He earned his MBA from Vanderbilt University’s Owen Graduate School of Management, and his MSc and PhD in management from INSEAD.

Journal Articles
  1. Carbon Tariffs: Effects in Settings with Technology Choice and Foreign Production Cost Advantage

    David F. Drake

    Emissions regulation is a policy mechanism intended to address the threat of climate change. However, the stringency of emissions regulation varies across regions, raising concerns over carbon leakage—an outcome where stringent regulation in one region shifts production to regions with weaker regulation. It is believed that such leakage adversely increases global emissions. It is also believed that leakage can be eliminated by carbon tariffs, which are taxes imposed on imported goods so that they incur the same emissions cost that they would have if they had been produced in the regulated region. Results here contradict these beliefs. This paper demonstrates that carbon leakage can arise despite a carbon tariff, but, when it does arise under a carbon tariff, it decreases emissions. Due in part to this clean leakage, results here indicate that a carbon tariff decreases global emissions. Domestic firm profits, on the other hand, can increase, decrease, or remain unchanged due to a carbon tariff, which suggests that carbon tariffs are not inherently protectionist as some argue. Rather, results here suggest that carbon tariffs improve the efficacy of emissions regulation, enabling it to reduce global emissions in many settings in which it would otherwise fail to do so.

    Keywords: Technology; Competition; Pollution and Pollutants; Taxation; Environmental Sustainability; Globalized Markets and Industries;


    Drake, David F. "Carbon Tariffs: Effects in Settings with Technology Choice and Foreign Production Cost Advantage." Harvard Business School Working Paper, No. 13-021, August 2012. (Revised August 2017. Forthcoming at Manufacturing & Service Operations Management.)  View Details
  2. Technology Choice and Capacity Portfolios under Emissions Regulation

    David Drake, Paul R. Kleindorfer and Luk N. Van Wassenhove

    We study the impact of emissions tax and emissions cap-and-trade regulation on a firm's technology choice and capacity decisions. We show that emissions price uncertainty under cap-and-trade results in greater expected profit than a constant emissions price under an emissions tax, which contradicts popular arguments that the greater uncertainty under cap-and-trade will erode value. We further show that two operational drivers underlie this result: i) the firm's option not to operate, which effectively right-censors the uncertain emissions price and ii) dispatch flexibility, which is the firm's ability to first deploy its most profitable capacity given the realized emissions price. In addition to these managerial insights, we also explore the effect of investment and production subsidies. Through an illustrative example, we show that production subsidies of higher investment and production cost technologies (such as carbon capture and storage technologies) have no effect on the firm's optimal total capacity when firms own a portfolio of both clean and dirty technologies. On the other hand, investment subsidies of these technologies increase the firm's total capacity, conditionally increasing expected emissions. Subsidization of a lower production cost technology has no effect on the firm's optimal total capacity in multi-technology portfolios.

    Keywords: technology management; Management; Technology; Service Operations; Environmental Sustainability;


    Drake, David, Paul R. Kleindorfer, and Luk N. Van Wassenhove. "Technology Choice and Capacity Portfolios under Emissions Regulation." Production and Operations Management 25, no. 6 (June 2016): 1006–1025. (Runner up, Wickham Skinner Award for the best paper published in Production and Operations Management during 2016.)  View Details
  3. Observation Bias: The Impact of Demand Censoring on Newsvendor Level and Adjustment Behavior

    Nils Rudi and David Drake

    In an experimental newsvendor setting we investigate three phenomena: level behavior—the decision-maker's average ordering tendency; adjustment behavior—the tendency to adjust period-to-period order quantities; and observation bias—the tendency to let the degree of demand feedback influence order quantities. We find that the portion of mismatch cost due to adjustment behavior exceeds the portion of mismatch cost due to level behavior in three out of four conditions. Observation bias is studied through censored demand feedback, a situation which arguably represents the majority of newsvendor settings. When demands are uncensored, subjects tend to order below the normative quantity when facing high margin and above the normative quantity when facing low margin, but in neither case beyond mean demand (a.k.a. the pull-to-center effect). Censoring in general leads to lower quantities, magnifying the below-normative level behavior when facing high margin but partially counterbalancing the above-normative level behavior when facing low margin, violating the pull-to-center effect in both cases.

    Keywords: Prejudice and Bias; Behavior; Logistics; Decision Making;


    Rudi, Nils, and David Drake. "Observation Bias: The Impact of Demand Censoring on Newsvendor Level and Adjustment Behavior." Management Science 60, no. 5 (May 2014): 1334–1345.  View Details
  4. Sustainable Operations Management: An Enduring Stream or a Passing Fancy?

    David Drake and Stefan Spinler

    Paul Kleindorfer was among the first to weigh in on and nurture the stream of Sustainable Operations Management. The thoughts laid out here are based on conversations we had with Paul relating to the drivers underlying sustainability as a management issue: population and per capita consumption growth, the limited nature of resources and sinks, and the responsibility and exposure of firms to ensuing ecological risks and costs. We then discuss how an operations management lens contributes to the issue and criteria to help the Sustainable Operations Management perspective endure. This article relates to a presentation delivered by Morris Cohen for Paul's Manufacturing and Service Operations Management Distinguished Fellows Award, given at Columbia University, June 18, 2012. We wrote this article at Paul's request.

    Keywords: Sustainable Operations; sustainability; environment; Paul Kleindorfer; Management; Environmental Sustainability;


    Drake, David, and Stefan Spinler. "Sustainable Operations Management: An Enduring Stream or a Passing Fancy?" Special Issue on the Environment. Manufacturing & Service Operations Management 15, no. 4 (Fall 2013).  View Details
Working Papers and Work-in-progress
  1. Inventory Management for Mobile Money Agents in the Developing World

    Karthik Balasubramanian, David F. Drake and Douglas Fearing

    Mobile money systems, platforms built and managed by mobile network operators to allow money to be stored as digital currency, have burgeoned in the developing world as a mechanism to transfer money electronically. Mobile money agents exchange cash for electronic value and vice versa, forming the backbone of an emerging electronic currency ecosystem that has potential to connect millions of poor and “unbanked" people to the formal financial system. Unfortunately, low service levels due to agent inventory management are a major impediment to the further development of these ecosystems. This paper describes models for the agent's inventory problem, unique in that sales of electronic value (cash) correspond to an equivalent increase in inventory of cash (electronic value). This paper presents a base inventory model and an analytical heuristic that are used to determine optimal stocking levels for cash and electronic value given an agent's historical demand. When tested with a large sample of transaction-level data provided by an East African mobile operator, both the base model and the heuristic improved agent profitability by reducing inventory costs (defined here as the sum of stockout losses and cost of capital associated with holding inventory). The heuristic increased estimated agent profits by 15% relative to profits realized through agents actual decisions, while also offering substantial computational advantages relative to the base model.

    Keywords: Currency; Mobile Technology; Market Platforms; Developing Countries and Economies;


    Balasubramanian, Karthik, David F. Drake, and Douglas Fearing. "Inventory Management for Mobile Money Agents in the Developing World." Harvard Business School Working Paper, No. 17-109, June 2017. (Presented at INFORMS 2015 and POMS 2016. Finalist and first runner up, Production and Operations Management College of Sustainable Operations Best Student Paper Award.)  View Details
  2. Kicking Ash: Who (or What) Is Winning the War on Coal?

    David F. Drake and Jeffrey York

    Power generators throughout the U.S. have shed coal capacity at an unprecedented rate over the past few years. Multiple stakeholders have claimed credit - natural gas executives, policy makers, renewables advocates, and environmental NGOs. In this paper, we explore the extent to which each has impacted the expected life of coal-fired power generating units.

    Keywords: Energy Generation; Energy Sources; Energy Industry; United States;


    Drake, David F., and Jeffrey York. "Kicking Ash: Who (or What) Is Winning the War on Coal?" 2017. (Work in progress. Presented at INFORMS 2016 and POMS 2016.)  View Details
  3. Sustainable Fleet Operations: The Collaborative Adoption of Electric Vehicles

    Vanessa Chocteau, David F. Drake, Paul R. Kleindorfer, Renato J. Orsato and Alain Roset

    Keywords: fleet management; carbon regulation; Sustainable Operations; collaboration; Environmental Sustainability; Transportation; Cooperation; Energy Sources; Manufacturing Industry; Green Technology Industry; Service Industry; Auto Industry; France;


    Chocteau, Vanessa, David F. Drake, Paul R. Kleindorfer, Renato J. Orsato, and Alain Roset. "Sustainable Fleet Operations: The Collaborative Adoption of Electric Vehicles." INSEAD Faculty & Research Working Paper, April 2011.  View Details
  4. Service Quality, Inventory and Competition: An Empirical Analysis of Mobile Money Agents in Africa

    Karthik Balasubramanian and David F. Drake

    The use of electronic money transfer through cellular networks ("mobile money") is rapidly increasing in the developing world. The resulting electronic currency ecosystem could improve the lives of the estimated 2 billion people who live on less than $2 a day by facilitating more secure, accessible, and reliable ways to store and transfer money than are currently available. The development of this ecosystem requires a network of agents to conduct cash-for-electronic value transactions and vice versa. This paper examines how service quality, competition, and poverty are related to demand and inventory (of electronic credit and physical cash) where, in this setting, service quality consists of pricing transparency and agent expertise. Among our results, we find that average demand increases with both pricing transparency and agent expertise, and that agent expertise interacts positively with competitive intensity. We also find that competition is associated with higher inventory holdings of both cash and electronic value, and that agents in high-poverty areas hold greater amounts of cash but do not carry a smaller amount of electronic value indicating that they devote more capital to their inventory. These results offer insight to mobile money operators with respect to monitoring, training, and the business case for their agents. This paper furthers our understanding of service quality, competition and inventory, while developing a foundation for the exploration of mobile money by operations management scholars.

    Keywords: service operations; operations strategy; competition; base of the pyramid; mobile money; Inventory management; Competition; Currency; Service Operations; Mobile Technology;


    Balasubramanian, Karthik, and David F. Drake. "Service Quality, Inventory and Competition: An Empirical Analysis of Mobile Money Agents in Africa." Harvard Business School Working Paper, No. 15-059, January 2015. (Revised October 2015.)  View Details
  5. Show or Tell?: Behavioral Inventory Response to an East African Mobile Money Field Experiment

    Jason Acimovic, Chris Parker, David F. Drake and Karthik Balasubramanian


    Acimovic, Jason, Chris Parker, David F. Drake, and Karthik Balasubramanian. "Show or Tell?: Behavioral Inventory Response to an East African Mobile Money Field Experiment." 2017. (Work in progress. Completed field experiment involving more than 4,500 Tanzanian mobile money agents.)  View Details
Cases and Teaching Materials
  1. Ekal Vidyalaya: Education for Rural India

    David Drake, Namrata Bhattacharya, Pooja Godbole and Amrita Saigal

    By examining Ekal Vidyalaya (Ekal), a nonprofit network of schools in India, this case focuses on the classic challenge faced by organizations that grow through replication (e.g., McDonald's, Starbucks, Walmart, Whole Foods): How can they continue to drive growth when their well of attractive locations begins to dry up?

    In 1986, a group of social entrepreneurs reimagined education in India, developing a low-cost, "one-teacher school" model to provide educational access in regions that had proven cost prohibitive for government schools. They founded Ekal to fulfill the vision of a network of 100,000 one-teacher schools throughout rural India. More than a quarter century later, in 2014, the Ekal network included over 54,000 schools. However, with the emergence of India as an economic power, government schools had received the mandate and funds to extend their reach to many of the regions that Ekal serves. Was it time for Ekal to reevaluate their vision; was the target of 100,000 schools, which had driven their growth thus far, still the best path forward? Or was it time to declare their mission of universal access to education a success in the regions that government schools now served and begin to scale back from those areas?

    Keywords: Nonprofit Organizations; Early Childhood Education; India;


    Drake, David, Namrata Bhattacharya, Pooja Godbole, and Amrita Saigal. "Ekal Vidyalaya: Education for Rural India." Harvard Business School Case 617-021, September 2016.  View Details
  2. Unilever: Combatting Global Food Waste

    David F. Drake, Janice H. Hammond and Matthew G. Preble

    The global consumer goods company Unilever was on pace to hit a number of aggressive targets by 2020 as part of the Unilever Sustainable Living Project, including a goal to halve the waste associated with the disposal of its products. Unilever's chief supply chain officer Pier Luigi Sigismondi and his team were working towards this goal and had chosen to first focus on three key areas—sugar, tomatoes, and tea—and had analyzed where in the “farm to fork” value chain product was wasted. This analysis showed that very little was wasted within areas of the value chain directly controlled by Unilever, and most occurred either upstream with its suppliers or downstream with consumers. How could Unilever encourage these actors to change established practices and entrenched behaviors within a short timeframe to help Unilever meet its sustainability targets and also to improve the operations of its partners in the value chain? By encouraging consumers to better manage their food purchases, did Unilever risk harming its own sales or those of its retail customers? Could Unilever encourage industry-wide changes to have a real impact on global environmental sustainability?

    Keywords: food waste; sustainable business and innovation; sustainable supply chains; Sustainable Operations; organization alignment; Environmental Sustainability; Operations; Supply Chain Management; Growth and Development Strategy; Food; Agribusiness; Strategy; Organizational Change and Adaptation; Beauty and Cosmetics Industry; Consumer Products Industry; Food and Beverage Industry; Forest Products Industry; Manufacturing Industry; Retail Industry; North and Central America; Europe; Asia; Africa; Latin America; India;


    Drake, David F., Janice H. Hammond, and Matthew G. Preble. "Unilever: Combatting Global Food Waste." Harvard Business School Case 615-040, March 2015.  View Details
  3. Whole Foods: The Path to 1,000 Stores

    David F. Drake, Ryan W. Buell, Melissa Barton, Taylor Jones, Katrina Keverian and Jeffrey Stock

    The case examines the operations strategy of Whole Foods, one of the largest natural grocery chains in the United States. In late 2013, Whole Foods was expanding rapidly, with a publicly-stated goal of growing from 351 to 1,000 domestic stores by 2022. It was also engaged in a strategic initiative to combat "food deserts"—areas with limited access to affordable and nutritious food. In pursuit of these initiatives, the company's rapid entry into a heterogeneous set of new markets necessitated a reexamination of its store format, target customer base, and approach to human capital.

    Keywords: Human Capital; Food; Expansion; Market Entry and Exit; Operations; Retail Industry; Food and Beverage Industry; United States;


    Drake, David F., Ryan W. Buell, Melissa Barton, Taylor Jones, Katrina Keverian, and Jeffrey Stock. "Whole Foods: The Path to 1,000 Stores." Harvard Business School Case 615-019, September 2014. (Revised June 2016.)  View Details
Managerial Chapters and Articles
  1. Ignore, Avoid, Abandon, and Embrace: What Drives Firm Responses to Environmental Regulation?

    David F. Drake and Robin L. Just

    A regulator's ability to incentivize environmental improvement among firms is vital in achieving long-term sustainability. However, firms can and do respond to environmental regulation in a variety of ways: complying with its intent; avoiding the regulation by offshoring or by abandoning the market; or ignoring the regulation by continuing with entrenched business practices. The path a profit-maximizing firm will choose depends, in part, on the expected cost of non-compliance, which is a product of the regulator's stated penalty, the likelihood that non-compliant practices are detected, and the likelihood that detected violations are punished. The type of regulatory regime—compliance-based or "pay-to-pollute"—and three important cost thresholds also drive firm response: i) the compliance or clean technology adoption threshold; ii) the offshoring threshold; and iii) the exit threshold. In this chapter, through examples of regulatory failures and successes, we develop a framework for understanding how these thresholds interact with the type of regulatory regime being considered and the expected cost of non-compliance to determine whether profit-maximizing firms ignore, avoid, or embrace environmental regulation.

    Keywords: sustainability; Environmental Operations; regulation; Cost vs Benefits; For-Profit Firms; Operations; Environmental Sustainability;


    Drake, David F., and Robin L. Just. "Ignore, Avoid, Abandon, and Embrace: What Drives Firm Responses to Environmental Regulation?" In Environmentally Responsible Supply Chains, edited by Atalay Atasu. New York: Springer, 2016.  View Details