Integrity and identity are the topics of two different working papers this week. Integrity, says HBS professor emeritus Michael C. Jensen, means “a state or condition of being whole, complete, unbroken, unimpaired, sound, in perfect condition.” It does not mean being perfect. As his working paper suggests, integrity assumes that people keep their word. Yet individuals retain their integrity even when they fail to keep a promise—so long as they acknowledge the consequences created by their lapse and try to make amends. Jensen’s remarks originally appeared as an interview in Rotman Magazine of the Rotman School of Management.
As Jensen says, “If I had one recommendation for improvement to the curriculum of every business school, it would be to make it very clear to students that cost-benefit analysis is very important almost everywhere in life—but not with respect to honoring one’s word. In my view, this is a major root cause of the current economic crisis.”
Identity, meanwhile, is also important to people and organizations. HBS postdoctoral fellow Lakshmi Ramarajan, author of the working paper “Opening Up or Shutting Down? The Effects of Multiple Identities on Problem Solving,” discusses issues of identity and workplace boundaries.
As Ramarajan writes, “An employee in a multinational corporation may think of himself not only as a member of the corporation, but also as an alumnus of his university, a citizen of his home country, a manager, a team member, a parent, an accountant, and a musician. With a similar proliferation of identities within each person, new questions arise regarding the influence of a person’s identities on how she engages in resolving problems with others. Do multiple intrapersonal identities help or hinder how people resolve problems with others?” Her paper offers insights and suggestions for alleviating tensions.
— Martha Lagace
Working Papers
Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation
| Authors: |
Carliss Y. Baldwin and Eric von Hippel |
Abstract
In this paper we assess the economic viability of innovation by producers relative to two increasingly important alternative models: innovations by single user individuals or firms and open collaborative innovation projects. We analyze the design costs and architectures and communication costs associated with each model. We conclude that innovation by individual users and also open collaborative innovation increasingly compete with—and may displace—producer innovation in many parts of the economy. We argue that a transition from producer innovation to open single user and open collaborative innovation is desirable in terms of social welfare and so worthy of support by policymakers.
Download the paper: http://www.hbs.edu/research/pdf/10-038.pdf
Fluid Teams and Fluid Tasks: The Impact of Team Familiarity and Variation in Experience (revised)
| Authors: |
Robert S. Huckman and Bradley R. Staats |
Abstract
In many manufacturing and service settings, fluid teams of individuals with varied sets of experience are responsible for projects that are critical to their organization’s success. Although building teams from individuals with varied prior experience is increasingly necessary, prior work fails to find a consistent effect of variation in experience on performance. We hypothesize that team familiarity—team members’ prior experience working with one another—is one mechanism that helps teams leverage the benefits of variation in team experience by alleviating coordination problems that variation creates.
Download the paper: http://www.hbs.edu/research/pdf/09-145.pdf
Traveling Agents: Political Change and Bureaucratic Turnover in India (revised)
| Authors: |
Lakshmi Iyer and Anandi Mani |
Abstract
We develop a framework to empirically examine how politicians with electoral pressures control bureaucrats with career concerns as well as the consequences for bureaucrats’ career investments. Unique micro-level data on Indian bureaucrats support our key predictions. Politicians use frequent reassignments (transfers) across posts of varying importance to control bureaucrats. High-skilled bureaucrats face less frequent political transfers and lower variability in the importance of their posts. We find evidence of two alternative paths to career success: officers of higher initial ability are more likely to invest in skill, but caste affinity to the politician’s party base also helps secure important positions.
Download the paper: http://www.hbs.edu/research/pdf/09-006.pdf
Integrity: Without It Nothing Works
| Author: |
Michael C. Jensen |
Abstract
There is confusion between integrity, morality, and ethics. In our much longer paper on the topic (see “Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics and Legality”—available at http://ssrn.com/abstract=920625), my co-authors, Werner Erhard and Steve Zaffron, and I distinguish integrity from morality and ethics in the following way. Integrity in our model is honoring your word. As such, integrity is a purely positive phenomenon. It has nothing to do with good vs. bad, right vs. wrong behavior. Like the law of gravity the law of integrity just is, and if you violate the law of integrity as we define it, you get hurt just as if you try to violate the law of gravity with no safety device. The personal and organizational benefits of honoring one’s word are huge—both for individuals and for organizations—and generally unappreciated.
Download the paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1511274
Opening Up or Shutting Down? The Effects of Multiple Identities on Problem Solving
| Author: |
Lakshmi Ramarajan |
Abstract
Across three studies, I investigate the distinct effects of multiple identity conflict and enhancement within people on two crucial aspects of resolving problems with others: integrative behavior and openness. The results of two studies support the hypotheses that multiple identity conflict is negatively related to integrative thinking, while multiple identity enhancement is positively related to attitudes of openness to others. In a third study, I conducted an interpersonal dyadic negotiation experiment with business school students and found that, as predicted, these effects replicated and extended to integrative outcomes and open behaviors. This research shows that there are both harmful and helpful effects of multiple identities on interpersonal problem solving depending on whether those identities are enhancing or conflicting: multiple identity conflict shuts down integrative thought and behavior and multiple identity enhancement opens us up to other people.
Download the paper: http://www.hbs.edu/research/pdf/10-041.pdf
Publications
From Wealth to Well-Being? Money Matters, but Less than People Think
| Authors: |
Lara B. Aknin, Michael I. Norton, and Elizabeth W. Dunn |
| Publication: |
Journal of Positive Psychology 4 (2009): 523-527 |
Abstract
While numerous studies have documented the modest (though reliable) link between household income and well-being, we examined the accuracy of laypeople’s intuitions about this relationship by asking people from across the income spectrum to report their own happiness and to predict the happiness of others (Study 1) and themselves (Study 2) at different income levels. Data from two national surveys revealed that while laypeople’s predictions were relatively accurate at higher levels of income, they greatly overestimated the impact of income on life satisfaction at lower income levels, expecting low household income to be coupled with very low life satisfaction. Thus, people may work hard to maintain or increase their income in part because they overestimate the hedonic costs of earning low levels of income.
Capital Market Driven Corporate Finance
| Author: |
Malcolm Baker |
| Publication: |
Annual Review of Financial Economics 1, no. 1 (December 2009) |
Abstract
Much of empirical corporate finance focuses on sources of the demand for various forms of capital, not the supply. Recently, this has changed. Supply effects of equity and credit markets can arise from a combination of three ingredients: investor tastes, limited intermediation, and corporate opportunism. Investor tastes, when combined with imperfectly competitive intermediaries, lead prices and interest rates to deviate from fundamental values. Opportunistic firms respond by issuing securities with high prices and investing the proceeds. A link between capital market prices and corporate finance can, in principle, come from either supply or demand. This framework helps to organize empirical approaches that more precisely identify and quantify supply effects through variation in one of these three ingredients. Taken as a whole, the evidence shows that shifting equity and credit market conditions play an important role in dictating corporate finance and investment.
Of Gods and Small Things: Closing the Gap in Corporate Entrepreneurship
| Author: |
Bhaskar Chakravorti |
| Publication: |
In India 2010. Business Standard Books, in press |
Abstract
Entrepreneurship is frequently associated with a “small thing”—a venture that challenges the status quo and relentlessly pursues opportunity. The large established firms, the “gods,” have forever coveted these small things—through incubation, financial support, or acquisition—in their quest for the Next Big Thing. The problem with corporate entrepreneurship, of course, has been that the entrepreneur must deal with the challenges of securing resources and support within an organization focused on operations that are “at scale.” Entrepreneurs with miniscule, and often negative, financial contributions compete with mature businesses that are the primary revenue generators for the firm. Revenue is power, and for senior management taking their eyes off the mature businesses can be extremely costly. As a result, corporate entrepreneurship languishes despite its importance to the company’s future. I argue that there may be a geographic solution to this dilemma. In such a solution, a fast-growing emerging market plays a central role in orchestrating a complete strategy for corporate entrepreneurship. I also argue that it is time to go beyond the traditional framing of an emerging market. The prescription of this chapter is to think about a more ambitious role for such markets: establish a strategic business unit, designated as a “disruptive innovation hub,” that is charged with first penetrating the emerging market with products tailored to local needs and conditions and then leveraging that experience to develop disruptive innovations targeted at a global market. Scale and entrepreneurship—god and small things—can, indeed, cohabit and thrive in the developing world. This combination can become one of its major contributions to the global economy.
Mental Health in the Aftermath of Conflict
| Authors: |
Quy-Toan Do and Lakshmi Iyer |
| Publication: |
In Oxford Handbook of the Economics of Peace and Conflict, edited by Michelle Garfinkel and Stergios Skaperdas. Oxford University Press, forthcoming. (Also a Harvard Business School Working Paper, No. 10-040, November 2009.) |
Abstract
We survey the recent literature on the mental health effects of conflict. We highlight the methodological challenges faced in this literature, which include the lack of validated mental health scales in a survey context, the difficulties in measuring individual exposure to conflict, and the issues related to making causal inferences from observed correlations. We illustrate how some of these issues can be overcome in a study of mental health in post-conflict Bosnia and Herzegovina. Mental health is measured using a clinically validated scale; conflict exposure is proxied by administrative data on war casualties instead of being self-reported. We find that there are no significant differences in overall mental health across areas that are affected by ethnic conflict to a greater or lesser degree.
Download the paper: http://www.hbs.edu/research/pdf/10-040.pdf
The Dark Underbelly of Online Advertising
| Authors: |
Benjamin Edelman |
| Publication: |
HBR Now, HBR Voices (December 2009) |
Abstract
The Internet is sold to advertisers as a highly measurable medium that is the most efficient way to target exactly the right customers. But online advertising is also easily subverted—letting fraudsters claim advertising fees for work they did not actually do. The trickiest frauds deceive advertisers so effectively that measurements of ad effectiveness report the fraudsters as exceptionally productive and high quality, rather than revealing that their traffic was actually worthless. This is a quiet scandal. In a time of tightening ad budgets, losses to advertising fraud come straight from the bottom line—but savings can be equally dramatic. Here’s a look behind the veil—an explanation of ad practices that have cheated even the Web’s largest advertisers. Advertising scams take plenty of victims, both witting and not, but I offer strategies to help determined marketers protect themselves.
Read the blog: http://blogs.harvardbusiness.org/hbr/hbr-now/2009/11/dark-underbelly-of-online-ads.html
Chinese Railroads, Local Society, and Foreign Presence: The Tianjin-Pukou Line in pre-1949 Shandong
| Author: |
Elisabeth Köll |
| Publication: |
In Manchurian Railways and the Opening of China: An International History, edited by Bruce A. Elleman and Stephen Kotkin, 123-148. New York: M.E. Sharpe, 2009 |
Abstract
This chapter explores issues of how Chinese railroads improved social mobility and standards of living along major trunk lines, and how foreign investment shaped the integration of the Chinese railroad network from the early 1900s to 1949. As this case study of the Tianjin-Pukou line argues, the political context of semi-colonialism and imperialism in the first half of the 20th century framed the emergence and growth of railroad companies in China. This is not to say that individual railroad lines were not able to become substantial business institutions, but different political regimes—colonial authorities, warlords, political factions in the Republican government, and the Japanese—prevented the growth of Chinese railroads into an expansive, strong national railway network during the first half of the 20th century.
Purchase the book: http://www.mesharpe.com/mall/resultsa.asp?Title=Manchurian+Railways+and+the+Opening+of+China%3A+An+International+History
Crossing Boundaries to Increase Relevance in Organizational Research
| Authors: |
Jeffrey Polzer, Ranjay Gulati, Rakesh Khurana, and Michael Tushman |
| Publication: |
Journal of Management Inquiry (forthcoming) |
Abstract
In this volume, Palmer et al. and Miller et al. take different approaches to assessing the relevance debate in organizational studies. After commenting on these papers, we recommend that a “full-cycle” approach to conducting research can help organizational scholars increase the relevance of their work. We then describe how key elements of this approach can be incorporated into Organizational Behavior doctoral programs to help students produce research that is both rigorous and relevant. This approach can help faculty and doctoral students alike take advantage of our field’s position at the intersection of the social science disciplines, other business school constituents, and the organizational world of practice.
Cue Ennio Morricone and the symphonic accompaniment to the endgame: VW has officially taken a 49.9% stake in Porsche. VW paid €3.9 billion ($5.75B U.S.) for its cut, “based on the enterprise value for Porsche AG calculated under a careful due diligence and valuation procedure.” That’s a few shades more than the €3.3 billion amount VW was saying it would pay a few months ago.
Craigslist and eBay are set to fight it out in the court room as a trial between the two companies gets underway in Delaware, US. eBay has filed a lawsuit against Craigslist in 2008 as the two companies argue about eBay’s share in the classifieds site. The auctions site claims that Craigslist diluted its stake by issuing new shares, lowering eBay’s slice from 28.4 percent to just 24.85 percent which meant loosing its seat on the Craigslist board. 
With holiday season parties in sight, it’s nice to have easy appetizers you can count on. That’s what we had in mind when we ran our holiday appetizer contest last week, and today we’re sharing one of the winners.
Everyone loves to play the guessing game when it comes to Facebook’s, and other social networks’, revenue and worth. Some are more informed than others, but at the end of the day, without any official figures, all they can do is speculate. Not that this is stopping anyone and the Wall Street Journal is revealing (subscrition required) some of the numbers private market advisory firm NYPPEX has come up with. 
