November 2009

In with the “In” Crowd
Like the cool kids in high school who discourage those who “don’t belong” from encroaching on their turf, Yael Hochberg notes that venture capitalists in tightly networked geographic markets deter new entrants using some of the same behaviors exhibited in high school hallways.

Yael Hochberg

Alexander Ljungqvist

Yang Lu

May 2009

People are Talking
Talk may be cheap, but listening to what people are saying about your product can be a valuable method of improving corporate performance. According to recent research, there is a measurable connection between what is being said about a product in online posts and real-time customer behavior.

Shyam Gopinath

Jacquelyn Thomas

Lakshman Krishnamurthi

April 2009

Living Outside the Box
Living in another country can be a cherished experience, but new research suggests it might also help expand minds. This research, published by the American Psychological Association, is the first of its kind to look at the link between living abroad and creativity.

William Maddux

Adam D. Galinsky

April 2009

Growing Socially Responsible Markets
There is an assumption that companies start producing environmentally friendly or “green” products when consumers demand them. As gas prices soar, truck and sport utility vehicle plants close down, and fuel-efficient vehicles become the rage in today’s markets, the reality of this truth is hard to dispute.

Klaus Weber

Kathryn Heinze

Michaela De Soucey

April 2009

The Global “Idea” Market
When we imagine international trade, we conjure up images of supertankers and massive container ships, or maybe ships laden with exotic cargoes of rum, coffee, and spices. But international trade today involves much more than crude oil and bananas. We live in a global marketplace of ideas, when trademarks, patents, and research are moving from Argentina to Tanzania at the speed of light. In the Internet age, people are trading ideas around the world.

Daniel Spulber

January 2009

When Does One Good Deed Deserve Another?
Rationality suggests that trust should build slowly and that people should proceed cautiously when building a relationship. But what if you only have one chance to decide whether to trust someone?

Madan M. Pillutla

Deepak Malhotra

J. Keith Murnighan

January 2009

Golf Lessons
When confronted by a Tiger Woods or a Michael Phelps, do challengers step up their game or throw in the towel? Managers often use internal competition to motivate employees, but new research suggests that adding a superstar to the mix might actually hurt productivity rather than help it.

Jennifer Brown

October 2008

Science as Team Sport
The Large Hadron Collider, accelerating subatomic particles to light speed before crashing them together in spectacular fashion 100 meters beneath the Franco-Swiss border, unites thousands of physicists and engineers from dozens of nations and hundreds of universities in one of the world’s largest scientific collaborations. But calculus, a cornerstone of mathematics that is wielded en masse in the collider’s humming tunnels and glowing control rooms, was developed by just two men, Gottfried Wilhelm Leibniz and Sir Isaac Newton, each of whom worked independently in the latter half of the 17th century.

Benjamin F. Jones

Stefan Wuchty

Brian Uzzi

July 2008

Cultural Intelligence in Global Teams
Modern organizations operate in a thoroughly global environment. Not only do they buy and sell goods and services in several national markets, but they also hire individuals from a variety of cultures. As a result, culturally heterogeneous teams frequently determine strategy, undertake planning, carry out research, and perform other complex tasks for organizations.

Maddy Janssens

Jeanne M. Brett

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June 2008

Patent Protection and Innovation in Pharma
Viagra doesn't grow on trees. Neither does Advil, Lipitor, or any of the myriad other drugs that make their way to market. Those biochemical breakthroughs are rooted in human innovations, not magic. Like most other human endeavors, innovation is thought to be encouraged by some pushing and prodding.

Yi Qian

May 2008

The Promise, Perils, and Performance of Private Equity
Private equity—the class of investments that includes venture capital investments and buyouts—accounts for a relatively small and, to date, little analyzed percentage of overall investments. Studies have shown that institutional investors—such as university endowment funds, corporate and public pension funds, private advisors, banks, and insurance companies—generally outperform individual investors. However, researchers have unearthed virtually no information on the success rates of different types of institutional investors.

Josh Lerner

Antoinette Schoar

Wan Wongsunwai

March 2008

Running Neck and Neck
Phenom. Quad-core. FASN8. These may sound like a new car model, the type of engine under its hood, and a vanity license plate for it respectively, but in reality they are all microprocessors recently introduced by major chipmakers. More generally, they are moves in one of the most competitive current product races in the technology industry: the ongoing battle to develop the fastest processor.

Johannes Hörner

November 2007

Place Your Bids
The traditional belief is that a high first offer results in a high selling price. This belief is rooted in a psychological principle known as anchoring, such that the size of an opening bid is a testament to the item’s value. The numerical value of an anchor sets the tone of more or less prestige of the product up for auction. Furthermore, a high opening bid can spark the rose-colored glasses effect, leading bidders to focus on the more positive features of an item. The researchers show that low rather than high opening bids—for a variety of products from shirts to fancy rugs in online auctions—generate high selling prices, demonstrating a reversal of the anchoring effect.

Gillian Ku

Adam D. Galinsky

J. Keith Murnighan

October 2007

A New Channel Strategy for Dell
Dell impressed many in its early years with its distinct model of supply chain management, selling customized computers directly to customers to meet burgeoning PC demand. By using this innovative sales model, Dell became an industry and shareholders' darling, a high-tech pioneer with seemingly limitless growth. Those days appear to be over: Dell's profits and shares have dropped considerably from their peaks in recent times.

Sunil Chopra

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October 2007

Softening the Blow of Bad News
Chief financial officers and investors focus on earnings per share more than any other single financial figure. Researchers in accounting have long confirmed that the price of a company's stock is punished when a company's earnings fall short of forecasted earnings or, in the lingo, the company has a “negative earnings surprise.” Common wisdom, confirmed by empirical evidence, suggests that negative earnings surprises are punished proportionately more than positive earnings surprises are rewarded. A recent survey (Graham et al., 2005) confirms that this is indeed the perception among CFOs and summarizes several strategies mentioned by CFOs to temper the market's reaction to bad news. Among them, the company may release news about leading indicators that signal the prospect of better future earnings.

Benjamin Lansford

September 2007

Beating the Bottlenecks in E-Commerce
It’s the familiar demand of sales and services businesses played out over the Web: Executives want to ensure that their customers obtain maximum satisfaction while keeping the costs of doing business as low as possible. That problem looms particularly large for online organizations. The combination of growing demand for e-commerce and the increasing complexity of the Internet’s infrastructure has put intense pressure on information technology (IT) planners to harmonize the two requirements in inventive ways. An innovative research project headed by Wuqin Lin, associate professor of managerial economics and decision science at the Kellogg School, provides guidance for doing just that.

Wuqin Lin

Zhen Liu

Cathy H. Xia

Li Zhang

August 2007

Does Location Matter for the Adoption of Internet Technologies in Business?
From traveling businessmen and women using PDAs as movable offices to large consortiums sharing supercomputing capabilities around the globe, advanced Internet technology has revolutionized the business world. It has obviously had an economic impact, changing the very way that companies do business. But what exactly is the impact? And how can businesses and regional planning boards benefit from a better understanding of the interplay between a business’s location and its adoption of Internet technology?

Christopher Forman

Avi Goldfarb

Shane Greenstein

July 2007

Compete or Cooperate?
For generations, would-be entrepreneurs and economists believed that start-up companies were created to bring new innovations to market rapidly and to compete with or displace established firms. The noted economist Joseph Schumpeter famously referred to this process of continuous innovation and displacement as “creative destruction.” Due to this conventional wisdom, the first instinct of most executives at start-ups today is to try to use new technology to outcompete larger, more established and less innovative firms.

Joshua S. Gans

David H. Hsu

Scott Stern

May 2007

Whom You Know Matters
Venture capitalists often acknowledge the critical role of network relationships in the success of individual VC firms, particularly in sourcing investment opportunities, management talent, and information necessary for consistent industry success. One prominent VC, Kleiner Perkins Caufield and Byers, even goes so far as to refer to itself as a “Venture Keiretsu.” Research by Yael Hochberg (Finance Department, Kellogg School of Management) and her colleagues Alexander Ljungqvist and Yang Lu (Stern School of Business, NYU) suggests that VC networks—in particular, relationships with other VC firms—can have a significant positive impact on fund performance.

Yael Hochberg

Alexander Ljungqvist

Yang Lu

May 2007

Why Do IPO Auctions Fail?
When Google successfully launched its initial public offering (IPO) by auction in 2004, there was much media and industry fanfare. In reality, using an IPO auction to determine who gets to buy how many shares at what price is an old approach that either never took off in some countries, or has gone out of fashion in others. IPO auctions were attempted in more than twenty countries in the 1980s and early 1990s, but are rare today.

Ravi Jagannathan

Ann E. Sherman

April 2007

Uncertainty and Independence
Motel chain affiliation is more common than independent ownership when there is greater uncertainty about the prospects for an individual outlet’s success. Factors that contribute to uncertainty for a given motel location include proximity to an interstate highway, room capacity, competition, resident income, traffic volume, and the industry’s economic fluctuation. Under conditions of uncertainty, chain affiliation is beneficial because it helps to stabilize demand for an individual outlet. This research is extendable to the retail sector and service industries, as well as managers analyzing business partnerships and negotiating with suppliers.

Michael J. Mazzeo