Publications

Roe, Mark J., and Jordan I. Siegel. "Political Instability: Effects on Financial Development, Roots in the Severity of Economic Inequality." Journal of Comparative Economics 39, no. 3 (September 2011): 279–309. (We here bring forward strong evidence that political instability impedes financial development, with its variation a primary determinant of differences in financial development around the world. As such, it needs to be added to the short list of major determinants of financial development. First, structural conditions first postulated by Engerman and Sokoloff (2002) as generating long-term inequality are shown here empirically to be exogenous determinants of political instability. Second, that exogenously-determined political instability in turn holds back financial development, even when we control for factors prominent in the last decade's cross-country studies of financial development. The findings indicate that inequality-perpetuating conditions that result in political instability are fundamental roadblocks for international organizations like the World Bank that seek to promote financial development. The evidence here includes country fixed effect regressions and an instrumental model inspired by Engerman and Sokoloff's (2002) work, which to our knowledge has not yet been used in finance and which is consistent with current tests as valid instruments. Four conventional measures of national political instability — Alesina and Perotti's (1996) well-known index of instability, a subsequent index derived from Banks' (2005) work, and two indices of managerial perceptions of nation-by-nation political instability — persistently predict a wide range of national financial development outcomes for recent decades. Political instability's significance is time consistent in cross-sectional regressions back to the 1960's, the period when the key data becomes available, robust in both country fixed-effects and instrumental variable regressions, and consistent across multiple measures of instability and of financial development. Overall, the results indicate the existence of an important channel running from structural inequality to political instability, principally in nondemocratic settings, and then to financial backwardness. The robust significance of that channel extends existing work demonstrating the importance of political economy explanations for financial development and financial backwardness. It should help to better understand which policies will work for financial development, because political instability has causes, cures, and effects quite distinct from those of many of the key institutions most studied in the past decade as explaining financial backwardness.)

2022
Working Paper

The Regulation of Medical AI: Policy Approaches, Data, and Innovation Incentives

By: Ariel Dora Stern

For those who follow health and technology news, it is difficult to go more than a few days without reading about a compelling new application of Artificial Intelligence (AI) to health care. AI has myriad applications in medicine and its adjacent industries, with... View Details

Keywords: AI and Machine Learning; Health Care and Treatment; Governing Rules, Regulations, and Reforms; Technological Innovation; Medical Devices and Supplies Industry

20 Apr 2015
Research & Ideas

The 5 Strategy Rules of Bill Gates, Andy Grove, and Steve Jobs

that no one understood what it did was brilliant," says Yoffie. "That changed the entire structure of the semiconductor industry... View Details

Keywords: by Michael Blanding; Computer

2014
Working Paper

Profits and Economic Development

By: Dan Schwab and Eric Werker

Are rents, or excess profits, good for development? Using industry-level manufacturing data, this paper demonstrates a negative effect of rents, measured by the mark-up ratio, on productivity growth. The negative effect is strongest in poor countries, suggesting that... View Details

Keywords: Firm Performance; Rent; Mark-up; Competition; Manufacturing; Development Economics; Profit; Economic Growth; Renting or Rental

SSRN

15 Dec 2008
Research & Ideas

The Surprisingly Successful Marriages of Multinationals and Social Brands

emphasize expanding sales, with profitability to follow with a lag—rather than having to produce high profitability along with rapid expansion from the start. And, finally, a key virtue of acquisition from... View Details

Keywords: by Sarah Jane Gilbert; Consumer Products; Food & Beverage

July 2016
Article

Under New Management: Equity Issues and the Attribution of Past Returns

By: Malcolm Baker and Yuhai Xuan

There is a strong link between measures of stock market performance, such as changes in Tobin's Q or past stock returns, and equity issues. Typically, this performance is thought to be a characteristic of the firm, not the CEO who happens to run the firm. In contrast... View Details

Keywords: Performance; Management Teams; Equity

September–October 2018
Article

The Paradox of Responsive Authoritarianism: How Civic Activism Spurs Environmental Penalties in China

By: Christopher Marquis and Yanhua Bird

Recognizing the need to better understand institutional change processes in authoritarian states, which play an increasingly prominent role in the world economy, we examine the efficacy of civic activism aimed at spurring governmental action concerning the... View Details

Keywords: Civic Activism; Authoritarianism; Regulation; Corporate Sustainability; Environmental Sustainability; Government and Politics; Business and Government Relations; Social Issues; Change; China

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October 2015
Teaching Note

Molycorp: Financing the Production of Rare Earth Minerals (A)

By: Benjamin C. Esty and E. Scott Mayfield

Molycorp, the western hemisphere's only producer of rare earth minerals, was in the middle of a $1 billion capital expenditure project in its effort to become a vertically integrated supplier of rare earth minerals, oxides, and metals. Yet it had just reported lower... View Details

2012
Working Paper

Do Market Leaders Lead in Business Process Innovation? The Case(s) of E-Business Adoption

By: Kristina S. McElheran

This paper explores the relationship between market position and business process innovation. Prior research has focused on the alignment between new technologies and the internal capabilities of firms to pursue them. I extend the investigation to include external... View Details

Keywords: Investment; Technological Innovation; Leadership; Business Processes; Behavior; Motivation and Incentives; Technology Adoption; Manufacturing Industry; United States

SSRN

09 Nov 2007
Working Paper Summaries

Recognizing the New: A Multi-Agent Model of Analogy in Strategic Decision-Making

Keywords: by Giovanni M. Gavetti & Massimo Warglien

2008
Working Paper

The Small World of Investing: Board Connections and Mutual Fund Returns

By: Lauren Cohen, Andrea Frazzini and Christopher J. Malloy

This paper uses social networks to identify information transfer in security markets. We focus on connections between mutual fund managers and corporate board members via shared education networks. We find that portfolio managers place larger bets on firms they are... View Details

Keywords: Asset Pricing; Investment Portfolio; Governing and Advisory Boards; Knowledge Sharing; Knowledge Use and Leverage; Social and Collaborative Networks; Financial Services Industry

Research Summary

Dissertation: "Essays in International Non-market Strategy and the Political Economy of Environmental Regulation"

My dissertation is part of a research agenda intended to advance our understanding of the interaction between companies and non-market actors (e.g. regulators) in an international context. The empirical setting of my analysis is the European Union Emissions Trading... View Details

16 Dec 2011
Research & Ideas

Reintroducing Intellectual Ambition to the Study of Business History

there is nothing new about the globalization of firms. Since the emergence of the first global economy in View Details

Keywords: by Geoffrey Jones & Walter Friedman

Web

The Coming of Managerial Capitalism - Course Catalog

course covers the founding of the new nation, early entrepreneurial venturing, changes in the strategy and View Details

2008
Article

Market Leadership and Strategic Investments in Innovation: The Adoption of E-Business Capabilities

By: Kristina Steffenson McElheran

This study focuses on whether more-productive firms are more likely to adopt process innovations and why. The empirical context is the adoption of e-business practices among U.S. manufacturing plants in early 2000. Based on detailed data from the U.S. Census of... View Details

Keywords: Investment; Innovation Strategy; Leadership; Motivation and Incentives; Competitive Advantage; Technology Adoption; Manufacturing Industry; United States

March 2009 (Revised April 2011)
Course Overview Note

Growing, Financing, and Managing Family and Closely Held Firms: Overview of the Course

By: Belen Villalonga

Most companies around the world are controlled by their founding families, including more than half of all public corporations in the U.S. and Europe and more than two thirds of those in Asia. These companies are the subject of the Financial Management of Family and... View Details

Keywords: Family Business; Financial Management; Corporate Governance; Governing and Advisory Boards; Family Ownership; Business and Stakeholder Relations; Valuation

2014
Article

Morality Rebooted: Exploring Simple Fixes to Our Moral Bugs

By: Ting Zhang, Francesca Gino and Max Bazerman

Ethics research developed partly in response to calls from organizations to understand and solve unethical behavior. Departing from prior work that focused mainly on examining the antecedents and consequences of dishonesty, we examine two approaches to mitigating... View Details

Keywords: Corruption; Dishonesty; Unethical Behavior; Interventions; Structure; Values; Behavior; Ethics; Moral Sensibility

March 2013 (Revised October 2013)
Supplement

Jones Lang LaSalle (2012): Integrated Services and the Architecture of Complexity (D)

By: Ranjay Gulati and Luciana Silvestri

This case describes the strategic and organizational challenges that Jones Lang LaSalle (JLL) faced between 2008 and 2012. In 2008, in order to strengthen the firm's brokerage team, JLL merged with The Staubach Company, a real estate services provider with a first-rate... View Details

Keywords: Organizational Structure; Strategy; Integration; Real Estate Industry; North America; South America; Central America

10 Jan 2013
Working Paper Summaries

Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions

Keywords: by Robert G. Eccles, Ioannis Ioannou, Shelley Xin Li & George Serafeim

April 2017
Article

The Responsibilities and Role of Business in Relation to Society: Back to Basics?

By: Nien-he Hsieh

In this address, I outline a back-to-basics approach to specifying the responsibilities and role of business in relation to society. Three “basics” comprise the approach. The first is arguing that basic principles of ordinary morality, such as a duty not to harm,... View Details

Keywords: Business And Society; Corporate Responsibility; Harm; Human Rights; Institutions; Pareto Efficiency; Corporate Social Responsibility and Impact; Moral Sensibility; Society; Rights