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In many ways, the terrorist attacks of September 11, 2001, crystallized national debate over drug patents both in Canada and the United States. This became clear when, at the height of the anthrax attacks in October, NBC's Tom Brokaw paid the following homage to the top anti-anthrax drug: In Cipro we trust. On the one hand, the public was eternally grateful for the research and development that led to the patented, life-saving CIPRO. On the other, the Canadian and United States governments insisted on obtaining national stockpiles of the drug at much-reduced prices. In fact, these conflicting attitudes toward CIPRO revealed a greater reality. Competing policy objectives—providing incentives for pharmaceutical innovation while ensuring timely access to affordable medicines—are the raison d'etre of many drug patent regimes, including those in Canada and the United States. Legislators and regulators alike keep searching for the best balance between these conflicting goals. This paper explores these issues through a comparative study of Canadian and United States drug patent regimes. Part II is an overview of the legislative and regulatory framework currently in place in both jurisdictions. In at least one significant respect, the regimes in Canada and the United States are unique, vis-a-vis the rest of the world. Pursuant to complex procedures, a drug patentee is entitled to an automatic injunction against a proposed generic competitor. Parts III and IV consider how these drug patent rules have played out in the case of CIPRO both before and after September 11, again in Canada and the United States. The purpose of the CIPRO case study is twofold: (1) to show how legal incentives provided to drug manufacturers can be misused, leading to possible anticompetitive outcomes; and (2) to demonstrate how current laws may not adequately address the new, suddenly pressing objective of bioterrorism defense. Finally, Part V looks at pending legislation directed at readjusting the balance between pharmaceutical innovation and generic competition.

Economics

This paper assesses one of the key components of the nation’s defense against bioterrorism—the National Strategic Stockpile. The Stockpile was created by the Bioterrorism Act of 2002 and Project Bioshield in 2004, with a mandate to procure sufficient vaccines, medicines and other products to avert or contain a public health crisis in the event of a bioterrorist attack. Currently, the Stockpile lacks critical countermeasures and next generation vaccines because they have not yet been developed. Congress has attempted to provide the conditions necessary for the private sector to create these products for the National Stockpile, but Congress’s efforts have largely failed thus far. This paper will examine both aspects of the National Strategic Stockpile: first it will examine the legislation providing for the National Strategic Stockpile and the strategy to provide the private market with incentives to develop priority countermeasures. Second, this paper will then analyze the strengths and weaknesses of the legislation and offer recommendations for future governmental actions to ensure the successful build-up of a robust National Strategic Stockpile.

Although the corrective tax has long been viewed by economists as a theoretically desirable remedy for the problem of harmful externalities, its actual use has been limited, mainly to the domain of pollution. Liability, in contrast, has great importance in controlling harmful externalities. I compare the tax and liability here in theory and suggest that the conclusions help to explain the observed predominance of liability over taxation, except in the area of pollution. The following factors are emphasized in the analysis: inefficiency of incentives under taxes when, as would be typical, it would be impractical for the state to incorporate into taxes all of the variables that significantly affect expected harm; efficiency of incentives under strict liability, which requires only that actual harms be measured; efficiency of incentives to exercise precautions under the negligence rule; administrative cost advantages of liability deriving from its being applied only when harm occurs; and dilution of incentives under liability when suit would be unlikely or injurers would not be able to pay fully for harms caused.

In order to further the Food and Drug Administration's (FDA) mission of "assur[ing] that the products it regulates are safe and truthfully labeled," the Federal Food, Drug, and Cosmetic Act (FD&C Act) gives FDA the power to enforce prohibitions on labeling that causes a food, drug, cosmetic, or medical device to be misbranded. The FD&C Act defines labeling as "all labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) accompanying such article." Because of the expansive nature of this definition, independently written pamphlets, newspapers, and books that accompany products covered by the FD&C Act constitute labeling in certain circumstances. This exacerbates the tension between the First Amendment's free speech guarantee and FDA's mandate, and raises the question of how courts should scrutinize FDA's ability to seize or enjoin the sale of misleading labeling. The importance of both the Free Speech Clause and the protection of consumers makes this a difficult issue to resolve, and as of yet, "no case has squarely confronted the issue."

In the decades since the enactment of the Federal Food, Drug, and Cosmetic Act (the "Act")' in 1938, one of the more persistent challenges facing the Food and Drug Administration (the "FDA") has been to apply an old statute to the regulatory problems generated by new technologies. The development of new anti-aging skin preparations is a recent example of this phenomenon. Although potions purporting to make the skin younger have existed for centuries, today's youth-seekers are spending billions on new products that just might work. In particular, the development of alpha hydroxy acids ("AHAs") has been promising. Derived from fruit, sugar cane, and milk, AHAs cause the surface layer of dead skin cells to shed, hastening the appearance of fresh cells. The laboratory results are inconclusive thus far, but preliminary research shows that some products may deliver active ingredients to the skin's inner layer, stimulating the production of moisturizing acids and cells such as collagen that help to keep the skin firm.

The debate over affirmative action has played a significant role in shaping the world of academia over the past several decades. Accordingly, researchers Mary Fischer and Douglas Massey attempt to evaluate many of the arguments surrounding the social policy in their paper “The effects of affirmative action in higher education.” Drawing from the National Longitudinal Survey of Freshman, the authors conclude that there is no basis for the Mismatch Hypothesis and only a limited statistical basis for Stereotype Threat. We replicated their results and extended their analysis by examining a variety of regression specifications including demographic information, socioeconomic background, and social preparedness. We find that their conclusions are robust and that there is no evidence for the Mismatch Hypothesis and only a limited amount of evidence for Stereotype Threat. This is good news for academic institutions as it demonstrates that affirmative action can be practiced without significant negative consequence to the peer group it claims to help.

This working paper provides a business history perspective on debates about the Great Divergence, the rise of the gap in incomes between the West and the Rest, and the more recent Great Convergence, which has seen a narrowing of that gap. The literature on the timing and causes of the Great Divergence has focussed on macro analysis. This working paper identifies the potential for more engagement at the micro level of business enterprises. While recognizing that the context of institutions, education and culture play a role in explanations of wealth and poverty, the paper calls for a closer engagement with the processes how these factors translated into generating productive firms and entrepreneurs. The challenges of catching-up were sufficiently great in the Rest that initially minorities held significant advantages in capital-raising and trust levels which enabled them to flourish as entrepreneurs. Yet by the interwar years there is evidence of more general emergence of modern business enterprise in Asia, Latin America and Africa. Many governmental policies after 1945 designed to facilitate catch-up ended up crippling such emergent business enterprises without putting effective alternatives in place. The second wave of globalization from the 1980s provided more opportunities for catch up from the Rest. Firms from emerging markets had the opportunity to access the global networks which replaced large integrated firms. There were also new ways to access knowledge and capital, including through management consultancies and hiring graduates from business schools. The upshot was the rise to global prominence of firms based in the Rest, including Foxcomm, Huawei, HNA, Cemex, and TCS.

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.

This paper documents a set of stylized facts about leverage and financial fragility in the nonfinancial corporate sector in emerging markets since the Global Financial Crisis (GFC). Corporate debt vulnerability indicators prior to the Asian Financial Crisis (AFC) attributed to corporate financial roots provide a benchmark for comparison. The firm-level data suggest that emerging markets post-GFC have lower leverage ratios than the five Asian crisis countries (Asian Five) in the run-up to the AFC. However, a broader set of emerging market countries show weaker liquidity, solvency, and profitability indicators. More countries are also in the Altman Z-score's “grey zone”, that is, at risk for corporate distress. Regression estimates confirm that leading up to the AFC and in the aftermath of the GFC, firms with higher leverage have Z-scores that are closer to the financial distress range. The data also corroborate two macro-related hypotheses: first, that leverage interacted with currency depreciation had a statistically significant adverse impact on Z-scores in pre-AFC; and second, that in countries with higher GDP growth leverage is correlated with less corporate financial fragility. Consistent with Gabaix (2011) the paper finds a granularity effect in that large firms are systemically important—idiosyncratic shocks to large firms significantly correlate with GDP growth in our emerging markets sample. Also, the more-levered large firms are more vulnerable to exchange rate shocks than smaller firms with comparable levels of leverage. While this result holds for the average country in our sample, there is substantial cross-country heterogeneity.

This working paper examines how innovations in transparent packaging, specifically cellophane, in the mid-twentieth century United States helped retailers to create full self-service merchandising systems, including selling perishable food. While self-service stores began appearing in the late 1910s, self-service was initially applied only to grocery and dry goods, such as canned foods and a box of breakfast cereals. It was not until after World War II that the majority of American grocers adopted self-service to meat and produce sections. Business historians have explored the development of this self-service merchandising from the perspectives of marketing strategies, store operations, and relationships between customers and store clerks. However, the significance of the development of cellophane as a new packaging material, and the role of packaging manufacturers in promoting self-service, has yet to be analyzed. This working paper fills this void by showing that the expansion of self-service operation and the increasing use of transparent packaging had a significant impact not only on how consumers purchased foods but also on how they understood food quality.

This working paper examines the remarkable growth of wine consumption in the United States since the 1960s. The country is now the largest wine consumer in the world, exceeding the wine-producing European countries such as France and Italy, which had long dominated world markets. The paper identifies the late 1960s and 1970s as the major turning point by analyzing the role of businesses in reinventing the image of wine from a cheap and very alcoholic beverage to a sophisticated natural product, and a fine accompaniment for gourmet food. By creating wine as a symbol of social status, the reimagined wine industry became a reinforcer of social and class divisions in the United States.

Between the 1970s and the 2000s Costa Rica became established as the world’s leading ecotourism destination. This working paper suggests that although Costa Rica benefited from biodiversity and a pleasant climate, the country’s preeminence in ecotourism requires more than a natural resource endowment explanation. The paper argues that the ecotourism industry was a co-creation of the public, private, and tertiary sectors. While the role of the government and conservation NGOs is acknowledged in the existing literature, this study draws attention to the critical role of small entrepreneurs. Making extensive use of oral history, the working paper demonstrates the role of tour companies in drawing affluent Western ecotourists to the country, and of the creators of ecolodges and other forms of accommodation in providing them with somewhere to stay. These entrepreneurs, many of them expatriate Americans, helped ensure that formally protected areas remained sustainable parks and reserves, by providing revenues, education in conservation to tourists, and community development and jobs. Clustering created positive externalities for new entrepreneurs to enter the industry, who could also learn from knowledge spillovers. There were downsides to the new industry, however. The creation of the national image of a natural paradise enabled many businesses which were not environmentally sustainable to free-ride on the green image. Even values-driven ecotourism entrepreneurs faced questions about their impact as they expanded the scale of their operations. While scaling was a sign of success and delivered many benefits to Costa Rica, there were distinct drawbacks from a sustainability perspective.

In 1976, United States Secretary of State Henry A. Kissinger conducted a series of intricate, multiparty negotiations in Southern Africa to persuade white Rhodesian leader Ian Smith to accede to black majority rule. Conducted near the end of President Gerald Ford’s term in office, against substantial U.S. domestic opposition, Kissinger’s efforts culminated in Smith’s public announcement that he would accept majority rule within two years. This set the stage for the later Lancaster House negotiations which resulted in the actual transition to black majority rule. The account in this working paper carefully describes—but does not analyze nor draw lessons from —these challenging negotiations. Forthcoming papers will provide analysis and derive general insights from Kissinger’s negotiations to end white minority rule in Rhodesia.

President Richard M. Nixon was elected in 1968 with the widespread expectation that he would bring about an end to the costly and unpopular war in Vietnam. The task largely fell to National Security Adviser Henry Kissinger. When the negotiations began, North Vietnam appeared to have a winning hand with time on its side. To induce agreement from North Vietnam on acceptable terms, Kissinger orchestrated a complex negotiation campaign with multiple fronts: North Vietnam, the U.S. public and Congress China, the USSR, West Germany, and South Vietnam. Kissinger’s efforts culminated in the signing of the 1973 Paris Peace Accords, which held for about two years before collapsing in the wake of Watergate. The account in this working paper carefully describes—but does not analyze nor draw lessons from —core features of these challenging negotiations. Forthcoming papers will provide analysis and derive general insights from this negotiation campaign.

Risk assessment tools are increasingly being incorporated into all aspects of the criminal justice system. This paper focuses on the use of these tools in the sentencing process, a relatively recent development which raises fundamental legal and ethical questions about fairness, accountability, and transparency. The paper provides an overview of these issues and questions for further research that can help local policymakers who are currently implementing or considering implementing similar systems in their jurisdiction.

Affirmative action in higher education has been controversial since 1961. The Source of the River (Douglas Massey and Fischer (2003)) uses the National Longitudinal Survey of Freshmen—a demographic and socioeconomic survey of nearly 4,000 students entering 28 highly selective colleges in 1999—to evaluate explanations of minority underachievement in college. The authors develop two measures of vulnerability to stereotype threat. The authors focus on the stereotype threat hypothesis, and conclude that stereotype threat undermines minority achievement. We replicate their results, and investigate the robustness of their specification. We find that their main conclusion is fragile: controlling for other demographic characteristics, the effect of stereotype threat becomes statistically insignificant.

The Bell Curve, written by Murray and Herrnstein, is one of the most controversial books of the last few decades, exploring the role human intelligence plays in predicting a variety of social factors. I examine one of their more notorious conclusions that intelligence, as measured by an IQ test, is a stronger predictor for future poverty than Family's Socioeco­nomic Status. sing the National Longitudinal Survey of Youth (1979), we run regressions examining the relationship between Family SES, IQ test scores, and Age against probability of being in Poverty. Instead of using Bell Curve's method of dropping data that contained incomplete observations, we use an improved method that imputes missing data. i[y results show that IQ does indeed have a greater effect than parental SES on predicting Poverty if the individual is of less than average SES and IQ.

The Bell Curve (Herrnstein and Murray (1994)) is a very controversial piece of economics literature. The Bell Curve, which examines the effect of IQ on various social problems, is broken down into four sections: “The Emergence of the Cognitive Elite”, “Cognitive Classes”, “Social Behaviors”, and “National Context.” For survey statistics, Herrnstein and Murray (1994) use the National Longitudinal Survey of Youth (NLSY) data from 1979, which includes 12,686 people from ages 14 to 22, and contains Socioeconomic status (SES), IQ, and other related data. Herrnstein and Murray (1994) generate IQ from the Armed Forces Qualification Test (AFQT), a test all entrants to the Army take as an intelligence or IQ test. The Bell Curve concludes that self-isolation of the “cognitive elite,” defined in terms of IQ, has led to class stratification. Herrnstein and Murray (1994) believe that IQ is the best and most robust measure that is correlated to many resulting social problems, including poverty. I replicate The Bell Curve results that relate SES and IQ to poverty. I then examine the robustness of their results by examining a variety of regression specifications. I find that IQ is more correlated with poverty than SES in every regression, regardless of what is included in the regression, by a factor of 3.

In their controversial work The Bell Curve, Charles Murray and Richard Herrnstein hypothesize that intelligence plays a significant role in determining later life outcomes. Using data from the 1979 National Longitudinal Survey of Youth, Herrnstein and Murray specifically claim that Youth IQ is more important than Parental Socioeconomic Status in affecting future odds of living in poverty. We explore their hypothesis using the same statistical decisions but on a new data set: the 1997 National Longitudinal Survey of Youth. Our findings mirror those of Herrnstein and Murray; IQ has a larger effect than socioeconomic status on the likelihood of being in poverty, though the overall effect of both is diminished. We find that increasing Youth IQ by one standard deviation is expected to decrease the odds of ending up in poverty by 35 percentage points, compared to the 13 percentage point decrease from similarly increasing Parental Socioeconomic Status.

The Bell Curve by Charles Murray and Richard Herrnstein is one of the most controversial academic works of the last few decades. Using data from the National Longitudinal Survey of Youths (1979), we performed a number of regressions of poverty status in 1989 on parental socioeconomic status, IQ, race, sex, and age. We replicate their results which show that IQ is a more important predictor of poverty status than parental socioeconomic status (SES). We extend their analysis to other groupings and find that, while similar, the underlying relationship between the variables and poverty status varies across groups. We then compared ratios of the percentage of the top 25% to bottom 25% of either IQ or parental SES in poverty. We found that parental SES had three times the predictive power as SES for black respondents and twice the predictive power for Hispanic respondents over whites, also finding a greater proportion of respondents in poverty at all levels for minority groups than for white respondents with a similar relationship for females compared to males.

The use of affirmative action has been at the forefront of the debate regarding the fairness of the college admissions process for years. Utilizing data from the National Longitudinal Survey of Freshman (NLSF), M. Fischer and Massey (2007) test the effects of race-based admission policies. Providing a specific focus on cumulative GPA, they conclude that the effect of affirmative action is minimal. Testing the robustnessof this claim, I replicate their results. Their regression specification suffers from issues of high correlation between their SAT and individual affirmative action variable. When adjusting for these problems, affirmative action actually has a negative effect on cumulative GPA. There is a 0.10 reduction in GPA for every 100-point increase in the difference between an individual’s SAT score and the institutional average.

M&A transactions are governed by contracts that exhibit constrained variation – they are negotiated, yet full of boilerplate, tailored, yet full of patterns and regularities. This paper (a chapter of the Research Handbook on Mergers and Acquisitions, forthcoming) reviews the suite of contracts commonly needed in an M&A transaction, and offers two complementary descriptions of the core “deal contracts” in M&A. The first tracks the customary organization of the contracts themselves, and the second re-analyzes their contents with a new, functional typology derived from the purposes of deal contracts: (1) specification (especially of deal structure, pricing terms, and, in partial acquisitions, the business to be acquired), (2) risk-sharing, (3) process management, (4) control and information sharing, and (5) dispute management. Each description is illustrated by examples from and links to recent, high profile deals, augmented with cross-sectional data from a representative sample of M&A contracts involving U.S. targets. Ways that ownership and regulation shape M&A contracts for U.S. targets are summarized, and data consistent with that summary is presented. Finally, the rapidly growing body of empirical research on the contents and effects of M&A contracts is surveyed. The paper concludes with a brief agenda for future research on M&A contracts.

The field of strategy has mounted an enormous effort to understand, define, predict, and measure how organizational capabilities shape competitive advantage. While the notion that capabilities influence strategy dates back to the work of Andrews (1971), attempts to formalize a “capabilities based” approach to strategy only began to take shape in the past twenty years. In particular, the publication of Teece and Pisano (1994), Teece, Pisano, and Shuen (1997), and Eisenhart and Martin (2000) works on “dynamic capabilities” triggered a flood of debate and discussion on the topic. Unfortunately, the literature on dynamic capabilities has become mired in endless debates about definitions and has engaged in an elusive search for properties that make organizations adaptable. This paper argues that the research program on dynamic capabilities needs to be reset around the fundamental strategic problem facing firms: how to identify and select capabilities that lead to competitive advantage. To this end, the paper develops a framework that attempts to connect firms’ capability search strategies with their strategies in product markets. It frames firms’ capability search strategies as choices among different types of capability enhancing investments. The key distinguishing feature of capabilities in this framework is their degree of fungibility: capabilities span a continuum ranging from highly general-purpose (e.g. quality management) to highly market-specific (e.g. knowing how to manufacture an airplane wing). To illustrate the potential of the framework to shed new light on traditional strategy questions, the paper applies the framework to explore some unexplained features of Penrosian diversification strategies. The paper concludes by suggesting a research agenda for dynamic capabilities.

In a paper published in the JFE in 2013, we provided evidence that market participants perceive staggered boards to be on average value-reducing. In a recent response paper, Amihud and Stoyanov (2015) “contest” our results. They advocate using alternative methods for estimating risk-adjusted returns and excluding some observations from our sample. Amihud and Stoyanov claim that making such changes renders our results not significant (though retaining their direction) and conclude that staggered boards have no significant effect on firm value. This paper examines and replies to the Amihud-Stoyanov challenge. We question their methodological claims, study the consequences of following their suggestions, and conduct additional robustness tests. Our analysis shows that the evidence is overall consistent with the results and conclusions of our JFE paper.

Diversified business groups are well-known phenomenon in emerging markets, both today and historically. This is often explained by the prevalence of institutional voids or the nature of government-business relations. It is typically assumed that such groups were much less common in developed economies, and largely disappeared during the twentieth century. This working paper contests this assumption with evidence from Britain between 1850 and the present day. During the nineteenth century merchant houses established business groups with diversified portfolio and pyramidal structures overseas, primarily in developing countries, both colonial and independent. In the domestic economy, large single product firms became the norm, which over time merged into large combines with significant market power. This reflected a business system in which a close relationship between finance and industry was discouraged, but were there few restrictions on the transfer of corporate ownership. Yet large diversified business groups did emerge, which had private or closely held shareholding and substantial international businesses. The working paper argues that diversified business groups added value in mature markets such as Britain. In the domestic economy, Pearson and Virgin created well-managed and performing businesses over long periods. The much-criticized conglomerates of the 1970s-1990s era such as Hanson and BTR were also quite financially successful forms of business enterprise. The demise of many of them appears to owe at least as much to management fads as to serious financial under-performance.

The EU Commission has recently undertaken a review of the EU Merger Regulation. In this process it has published a White Paper that proposes to extend the Regulation to cover situations in which firms acquire minority shareholding in their competitors. However, the White Paper is silent about the closely related phenomenon of interlocking directorates (interlocks), which occurs when the same person sits on the board of two firms. This issue has never been directly addressed by the European Union, perhaps because the theory of interlocks is underdeveloped in Europe. This paper provides comprehensive antitrust arguments for why the EU should restrict certain interlocking activity. The main argument is that the EU should prohibit horizontal interlocks (interlocks between competing firms) per se, as they raise serious antitrust concerns. The paper further argues that non-horizontal interlocks should be monitored, and it addresses certain important policy questions that the EU might face when designing the regulatory framework.

The field of strategy has mounted an enormous effort to understand, define, predict, and measure how organizational capabilities shape competitive advantage. While the notion that capabilities influence strategy dates back to the work of Andrews (1971), attempts to formalize a “capabilities based” approach to strategy only began to take shape in the past twenty years. In particular, the publication of Teece and Pisano (1994) and Teece, Pisano, and Shuen (1997) work on “dynamic capabilities” triggered a flood of debate and discussion on the topic. Because strategy is a normative field, its theories must be evaluated in terms of how well they inform and impact practice. Judging by this standard, the dynamic research capabilities research program has come up short. It has become mired in endless debates about definitions and has engaged obsessively in an elusive search for properties that make organizations adaptable. In this paper, I argue that the research program on dynamic capabilities needs to be reset around the fundamental strategic problem facing firms: how to identify and select capabilities that lead to competitive advantage. I frame the firm’s capability strategy problem as one of choosing among different types of capability enhancing investments, ranging from general-purpose know-how to application-specific know-how. The framework also draws a distinction between investments designed to deepen the firm’s existing base of capabilities and those designed to broaden its repertoire into new realms. I explore the applicability of this framework to three general types of competitive circumstances: stable product market competition, Schumpeterian entry, and Penrosian dynamics. A major goal of the paper is to identify important gaps in our theoretical and empirical knowledge that should be a focus for future scholarly research.

This paper examines contemporary economic theories that focus on the design and management of business organizations. In the first part of the paper, a taxonomy is presented that describes the different types of economists interested in this subject—market economists, regulatory economists, and enlightened economists—and illustrates the extent to which each tribe has been captured by the concept of self-interest. After arguing that this fixation has caused—and is likely to continue to cause—significant harm to our economy, the paper then presents an alternative approach based on a theory of business and discusses the implications for research and teaching.

This paper offers guidance and shares collective wisdom for accounting Ph.D. students who will be entering the academic job market. It is divided into two sections. The first offers subjective advice on the dissertation process — from choosing a topic to surviving the inevitable self-doubt — from my personal experience and the experiences of other former job candidates. The second section mostly focuses on factual components of the job market, providing details that will be useful to candidates before they begin the search. It concludes with subjective advice on how to make the job hunt more enjoyable. Both sections are organized chronologically and attempt to be comprehensive, beginning with choosing a dissertation topic and adviser, and concluding with the decision to accept an offer.

Many production processes are subject to inspection to ensure they meet quality, safety, and environmental standards imposed by companies and regulators. This paper explores how the scheduling of inspections risks introducing bias that erodes inspection quality by altering inspector stringency. We theorize that inspection results will be affected by (a) when the inspection occurs within an inspector’s daily schedule and (b) the inspection outcomes of the inspector’s prior inspected establishment. Analyzing thousands of food safety inspections, we find that inspectors cite fewer violations in successive inspections throughout their day and when inspections risk prolonging their typical workday. We also find that inspectors cite more violations after inspecting establishments that exhibited worse compliance or greater compliance deterioration. We discuss several implications for managers who schedule or rely on inspections.

This paper explores the purpose and key challenges of assessing students’ learning, based on lessons learned from several projects undertaken over the last five years at the Harvard Kennedy School. The first part explores purpose: how might engaging in robust assessment of students’ learning bring value to the leadership of an entire School, as well as to leaders of different academic programs within a School? The second part describes several different approaches and formats used for assessing HKS students’ learning. The final section summarizes the challenges that HKS faced when engaging in, and institutionalizing, the process of assessing students’ learning, followed by some preliminary recommendations for addressing those challenges.

Engaged scholarship brings universities and external partners together to create knowledge for mutual benefit. Together, faculty, students, and external partners define problems, undertake analysis, and share findings. A defining characteristic of engaged scholarship is reciprocity—participants share benefits as well as costs. This paper explores engaged scholarship as a growing part of the HKS curriculum. More students are calling for engaged scholarship opportunities. More faculty are offering engaged scholarship courses. The school is developing resources to help faculty assume new, more externally focused roles. To date, however, relatively little attention has been given to how the school’s growing interest in engaged scholarship is impacting external partners: mayors, department managers, city council members, and school district superintendents. What does engaged scholarship require of them in terms of time and resources? From their perspective, what are the costs and what are the benefits? How might HKS better take their interests into account?

The global health system is in a period of rapid transition, with an upsurge of funds and greater political recognition, a broader range of health challenges, many new actors, and the rules, norms and expectations that govern them in flux. The traditional actors on the global health stage—most notably national health ministries, the World Health Organization (WHO) and a relatively small group of national medical research agencies and foundations funding global health research—are now being joined (and sometimes challenged) by a variety of newer actors: civil society and nongovernmental organizations, private firms, and private philanthropists, and an ever-growing presence in the global health policy arena of low- and middle-income countries, such as Kenya, Mexico, Brazil, China, India, Thailand, and South Africa. We present here a series of four papers on one dimension of the global health transition: its changing institutional arrangements. We define institutional arrangements broadly to include both the actors (individuals and/or organizations) that exert influence in global health and the norms and expectations that govern the relationships among them. We focused on three central questions regarding the global health system: (1) What functions must an effective global health system accomplish? (2) What kind of institutional arrangements can better govern the growing and diverse set of actors in the system to ensure that those functions are performed? (3) What lessons can be extracted from analysis of historical experience with malaria to inform future efforts to address them and the coming wave of new health challenges?

This working paper examines the impact of two entrepreneurs who offered alternative paths to reach their shared goal of a more sustainable world. Yvon Chouinard and Doug Tompkins were respective founders of the prominent outdoor apparel brands Patagonia and The North Face. Chouinard pursued incremental sustainability strategies over decades at his firm. Tompkins, who went on to manage the fashion company Esprit, opted in 1989 to exit business entirely having concluded that capitalism could never be sufficiently sustainable to reverse environmental degradation. He purchased 1.5 million hectares of land in Chile and Argentina which he converted to protected areas and national parks. The Chouinard strategy represented best practice green entrepreneurship which if widely adopted might markedly reduce the environmental impact of business, but its full execution appeared possible only because Patagonia was a private company. The Tompkins dual strategy of exit from business and application of entrepreneurial skills to conservation resulted in large environmental gains, including sequestering and storing an estimated 80 million tons of carbon. We lack the metrics and methodologies to compare rigorously which offers the better path to sustainability, but a case can be made that the application of entrepreneurial talents to activities beyond for-profit business (of which conservation is one example) might be a more effective strategy.

Assortment rotation – the retailing practice of changing the assortment of products offered to customers – has recently been used as a competitive advantage for both brick-and-mortar and online retailers. Fast-fashion retailers have differentiated themselves by rotating their assortment multiple times throughout a standard selling season. Interestingly, the entire online ash sales industry was created using this idea as a cornerstone of its business strategy. In this paper we identify and investigate a new reason why frequent assortment rotations can be valuable to a retailer, particularly for products where consumers typically purchase multiple products in a given category during a selling season. Namely, by distributing its seasonal catalog of products over multiple assortments rotated throughout the season – as opposed to selling all products in a single assortment – the retailer effectively conceals a portion of its full product catalog from consumers. This injects uncertainty into the consumer's relative product valuations since she is unable to observe the entire catalog of products that the retailer will sell that season. Rationally-acting consumers may respond to this additional uncertainty by purchasing more products, thereby generating additional sales for the retailer. We refer to this phenomenon as the value of concealment. A negative value of concealment is possible and represents the event that rationally-acting consumers respond to the additional uncertainty by purchasing fewer products. We develop a consumer choice model and finite-horizon stochastic dynamic program to study when the value of concealment is positive or negative. We show that when consumers are myopic, the value of concealment is always positive. In contrast, we show that when consumers are strategic, the value of concealment is context-dependent; we present insights and discuss intuition regarding which product categories likely lead to positive vs. negative values of concealment.

We estimate a structural model that takes into account the entry decisions of retail stores and their corollary effects on total shopping mall sales. By understanding the endogenous behavior of individual store entry, we provide guidance on location choice for mall developers. We find negative competition effects to dominate within store categories—especially among discount and midscale stores—but positive agglomeration effects to exist across store categories. Although varying by store brand, our results suggest that upscale stores are likely to enter malls in more populated, affluent areas, whereas midscale stores enter less populated, lower-income areas. We find positive causal brand effects for specific upscale and midscale stores, above and beyond market effects, but find negative causal brand effects for all discount stores on mall sales. This paper also introduces three main methodological innovations to the marketing literature. First, we correct for endogeneity with regard to both store entry and mall sales to identify the causal effect of store entry on mall sales. Second, we address multiple equilibria by estimating equilibrium selection from the observed data. Finally, we overcome the computational burden of solving games of complete information with multiple equilibria by utilizing the GPGPU technology, using multiple processing cores in a graphics processing unit to noticeably increase computational speed.

This paper seeks to explain the technological forces that led to the rise of vertically integrated corporations in the late 19th Century and the opposing forces that led to a vertical-to-horizontal transition in the computer industry one hundred years later. I first model the technology of step processes with bottlenecks and show how this technology rewards vertical integration, a hierarchical organization, and the use of direct authority. These properties in turn became the organizational hallmarks of so-called “modern” corporations. I then model platform systems, showing that, in contrast to step processes, this technology rewards the multiplication of options, increasing risk, and modularity. Moreover, given a modular architecture, a platform system can be open, with different components supplied by separate firms with no loss of interoperability or efficiency. Openness multiplies options and expands diversity, thus increasing the platform system’s value. The last two decades of the 20th Century saw the rise of three distinct types of open platforms in the computer industry: (1) “forward open” platforms with downstream complementors; (2) “backward open” modular supply networks; and (3) “open exchange” platforms designed to facilitate transactions and other forms of social interaction. Whereas in 1980, vertically integrated firms dominated the industry, by 2000, the “verticals” had essentially disappeared. The largest firms in the industry in 2000 were sponsors and participants in open platform systems. I argue that the vertical-to-horizontal transition in the computer industry was an organizational response to a fundamental change in economic rewards to the technologies of rationalized step processes vs. open platform systems.

American Honda was founded in 1959 as a wholly owned subsidiary of the Honda Motor Company to facilitate sales and distribution in the United States. The details of American Honda’s early history have long served as evidence in debates among scholars and practitioners about the managerial determinants of the subsidiary’s success. In particular, it is debated whether American Honda operated according to a deliberate or emergent strategy, i.e. whether or not strategic decisions made in the States conformed to the intentions of upper management. This paper presents evidence that Kihachiro Kawashima, President of American Honda from 1959 to 1965, made important decisions according to precedent set by his boss and mentor, Honda’s chief strategist, Takeo Fujisawa. It presents further evidence that these decisions may have contributed to the recovery of American Honda from its sales crisis during the late 1960s and its continued success thereafter. Addressing ourselves to concepts in the management literature, we argue that strategy realized by the appeal of subordinates to the historical precedent of their superiors defies categorization as deliberate or emergent.

In this paper, we examine how connecting to beneficiaries of one’s work increases performance, and argue that beneficiaries internal to an organization (i.e., one’s own colleague) can serve as an important source of motivation, even in jobs that – on the surface – may seem routine and low on potential impact. We suggest that this occurs because words of beneficiaries strengthen one’s sense of belongingness, a key driver of human behavior. Employees, in fact, seek to belong—and seek to enhance their sense of belongingness in work settings. We conducted two studies using both field and laboratory data from different populations to investigate the psychological consequences and performance benefits of connecting to beneficiaries of one’s work. In a longitudinal field experiment of fruit harvesters, we find that though beneficiary contact with the overall customer did not significantly improve productivity, contact with an internal beneficiary that made connectedness salient yielded a persistent increase in productivity relative to a control group. We validate this effect in the laboratory, and provide evidence that the effect is mediated by an enhanced sense of belongingness.

Online marketplaces have proliferated over the past decade, creating new markets where none existed. By reducing transaction costs, online marketplaces facilitate transactions that otherwise would not have occurred and enable easier entry of small sellers. One central challenge faced by designers of online marketplaces is how to build enough trust to facilitate transactions between strangers. This paper provides an economist’s toolkit for designing online marketplaces, focusing on trust and reputation mechanisms.

This working paper aims to deepen the scholarly dialogue between strategy and history. It does so by examining how historical models of change can contribute to theory and research on the competitive advantage of firms during periods of rapid innovation. Focusing on the dynamic capabilities framework, it shows how three models of historical change – evolutionary, dialectical, and constitutive – can be used to extend theory and deepen research about the origins, context, and micro-foundations of dynamic capabilities. We show how each model of historical change shaped the intellectual development of the dynamic capabilities framework, point to historical research that illustrates these processes, and discuss the methodological and conceptual implications for future research. We conclude by suggesting that recognizing and building on these historical models of change can provide a common conceptual language for a deeper dialogue between historians and strategy researchers.

It is widely presumed that in today’s globalized economy, the value of geographic clustering of manufacturing industries is no longer valuable. Manufacturing is represented as a highly mobile “commodity” that can be sourced from anywhere in the world where factor costs are favorable. This paper re-examines this assumption, and suggests that not all manufacturing is highly mobile. We suggest that manufacturing sectors should be viewed along a continuum from highly mobile to highly “sticky”. Manufacturing clusters can decline for two completely different reasons. The first is a change in technology that reduces the value of co-location (stickiness). This tends to lead to the decoupling of design and production activities and to a broad geographic diffusion of manufacturing. The second is a shift in the relative comparative advantage of clusters located in one region versus another. Under this scenario, geographic concentration is still valuable, but the center of production activity can shift from one location to another. The paper then analyzes how firm supply chain strategies impact stickiness and the survival manufacturing clusters.

This first of three papers in our series on materiality in credit ratings will examine the materiality of credit ratings from an “implied materiality” and governance disclosure perspective. In the second paper, we will explore the materiality of environmental, social, and governance (ESG) factors in credit ratings’ methodologies and introduce the concept of “layered materiality.” In the third paper, we will evaluate current and potential credit rating agency (CRA) business models based on our analysis in the previous papers, and introduce the concept of “institutionalized materiality.” Starting with this paper, and in the rest of the series, we will also recommend how the credit rating model can be enhanced in the coming years to help build more sustainable credit markets. This first paper is focused on the “G” (governance) component of ESG reporting. The governance matters we identify in this paper must be addressed before turning our attention to the broader set of ESG considerations in credit ratings. Failure to put these important governance matters at the top of the credit ratings reform agenda would, in our opinion, undermine the efforts we will recommend in our second and third papers.

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 estimates the effect of competition and service quality on mobile money demand. In this setting, service quality consists of service reliability (lower stockout and system downtime rates), pricing transparency, and agent expertise. Among our results, we find that agents experience reduced demand for service failures due to stockouts, but not for service failures due to network downtime, suggesting that consumers differentially ascribe responsibility for service failure based on the type of failure they experience. We find that both stockout rate and agent expertise are important competitive dimensions in this setting. Pricing transparency, on the other hand, has a main effect on demand but has no significant interaction with competitive intensity. This paper furthers our understanding of the impact and interaction of quality and competition in service settings, while developing a foundation for the exploration of mobile money by OM scholars.

This paper explores the connection between law and social change by looking at Insite, North America’s first legal supervised injection site, as a case study. The paper focuses on how the Canadian Supreme Court was primed to grant legal status to the site. By examining the deep, grassroots, addict-led movement that set the foundation for the site to exist, the paper looks at how local movements coupled with evidence-based statistics can help inform judges in making decisions that affect social change. The paper looks closely at how advocates drew on both the social movement and the law in defending the legality of Insite.

This paper estimates the effect of Chapter 13 bankruptcy protection on post-filing financial outcomes using a new dataset linking bankruptcy filings to credit bureau records. Our empirical strategy uses the leniency of randomly-assigned judges as an instrument for Chapter 13 protection. Over the first five post-filing years, we find that Chapter 13 protection decreases an index measuring adverse financial events such as civil judgments and repossessions by 0.316 standard deviations, increases the probability of being a homeowner by 13.2 percentage points, and increases credit scores by 14.9 points. Chapter 13 protection has little impact on open unsecured debt, but decreases the amount of debt in collections by $1,315.

In this paper I sketch key episodes in the two thousand year history of interactions between society and environment that have shaped the City of London and its hinterlands. My purpose in writing it has been to provide an empirical puzzle for use in teaching and theorizing about the long term coevolution of social-environmental systems and the potential role of policy interventions in guiding that coevolution toward sustainability. I undertook it because while a lively body of theory has begun to emerge seeking to explain such coevolution, rich descriptive characterizations of how specific social-environmental systems have in fact changed over the long time periods (multi-decade to multi-century) relevant to sustainable development remain relatively rare. One result is that the field of sustainability science lacks a sufficient number of the rich empirical puzzles that any field of science needs to challenge its theorizing, modeling and predictions. This paper reflects the beginning of an effort to provide one such characterization on a topic central to sustainability: the long term development of cities and their hinterlands.

In 2007, the Italian Supreme Court stated in a landmark judicial decision regarding the enforcement of a U.S. punitive damages award that Italian tort law is meant to serve a compensatory function and that there is no room for any goal other than corrective justice within domestic tort law. The majority of Italian jurists, while criticizing this monofunctional reading of tort law, have excluded the adoption of punitive damages as a domestic remedy on the grounds that they would blur the line between tort law and criminal law and that the conditions existing in the U.S. make punitive damages non-replicable in different settings. In this paper, I criticize the Italian rejection of punitive damages by offering a comparative analysis of the treatment punitive damages receive in the U.S. and the Italian legal discourse, with a special focus on the relationship between this tort law remedy and the public/private distinction. The significance of this analysis transcends Italy and the U.S.: controversial judicial decisions and intense academic discussions concerning punitive damages are detectable both in the U.S. and across Europe. Everywhere, punitive damages raise issues concerning essential aspects of legal systems, such as tort law’s function(s), the difference between tort law and criminal law, and the relationship between public law and private law. The comparative analysis I propose in this paper unfolds as follows. In Part II, I explore U.S. punitive damages law and the explanatory theories U.S. scholars propose in order to accommodate this controversial tort law remedy within domestic law. This inquiry shows that the battle over the ‘true’ justification of punitive damages is part of a larger clash relating to the public/private distinction because punitive damages have the effect of locating punishment and deterrence within private law, where, according to traditional thought, they should not be. Part of U.S. law conveys the message that courts and juries award punitive damages to further the public’s interest in punishing and deterring wrongdoers. On this account, punitive damages are a public sanction that contributes to minimizing the distinction between public and private law. Other legal materials offer a different picture by suggesting that punitive damages are awarded to promote the interest of private parties in punishing tortfeasors for their egregious wrongs. On this account, punitive damages are reconcilable with a vision of the law that keeps private law distinct from public law. These prima facie contradictory indications in the extant law are mirrored in the divergent conclusions that scholars have reached as to the theoretical foundations of punitive damages. Some jurists see punitive damages as instrumental to the fulfillment of public goals and put forward explanatory theories that tend to blur the line between public and private law. Others, focusing on different parts of extant law, justify punitive damages in a way that serves their commitment to preserving the public/private distinction. Basically, they argue that punitive damages are about private, as opposed to public, punishment. If so understood, punishment is consistent with the basic tenets of private law. Although both strands of legal scholarship recognize that U.S. punitive damages law exhibits a mélange of public and private law features, their conceptualizing efforts consider punitive damages as essentially public or essentially private. These legal thinkers fail to satisfactorily accommodate punitive damages within domestic law because they do not perceive that public and private elements coexist throughout tort law (and private law more generally). By resorting to the ‘nesting’ method, I show that the fact that punitive damages law is characterized by an internal coexistence of public and private as opposite and yet inextricably linked poles should not be read as an isolated and perhaps unfortunate instance in which public and private are under the same shelter. I use the findings of Part II to illuminate and critically assess the Italian rejection of punitive damages. In Part III, I argue that in Italy too tort law is a mixture of public and private elements. Against this background, I criticize the position of the Supreme Court and of scholars towards punitive damages. This inquiry demonstrates that the Court relies on the ideal of corrective justice up to the point of transforming it into a dogma that legal reasoning must obey with virtually no exception. This approach unveils adherence to an unhelpfully rigid distinction between public and private that can only generate detrimental effects, such as impeding desirable legal reforms. It further appears that Italian jurists, although disenchanted as to the absoluteness of the public/private dichotomy, still see the notion of punishment as a wall between public and private law, even though extant law shows that punitive and deterrent elements feature in Italian tort law. In brief, Italian legal actors fail to realize that, if punitive damages were adopted in Italy, they would only represent an additional element to the already conspicuous list of public elements within tort law. In Part IV, without any pretense of being exhaustive, I analyze three situations where the Italian system is remedially deficient and argue that punitive damages could be very useful in solving these long-standing problems: when the wrongdoer’s gain exceeds the loss suffered by the victim; when the wrongful action harms personality rights that are now protected by the criminal law; when a harm is caused to a number of people but it is likely that few, if any, of them will bring an action seeking damages.

Following a brief summary of Henry A. Kissinger’s career, this paper describes three of his most pivotal negotiations: the historic establishment of U.S. diplomatic relations with the People’s Republic of China, the easing of geopolitical tension with the Soviet Union, symbolized by the signing of the first Strategic Arms Limitation Treaty (“SALT I”), and the mediation of the agreement on Sinai disengagement between Egypt and Israel. An appendix lists other important negotiations in which Kissinger played key roles. In a subsequent paper (forthcoming), the authors will examine these and other major events in which Henry Kissinger played leading roles in order to extract their most important insights into the principles and practice of effective negotiation.