LBS logo London experience. World impact.

The Institute’s mission is to equip and inspire entrepreneurs, innovators and leaders who design the ecosystems in which they can thrive. The bedrock of the Institute is rigorous research in a field that is too often driven by popular wisdom. 

 

Twice a year, the Institute calls for curiosity-led research proposals from all London Business School faculty and research students. With Deloitte’s generous support, the Institute has funded more than 75 research projects at the School, all of which are destined for top research journals and contribute to our understanding of innovation and entrepreneurship. This research – and the insights and networks that flow from it – underpins all our practitioner, teaching and outreach activity.

September 2017

  • The impact of market entry on innovation and platform ecosystem performance

    aldona-diie

    Aldona Kapačinskaitė

    PhD student, Strategy and Entrepreneurship

     

     

    This project aims at uncovering conditions under which entry into a focal market is beneficial to the incumbent in a multisided market. The paper argues that competition can be beneficial to the extent that market size is not fixed, competition induces firms to innovate and firms are able to observe and learn from one another’s experience. I study this question in the context of platforms that host a set of complements (mobile applications). The predictions are that developers in markets of unfixed size benefit from entry in terms of subscriptions, and innovate more. Learning is moderated by the frequency of competitor’s activity while innovation efforts spill over to other platforms.

  • The Long-Term Consequences of Short-Term Incentives

    alex-edmans-diie

    Alex Edmans

    Professor of Finance

     

     

    vivian-fang-diie

    Vivian Fang

    Assistant Professor Accounting, University of Minnesota

     

     

    allen-huang-diie

    Allen Huang

    Associate Professor Accounting, HKUST Business School

     

     

    This paper shows that short-term stock price concerns induce CEOs to take value-reducing actions. Vesting equity, our measure of short-term concerns, is positively associated with the probability of a firm repurchasing shares, the amount of shares repurchased, and the probability of the firm announcing a merger and acquisition (M&A). When vesting equity increases, both repurchases and M&A have more positive short-term returns but more negative long-term returns. Overall, by identifying actions that carry clear value implications, this paper documents the long-term negative consequences of short-term incentives.

  • Impact of After-Sales Service on Technology Adoption in Emerging Markets

    amrita-kundu-diie

    Amrita Kundu

    PhD student, Management Science and Operations

     

     

    kamalini-ramdas-diie

    Kamalini Ramdas

    Professor of Management Science and Operations; Deloitte Chair in Innovation & Entrepreneurship

     

     

    stephen-am-diie

    Stephen Anderson-Macdonald

    Assistant Professor of Marketing, Stanford

     

     

    Two-thirds of the population in sub-Saharan Africa live without access to modern electricity. A wave of data-driven solar companies are filling this gap by providing off-grid electricity. Fast adoption is key. The question we ask is how can we improve adoption of solar and other technologies in emerging markets? Preliminary analysis suggests that these customers – are sensitive to good service perhaps even more than the barriers affordability and awareness – especially given the close-knit social structures in emerging markets that can make Word-of-Mouth marketing (WOM) an important channel.

    WOM remains a concept with little empirical evidence and the role of after-sales service as a marketing channel through WOM is untested. We address two critical questions relating to after sales service and technology adoption in emerging markets; first whether it significantly impacts the decision to adopt technology and second whether it is an effective marketing channel (through WOM).

  • The Legacy of Colonial Concessions

    Elias-Papaioannou--50x50

    Elias Papaioannou

    Professor of Economics

     

     

    giorgio-chiovelli-diie

    Giorgio Chiovelli

    Research Fellow

     

     

    stelios-m-diie

    Stelios Michalopoulos

    Associate Professor of Economic, Brown University

     

     

    This project assesses the long-run development impact of a major aspect of colonization, concessions to private corporations. First, we use colonial archives to compile an original pan-African dataset with digitized maps covering all concessions and their main features (e.g., crop, mineral, practice of forced labour, revenues. Then we examine the legacy of colonial concessions on contemporary development (income, self-employment, education, and public goods), conflict (major wars, one-sided violence against civilians), and culture (trust and beliefs).

    We test causation using two novel identification techniques (i) comparing outcomes just inside and just outside the historical boundaries of colonial concession using spatial regression and ii) using interaction of soil-terrain quality for specific minerals and goods (rubber, cotton, palm oil) with world prices of these goods during African colonization.

  • Strategic Innovation and Visual Sense-making

    Freek

    Freek Vermeulen

    Associate Professor of Strategy and Entrepreneurship

     

     

    Most firms use some form of visual frameworks to capture and communicate their strategies.

    These visualisations are used as sense-making devices, to frame and agree on a strategic course of action and subsequently to communicate a strategy to other stakeholders in the form of a presentation. Such visual frameworks are ubiquitous in the business world but we don’t understand when they are effective and in what form.

    We intend to study the use and influence of strategy frameworks in a company’s communication to the financial market, specifically in the context of acquisition announcements to analysts to explain the nature and objectives of the acquisition. Such strategies tend to be unique and innovative and necessitate more sense-making to investors.

    We intend to distinguish between calls with and without a visual presentation (in the form of a PowerPoint presentation). We undertake an event-study, examining the precise content of the sense-making presentations, and particularly their visualisation, as independent variables. Our moderator will be the degree of innovativeness of the strategy that the acquisition represents.

  • Migration, Consumption and Status

    iris-steenkamp-diie

    Iris Steenkamp

    PhD student, Marketing

     

     

    rajesh-chandy-diie

    Rajesh Chandy

    Professor of Marketing; Tony and Maureen Wheeler Chair in Entrepreneurship; Academic Director of the Deloitte Institute of Innovation and Entrepreneurship

     

     

    om-narasimhan-diie

    Om Narasimhan

    Professor of Marketing at LSE

     

     

    This research addresses an important question on the social impact of migration of women: how their status is perceived by (i) themselves and (ii) by others. We use a unique mechanism to explain this impact: consumption.

    We study these questions in the context of migration facilitated by an organization which represents a substantial component of the migration flows that occur in the world today. We focus on a quasi-experiment involving organised migration of female textile workers from rural to urban India. The nature of organised migration enables us to compare individual-level data and exploit exogenous variation in order to make causal inferences. To the best of our knowledge, this study is the first to causally assess the social impact of migration at the level of the individual migrant. It is also the first the formally study the potentially transformative impact of organised migration.

  • The impact of going public on employees and customers

    rui-silva-diie

    Rui Silva

    Assistant Professor of Finance

     

     

    ramin-pb-diie

    Ramin P. Baghai

    Associate Professor of Finance, Stockholm School of Economics

     

     

    A central question in finance relates to the choices firms make when deciding to finance new investments – particularly whether to go public and raise funds in in public equity markets. Although primarily about financing, the implications of such corporate action may be more far-reached, affecting the firm’s relation with its employees (and thus, their labour force composition) and its brand value.

    There are many reasons why IPOs may affect workers. The firm becomes more immune to financial constraints and as such become less risky. This could affect the type of workers that may choose to work for such firms. The relaxation of financial constraints may allow firms to pay more to current employees as well as bid more aggressively for external talent. Publicity may also entice outside employees to join the firm as well as insiders to remain. Finally, incentives change: pre-IPO equity-holding employees had incentives to exert effort in order to cash out in a successful IPO; post-IPO, that incentive is no longer there, which may make the optimal compensation more dependent on performance metrics.

    We test these effects using detailed employer-employee matched data from Statistics Sweden.

  • The impact of Mergers and Acquisitions on the organization of production: evidence from R&D teams

    rui-silva-diie

    Rui Silva

    Assistant Professor of Finance

     

     

    ramin-pb-diie

    Ramin P. Baghai

    Associate Professor of Finance, Stockholm School of Economics

     

     

    Luofu Ye

    University Scholar at Shanghai Jiao Tong University

     

     

    Team production is one of the most important and common ways to organize production in the economy. However, there is little evidence on which environments and corporate actions promote the creation of productive team configurations. In this project we study the impact of Mergers and Acquisitions (M&As) on the composition of teams and their productivity. We focus on inventors in the United States, a group that is of special interest for several reasons: (i) their output—innovation—is of impactds overall economic prosperity; (ii) there exist accurate measures of individual labour productivity (numbers of patents and citations generated, value of patents generated); and (iii) team production can be measured using information on the subset of inventors co-authoring different patents.

    Since co-authors of patents span subunits of, rather than the entire firm, we can use this information as proxy for the network of collaborations of different inventors within firms.

    Many M&As aim to combine resources from different organizations. Here we shed light on the ability of firms to integrate human resources from the two independent organizations into a single production unit, the timing of that integration, and the extent to which it ultimately leads to increased innovation productivity for the merged firm.

  • Product Demand, Innovation and Asset Prices

    nuno-clara-diie

    Nuno Clara

    PhD Student, Finance

     

     

    This paper studies the impact of product demand on innovation and asset prices. In particular I ask whether the elasticity of the demand faced by a firm matter for cross-sectional market outcomes and innovation? I make use of high-frequency price and quantity data of retail products sold on Amazon to estimate elasticities of demand. The high-frequency data allows me to reduce the standard endogeneity concerns of prices being jointly determined with quantities sold – in particular, I measure the elasticity encountered by a firm by focusing on how demand reacts within a very narrow window around a price change. This allows me to identify shifts along the demand curve due to the price change. Preliminary findings suggest that firms selling products with high elasticities of demand earn an annual return premium of 6.2% over firms dealing with more inelastic demands. Also, firms with higher demand elasticities do not seem to adjust their prices more frequently even when competitors change their prices or new products are introduced in the market.

March 2017

  • Entrepreneurial Refugees

    Elias-Papaioannou--50x50

    Elias Papaioannou

    Professor of Economics

     

     

    This project aims to assess the short, medium and long-run consequences of the massive refugee influx that Greece experienced in the mid-1920s when more than 1 million Greek-speaking people residing in Asia Minor and other part of the Ottoman Empire had to abandon their homes and settled in Greece. We plan digitizing historical archives, past population and business censuses, and yellow pages to provide a detailed autopsy of refugees’ settlement in Greece. Then we will examine the impact of refugees on various aspects of economic efficiency, placing an emphasis on productivity, entrepreneurship, and structural transformation. Almost all refugees arrived in Greece penniless; yet they carried their entrepreneurial talent, open mind-ness, and spirit of commerce as many lived and worked in trade and manufacturing in the main trading hubs of the Mediterranean, Istanbul and Smyrna. For identification, we will exploit the many quasi-random elements of their relocation that took place in chaotic conditions. We will also examine indirect links of refugees with development operating via shaping key for entrepreneurship aspects, such as beliefs, norms, and trust.

  • Innovation and Production Networks

    dimas-fazio-50x50

    Dimas Mateus Fazio

    PhD student, Finance

     

     

    Innovation is the engine of economic growth. This paper examines how changes in production network affects firm innovation. The theoretical prediction is ambiguous. On the one hand, it might be cost efficient for firms to outsource innovation to their suppliers. On the other hand, this makes the firm dependent on these suppliers and its financial health. If there are no alternative providers and innovation is key for the firm’s survival, in-house research and development might be the only solution. In this case, however, the firm bears the entire risk inherent in the development of new ideas, while by outsourcing this risk would be shared among firm and suppliers. Ultimately, the structure of the production network shapes and is shaped by innovation decisions. This paper focuses on understanding how the first affects the second. I do so by providing an exogenous shock to firms’ connections and observing how the development of new ideas changes as a result. Using the universe of firm-to-firm inter-bank payments from Brazil, I create a supplier-customer network and examine how large shocks to the structure of this network affect innovation. I measure innovation using R&D investment and patent data. Large input disruptions can cause firms linkages to be weakened or even severed. Firms might compensate this propagation in at least two ways: (i) create new supplier/customer relationships to replace the ones mostly affected by the shock and/or (ii) move the production of the disrupted input in-house. Innovation might increase or decrease depending on the structure of the production network after the shock. Overall, I present causal evidence on how the production network structure impacts innovation.

  • Does Risk-aversion Restrict Entrepreneurship?

    dimas-fazio-50x50

    Dimas Mateus Fazio

    PhD student, Finance

     

     

    Entrepreneurship is one of the most important drivers of innovation and a major source of economic growth. Understanding what leads individuals to become an entrepreneur is of interest to the development of public policies that foster this activity. On one hand, highly successful examples of entrepreneurs show that the average return on this activity is elevated if compared to a normal wage-paying job. On the other hand, several challenges may curb entrepreneurial activity, such as (i) financial constraints; (ii) lack of ability/skill in running a business, and (iii) the high risk inherent to this activity. While there is empirical evidence on the first two barriers to entrepreneurship, the last one is yet to be answered.

    This paper empirically investigates whether risk-aversion is a relevant factor to explain the decision to create a business. Using the universe of labour contracts in Brazil, it is assessed whether employees from firms that suffer large and unexpected production shocks are more likely to leave and subsequently create new business. Large input disruptions may affect employees’ perception of wage and employment risk to such a point that the present value of staying in the firm might become lower than the present value of becoming an entrepreneur. Overall, we present novel evidence on an overlooked channel to explain entry into entrepreneurship.

  • The impact of transient, exogenous shocks in the market for entrepreneurial finance: Do the sun and luck shine on London-based accelerators?

    gary-dushnitsky-50x50

    Gary Dushnitsky

    Associate Professor of Strategy and Entrepreneurship

     

     

    Sayan-Sarkar-50x50

    Sayan Sarkar

    PhD student, Strategy and Entrepreneurship

     

     

    The landscape of entrepreneurial finance is shifting rapidly, and increasingly, early-stage start-ups are seeking support of so called seed accelerator programs. Accelerators serve as a launchpad for quickly developing a business models and raising financing. A testament to the growing importance of this phenomenon is that currently London alone has 40-50 entities who call themselves accelerators, and have cumulatively graduated anywhere between 600 and 800 start-ups to date, with many going on to secure VC/ PE/ angel funding. Successful examples include the money transfer venture, TransferWise, who graduated from Seed Camp’s 2011 cohort, and went on to raise about $110M in financing till date, and the credit rating challenger Aire, who raised $7M soon after graduating from Barclays Accelerator’s 2014 cohort, to name a couple.

    Accelerator programs are receiving growing attention in academia and practice alike. A rather salient and unique attribute of accelerators is that the culmination of their cohort-based programs is generally marked by a single-day investor roadshow event. Called the “demo day”, this event is marked by all ventures graduating in that cohort making short (typically two to five minutes, and rarely up to 10 minutes) fund-raising pitches to prospective investors. We exploit this unique trait to study the effect on transient exogenous shocks on the likelihood of consummating an investment. Specifically, we ask; does more sunshine on a demo day increase the likelihood of securing funding?

  • Communicating the “Jockey” in Entrepreneurial Ventures

    Joao-Salvado-50x50

    Joao Cotter Salvado

    PhD student, Strategy and Entrepreneurship

     

     

    This study theorizes and empirically investigates the effects of communicating the entrepreneur while trying to persuade potential resource providers. Using a mixed empirical design, with a set of experiments and data from two entrepreneurial crowdfunding platforms, I examine two central questions. First, how visually displaying the entrepreneur affects critical investment outcomes like the probability of being funded, the interest rate paid or the amount of equity acquired by each investor; and, second, how venture distinctiveness and entrepreneurial appearance play role moderating the main effects.

  • A thing called `Free Lunch': Procurement and Planning to implement Midday Meal Schemes

    Nitin-Bakshi-50x50

    Nitin Bakshi

    Assistant Professor of Management Science and Operations

     

     

    Shyam-Mohan-50x50

    Shyam Mohan

    PhD Student, Management Science and Operations

     

     

    In India, the Midday Meal Scheme (MDMS), introduced in 2001, incentivizes poor families to send their kids to schools by providing them with free and nutritious lunch. The Akshaya Patra is one of the largest NGOs involved in the implementation of this scheme, and serves 1.6 million children daily. Working in collaboration with Akshaya Patra, this project aims at understanding and identifying best practices for implementing the Midday Meal Scheme (MDMS) in schools in India, and intends to set up a data-driven modelling framework that could improve the efficiency and scope of the implementation.

  • Diversification behaviour and performance through a product lens

    Pascal-Anders-50x50

    Pascal Anders

    PhD student, Strategy & Entrepreneurship

     

     

    This study expands the extant diversification literature from the business unit level to the product level. Using a novel dataset covering the products produced by the universe of German manufacturing firms1 between 2001 and 2014, I address two central question of the diversification literature that researchers have not been able to robustly answer: (1) Can resource relatedness explain dynamic product market entry and exit? (2) Does diversification in related products cause higher firm and establishment productivity?

September 2016

  • Gender Differences in publications and patenting – does scientific Style Matter?

    Isabel

    Isabel Fernandez-Mateo

    Professor of Strategy and Entrepreneurship

     

     

    Michael

    Michaël Bikard

    Assistant Professor of Strategy & Entrepreneurship

     

     

    This project re-examines the well-established finding that female scientists produce fewer publications and patents than their male counterparts. We propose to study gender differences in “scientific style” as a potential explanation for this phenomenon. We consider the possibility that women report their findings in a manner that subsequently prompts less scientific recognition and a lower access to commercial opportunities. We will test this argument by analysing the content of 236 “paper twins,” in which male and female academic scientists independently published papers reporting essentially the same discovery. This work will contribute to the sociology of science and innovation, as well as to our understanding of how to best utilize scientific talent in entrepreneurial settings.

  • Status and prosocial behaviors: Helpful feedback among innovative peers

    Bryan-Stroube

    Bryan Stroube

    Assistant Professor of Strategy and Entrepreneurship

     

     

    Robert

    Robert Vesco

    University of Maryland & Bloomberg

     

     

    Innovators seek the counsel of their peers in settings such as academia, R&D labs, and startups. This is because helpful feedback on early-stage ideas can improve innovative outcomes by providing complementary knowledge and lowering search costs. However, providing helpful feedback is costly, so why do peers do it? One explanation is they are motivated by the social status it can provide. This project explores the two dominant explanations for pursuing status: some individuals pursue it for the resources it attracts (pragmatists) while others pursue it because they value the deference of their peers (egoists). We leverage an exogenous change in the visibility of peer recognition in an online community for technology entrepreneurs to infer which of these explanations, if either, dominates. Initial empirical findings indicate that the production of feedback in this community is driven by both of these underlying motives.

  • Entrepreneurial Foundings of Safari Parks in Southern Africa: Balancing commercial and preservation interests

    Freek

    Freek Vermeulen

    Associate Professor of Strategy and Entrepreneurship

     


    Since the end of the Apartheid regime in South Africa new Safari Parks have been founded. Many of these are purely commercial operations, exploited for commercial use through tourism. Some others have been initiated by the government or by NGOs – such as the NGO Peace Parks – to settle border disputes between neighboring countries and bring welfare to local communities. This environment is a prime example of a setting where firms have to carefully manage the balance between commercial interests on the one hand, and preservation and social interests on the other. The question here is whether Safari Parks founded using a business model specifically aimed at balancing commercial and social interest perform better (both in commercial and social terms) than Parks founded with an emphasis on either one (i.e. specifically to exploit commercial interest or specifically to advance social interests). We will collect longitudinal data to examine this particular issue systematically in a quantitative empirical study.

  • From War to Medicine: Environmental Imprinting and Innovation in the Traditional Chinese Medicine Industry

    Freek

    Freek Vermeulen

    Associate Professor of Strategy and Entrepreneurship

     

     

    Prior research shows that early events in a region can create an institutional legacy that leads to the long-term persistence of certain types of organizational behavior. By contrast, I argue that early events may also imprint an environment in such a way that it fosters a norm of innovation, leading organizations to seek change and adaptation rather than persistence, which manifest long after the events have taken place. I aim to test this perspective using data on firms in the Traditional Chinese Medicine industry in the first half of the 1990s, when firms using this local, indigenous technology were confronted with the onset of a global substitute: “Western-style” chemical drugs. I am already able to show that firms in regions that were under communist rule in the late 1940s, where Mao stimulated experimentation with Western-style drugs treating wounded soldiers, nearly half a century later were more inclined to break industry norms and innovate by introducing “hybrid products” in the market: new products using elements adopted from chemical drugs.


    The proposed study’s primary contribution is to show that historical events can create an institutional legacy that fosters innovation, by stimulating firms to deviate from existing industry norms when environmental circumstances are changing.

  • Impact of TRIPS on Knowledge Diffusion
    Keyvan

    Keyvan Vakili

    Assistant Professor of Strategy & Entrepreneurship

     

     

    In prior research, we show that the implementation of TRIPS has increased investment in basic science on neglected diseases in low-income countries, potentially through cultivating better institutions of science. The question remains, whether the produced knowledge on neglected diseases in these countries are further adopted by academic and industrial labs, locally and globally. In this project, I explore this question in depth. In particular, I investigate the impact of TRIPS agreement on the diffusion of indigenous knowledge on neglected diseases, produced in low-income countries, within subsequent scientific papers, patents, and clinical trials. I further explore the variance in knowledge diffusion across disease categories and geographical location. The results can shed light on the impact of intellectual property rights on knowledge transfer, the broader institutions required for the global diffusion of scientific knowledge, and the remaining challenges in front of eradicating neglected diseases.

  • Impact of Financial Health on Hospital Operations

    NicosSavvasearchresults113x113

    Nicos Savva

    Associate Professor of Management Science and Operations

     

     

    Christopher-Chen

    Christopher J Chen

    PhD Candidate, Management Science and Operations

     

     

    This empirical study proposes to identify how the operational policies of hospitals are affected by variability in financial flows and to determine the impact of these changes on patient outcomes. We propose to exploit endowment returns as an exogenous source of variation in hospitals' financial flows and through this, examine how financial health impacts patient length-of-stay, staffing levels, medical inventory position, avoidable errors, readmissions, and mortality rates. Given the connection between operating procedures and patient outcomes, the results will offer managerial insights into designing novel processes that alleviate the impact of financial constraints on quality of care as well as potential policy insights as to the implementation of cutbacks. The funding provided by DIIE will be used to augment the publicly available datasets already in our possession with two proprietary datasets.

March 2016


  • The Exogenous Loss of Innovative Talent: Firms, collaborators and beyond
    bo-bian

     Bo Bian

    PhD student



    This project analyses how the exogenous loss of innovative talent in a firm affects both the firm’s and work-mates’ future performance. I extract information on the death of active inventors from US patent filings and exploit such talent loss as an exogenous shock to help evaluate the value of inventors. I find that a dead inventor’s employer suffers permanently both in subsequent innovation outcomes, measured by aggregate citation weighted number of patents, and future sales growth. Apart from the direct loss of dead inventors’ contribution, there exist negative spillovers. Average quality of the affiliated firm’s future patents drops and the productivity per inventor also goes down. For those who worked closely with the extinct inventor, as identified by past co-inventorship, their output drops even more. Following inventor deaths, there seems to be an exodus of skilled inventors. A deceased inventor’s collaborator is more likely to leave the current employer if he works in the same firm as the dead inventor, but not when he works for a different firm, suggesting potential complementarity between inventors. Firms react to the loss of innovative labour by increasing R&D capital. Taken together, the findings indicate that creative human capital is crucial for both the firm’s and collaborators’ performance and decision-making.

  • Cultural Norms and the Cross-Section of Innovation and Entrepreneurship
    jean-marie-meier

    Jean-Marie Meier

    PhD student



    This paper analyses the impact that cultural norms have on innovation and entrepreneurship. Max Weber postulated that the Protestant ethic motivated Protestants to work hard and be successful in business. Martin Luther announced his Ninety-Five Theses in Wittenberg, Germany. I plan to use the distance to Wittenberg as an instrument for the share of Protestants in a county. With this instrument I can study the effect of Protestantism on innovation and entrepreneurship. I plan to analyse the mechanism underlying the general effect of Protestantism. Understanding the cultural determinants of innovation and entrepreneurship can help us to better understand why innovation and entrepreneurship clusters in particular areas within countries such as in the Silicon Valley in the USA.

    September 2015



  • Capital gains tax and managerial myopia
    Alex Edmans 113 x 113

     Alex Edmans

    Professor of Finance



    Based on the conventional wisdom, there is widespread belief that short-termism of management (i.e. failure to innovate) is caused by short-termism of investors. Hillary Clinton argued that, by encouraging shareholders to hold their investments for the long-term, this will give companies the freedom to undertake long-term projects, rather than being pressured to pursue short-term profit. However, according to the common wisdom short-term trading by investors need not equate to short-term behaviour by managers. Instead, short-term trading can be based on a firm’s long-term value, and thus encourage managers to think long-term. The goal of this paper is to evaluate these conflicting views, and study whether short-term investor horizons cause short-term behaviour by management. For management behaviour, we intend to study investment, e.g. R&D, advertising, capital expenditure, innovation output (e.g. patent citations). For investor horizons, we intend to measure variables such as the average holding period, or the portfolio turnover rate. The paper will study how capital gains tax affects innovation incentives.

  • Revenue management in the age of big data
    GahYi Vahn113x113

    Gah-Yi Vhan

    Assistant Professor of Management Science and Operations



    The ubiquitous presence of micro-level data is changing business decision-making. E-commerce companies such as Otto (largest European online retailer), Uber, and Rue La La (a flash sale fashion start-up) successfully employ real-time, dynamic pricing as part of their operational strategy and capture value from innovating revenue management models by using (big) data. Revenue management – the practice of managing product assortments, prices and inventories - is one major area that can benefit from the use of Big Data. My earlier research [1, 2] shows that data-driven decisions can generate the best value if used with the correct methodology. In a series of papers, I aim to develop and investigate innovative new methods for incorporating “Big Data” in revenue management problems. One outcome of this research will be universal insights into how, and to what extent, Big Data can bring value in the practice of revenue management.

  • Disruptions, operational resilience and performance: a study of micro-entrepreneurs in Uganda
    KamaliniRamdas113x113

    Kamalini Ramdas

    Professor of Management Science and Operations; Deloitte Chair in Innovation & Entrepreneurship



    StephenAndersonMacdonald50x50

    Stephen Anderson-Macdonald

    Assistant Professor of Marketing, Stanford




    AmritaKundu50x50

    Amrita Kundu

    MSE Environmental Systems Engineering, John Hopkins University



    Researchers in operations management have been increasingly interested in operational and supply chain disruptions. The research to date on disruptions includes descriptive case-based research, analytical modelling and empirical work. The main focus of OM research on disruptions has been on mature markets supply chains. To our knowledge, little research in operations management has focused on operational or supply chain disruptions in emerging markets, and in particular, on disruptions faced by micro-entrepreneurs – individuals who own and operate very small businesses – in these markets (de Mel et al. 2010). This research intends to: 1) identify and categorize different types of disruptions faced by such micro-entrepreneurs, 2) estimate the effect of different types of disruptions on multiple dimensions of performance including revenues, costs and profits, and 3) estimate the moderating effect of specific operational strategies that micro-entrepreneurs use to improve their resilience to disruptions – i.e., the ability to bounce back post-disruption. This research project is directly focused on understanding micro-entrepreneurs’ businesses and on identifying strategies that can bolster them from disruptions to their business activities.

  • Can pay-for-performance reduce emergency department waiting times?

    NicosSavva113x113Nicos Savva
    Associate Professor of Management Science and Operations



    TolgaTezcan50x50Tolga Tezcan
    Associate Professor of Management Science and Operations BS (Bilkent) MS (Colorado State) MS PhD (Georgia Tech)


    The proposed study is motivated by the chronic underinvestment in Emergency Department (ED) capacity, which leads to overcrowding and long wait times. We conjecture that such problems can be alleviated by an innovative payment scheme (dubbed “pay-for-performance”) which links the ED’s reimbursement to patient waiting times. Our research will investigate whether socially optimal outcomes can be achieved though the appropriate application of “yardstick” competition, where the payer creates indirect competition between ED’s by linking their reimbursement to their relative performance against other ED’s. Our work, which is on the interface of economics and operations management, will contribute to the ongoing debate on how to design innovative reimbursement schemes for one important service offered by hospitals – Emergency Care. Our work, which is on the interface of economics and operations management, will contribute to the ongoing debate on how to design innovative reimbursement schemes for one important service offered by hospitals – Emergency Care.

  • Too busy to innovate – the role of slack in innovation adoption in emerging markets

    Chandy2 113x113Rajesh Chandy 
    Professor of Marketing; Tony and Maureen Wheeler Chair in Entrepreneurship; Academic Director of the Deloitte Institute of Innovation and Entrepreneurship 


    OmNarasimhan50x50Om Narasimhan
    Professor of Marketing at LSE



    ThomasZhang50x50Thomas Zhang



    A long-standing puzzle is why micro-enterprises in developing countries do not adopt productive practices more readily, even when the practices are accessible and their benefits are clearly demonstrated. Farming, in particular, can be much more productive in many emerging markets with the adoption of relatively simple farming innovations. Innovation adoption is not instantaneous, even if the innovation itself is simple. Innovation adoption takes physical and mental time to ponder and assimilate. We argue that poor infrastructure and pressures of daily life in rural villages leave little slack to adopt innovation, even when such innovations are readily accessible and their benefits are clearly shown. We propose that farmers are hindered in innovation adoption by dearth of slack time. The difficult circumstances and lacking amenities in rural villages do not allow for enough slack time to contemplate and evaluate new innovations for adoption, even when such innovations – and their benefits – are clearly presented to the farmers. A survey is planned to directly capture measures of physical and mental slack.

  • Targeting entrepreneurship support: how policy makers can better identify target markets for stimulating entrepreneurship

    NaufelVilcassim113x113Naufel Vilcassim

    Professor of Marketing, London Business School



    StephenAndersonMacdonald50x50

    Stephen Anderson-Macdonald

    Assistant Professor of Marketing, Stanford Graduate School of Business



    ChristyLazicky50x50Christy Lazicky

    Master’s candidate, Harvard Kennedy School


    In this research, we aim to evaluate and further refine the effectiveness of an innovative sampling approach we have developed to identify higher growth-potential entrepreneurs in emerging markets. Building on two on-going studies in Uganda and Rwanda, we will compare, over time, the business performance, practices and psychometrics of entrepreneurs with a high growth potential index (GPI) with that of entrepreneurs with a low GPI to understand how well our approach predicts growth potential. This research aims to assist policy makers better identify target markets for enterprise support programmes designed to stimulate entrepreneurship and economic growth in emerging markets. This research focuses on stimulating entrepreneurship in emerging markets by providing an innovative screening mechanism for policy makers and managers to target entrepreneurship support programmes and partnerships to higher growth-potential entrepreneurs most likely to grow established, employment-generating businesses.

March 2015

  • The division of innovative labour between academia and industry and Pasteur’s quadrant

    Michaël Bikard 
    Assistant Professor of Strategy & Entrepreneurship 

    Why do universities get involved in applied research? And why do firms undertake basic science? The classic view is that academia should focus on basic research and industry should concentrate on applied science. Yet, recent studies have shown that, in some fields, a considerable overlap exists in the “basicness” of university and firm research. This paper proposes that the proximity and complementarity between academic and industrial science is to a large extent driven by the existence of particular lines of research (i.e., belonging to “Pasteur’s Quadrant”) that emerge in some fields and not in others.


  • The effect of intellectual property protections on basic science

    Keyvan Vakili
    Assistant Professor of Strategy & Entrepreneurship

    Scholars and policymakers have sought to identify new mechanisms for cultivating scientific breakthroughs.  One such mechanism involves using intellectual-property protections (IPP) such as patents as an incentive, and yet little evidence exists on whether the prospect of obtaining IPP stimulates scientific research that may occur decades prior to an uncertain return on the investment.  In this paper, I investigate this mechanism through an examination of the effect of the World Trade Organization’s (WTO’s) 1994 policy of Trade-Related Intellectual Property Rights (TRIPS), which was justified in part by a claim that IPP would improve the availability of drugs for ‘neglected diseases’ that primarily afflict the poor.   The analysis further considers how TRIPS may have encouraged new science on neglected diseases by examining the locations of the scientific researchers.  The early findings suggest that IPP may create an incentive for new science even when the prospective returns occur decades subsequent to the investment.

  • The diffusion of misconduct: geography of auditors’ advice and backdating of stock-option grants

    Aharon Cohen-Mohliver 
    Assistant Professor of Strategy & Entrepreneurship 

    While the majority of work on innovation has focused on value creating activities, not all innovations are designed to create value. Innovative practices such as price fixing schemes, tax evasion and even stock option backdating practices emerge and proliferate among organizational actors, often for years, before they are caught and stopped. These practices have much in common with traditional innovations but they differ on an important dimension- all of them must be conducted in secret to shield the perpetrator from potential liabilities. While we know much on the diffusion of innovation, we know surprisingly little on the diffusion of secrets. In this research I trace the path through which innovative misconduct spreads. I examine the diffusion of stock option backdating between organizations in the United States and find that the practice is closely tied to the identity of the local office of the firms external auditor. Several robustness tests suggests that it is the local office of external auditor that either spreads or stops the practice among its clients. These findings have reaching implications for research on (unethical) innovation and for the governance of organizations.


  • The effect of stock prices on investment: the type of price informativeness matters

    Alex Edmans
    Professor of Finance  

    Prices can improve innovation efficiency by providing managers with information on their investment opportunities.  Traditional thought is that the quality of such guidance depends on the total amount of information in prices.  We show that what matters is the amount of information in prices not already known to the manager – i.e. the source of information, not simply the overall amount.  We study the staggered enforcement of insider trading laws across 25 countries, as it reduces (increases) managers’ (outsiders’) ability to trade and incorporate information into prices.  Enforcement significantly increases the extent to which market prices affect investment. 

  • Unpacking the dynamics of industry and corporate change: benefits and risks of new business models over the life cycle

    Michael Jacobides
    Sir Donald Gordon Chair of Entrepreneurship and Innovation; Associate Professor of Strategy and Entrepreneurship

    This project aspires to provide an innovative, econometric investigation into an area which has remained ill-defined in the literature: The adoption and implementation of new business models, focusing on Financial Services in the USA, over the last 25 years. Drawing on an unusually comprehensive new database, just put together by the New York Federal Reserve Board (NYFRB), I propose to investigate, along with Nicola Cetorelli, a senior NYFRB economist: (a) what drives the adoption of new business models in banking (here, defined as the dependence of Bank Holding Companies on traditional income revenues, vs other sources such as trading and other activities); (b) how this changes with the industry life-cycle; and (c) how this relates to choices firms make in terms of organizational design (e.g., number and type of subsidiaries, scope, etc). We also intend to link the changes in business models with different metrics of success (ROE, ROA, etc), and of risk (NPL, variability of returns), in a way that will shed some light on how changes in business models by those who innovate early on compare with those of laggards. In addition to these results being important for a study of industry change and business model transformation, they should also shed some light on how the innovation from major banks contributed to the financial crisis of 2008, thus complementing ongoing qualitative work.

  • Improving entrepreneurs’ access to information: a field experiment on marketing versus financial information for micro and small entrepreneurs in Rwanda

    Naufel Vilcassim 
    Professor of Marketing 

    Stephen Anderson-Macdonald 

    (Stanford University Graduate School of Business)

    Pradeep K. Chintagunta 

    (Booth Business School, University of Chicago)

    Professor of Marketing 

    In this study, we examine an innovation in mobile phone technologies designed to stimulate entrepreneurship and firm growth in developing countries. We use a randomised controlled trial to measure the impact on performance of an easy-to-use, SMS-based business information tool that increases an entrepreneur’s ability to track, access and take action on key financial and marketing metrics in his/her business. Through this research, we aim to better understand the role of business information in driving enterprise growth, and how innovation can be used to overcome barriers to growth and unlock the potential of developing-country enterprises in a cost-effective, scalable way.


  • Do institutions affect innovation and entrepreneurship?

    Jean Marie Meier
    PhD student

    Alexander Donges 

    (University of Mannheim, Germany)

    Rui Silva
    Assistant Professor of Finance  

    This paper studies the impact of institutions on innovation and entrepreneurship. During the French occupation of parts of Germany after the French Revolution and under Napoleon’s rule, the French imposed major institutional reforms. We use the length of the French occupation in different parts of Germany as a “shock” to institutions. We use this “shock” to study the impact of institutions on innovation and entrepreneurship. We document that better institutions lead to an increase in innovation and entrepreneurship. Thereby we provide evidence of an important channel by which institutions affect long-run economic growth. The results are relevant to policy makers, practitioners and academics given that most of the world’s population is living in countries with weak institutions.

  • Cultural norms and the cross-section of innovation and entrepreneurship

    Jean Marie Meier 
    PhD student

    This paper analyses the impact that cultural norms have on innovation and entrepreneurship. Max Weber postulated that the Protestant ethic motivated Protestants to work hard and be successful in business. Martin Luther announced his Ninety-Five Theses in Wittenberg, Germany. I plan to use the distance to Wittenberg as an instrument for the share of Protestants in a county. With this instrument I can study the effect of Protestantism on innovation and entrepreneurship. I plan to analyse the mechanism underlying the general effect of Protestantism. Understanding the cultural determinants of innovation and entrepreneurship can help us to better understand why innovation and entrepreneurship clusters in particular areas within countries such as in the Silicon Valley in the USA.

  • The effect of operational decisions on performance in health care delivery systems in resource limited settings

    Jonas Oddur Jonasson 
    PhD Student

    Professional community health workers are currently being introduced as a formal part of the health care delivery system in many southern African countries. This constitutes an operational innovation, both in terms of who does what—CHWs provide primary care instead of qualified nurses or doctors—and in terms of the service location—CHWs visit households, bringing the health care delivery system to the patients. The aim of the project described in this proposal is to jointly model operational and clinical decision making to develop guidelines for how such systems are operationally best implemented, to maximize the positive public health impact.

  • The real effects of uncertainty

    Raja Patnaik
    PhD student

    This project aims at exploring the effects of uncertainty on firm investment and innovation. I exploit a prominent weather pattern in the Pacific region that generates uncertainty across different industries in the U.S. to empirically estimate firm-level responses to uncertainty in terms of investment in physical capital and R&D spending. Preliminary results indicate that while firms decrease investment in physical capital, they increase R&D spending in response to higher uncertainty. This suggests that under certain conditions higher uncertainty can stimulate innovation,  particularly in industries in which firms have more growth options.

  • On using precursor events for risk management

    Heikki Peura
    PhD student

    Disaster investigations often reveal that the accident had been preceded by more frequent near misses  precursor events that could have led to a disaster but resulted in limited impact or no damage at all. Yet reports of such precursors either failed to reach management, or were not acted upon, and preventive measures were insu_cient. The purpose of this work is to study why organizations may fail to capture and address such opportunities for safety innovation. To address this question, we analyse how a _rm can incentivize its employees both to learn about disaster risk and simultaneously mitigate it.

  • How do crowdfunding charity platforms nudge potential donors to donate more and increase the completion rates of crowdfunding campaigns?

    Lakshmi Prasad Vana 

    PhD student 


    Crowdfunding is an innovative business model that has seen enormous adoption among non-profit organizations. The crowdfunding site Donors Choose has, for example, raised over $250 million for various public school projects in the US since 2002. A major challenge faced by crowdfunding campaigns is to reach their campaign target within the allocated time. My research models how donors evaluate their uncertainty about whether a campaign would reach its target and how that affects the amount they donate. My findings may suggest that displaying the right information may nudge potential donors to better assess the uncertainty, leading to higher donations and completion rates.

To see a full list of research projects starting from 2011, download the Institute of Innovation and Entrepreneurship Sponsored Faculty Research Projects document (PDF, 1.09MB).