Government and Politics →
- 06 Aug 2008
- Research & Ideas
Are the Olympics a Catalyst for China Reforms?
By hosting the Summer Games, China is putting itself at the center of the world's stage, a position some reformers would like to leverage to spark human rights improvements in the country. Can outsiders influence Chinese policy? Not without help, says HBS professor Tarun Khanna. Closed for comment; 0 Comments.
- 06 Aug 2008
- Working Paper Summaries
Fixing Market Failures or Fixing Elections? Agricultural Credit in India
There are strong theoretical reasons to believe that politicians manipulate resources under their control to achieve electoral success. Yet, compelling examples of this manipulation are heretofore rarely documented in scholarly literature. Cole's paper presents evidence that government-owned banks in India serve the electoral interests of politicians. It also analyzes how resources are strategically distributed. Key concepts include: Findings show that the costs of redistribution are considerable: The estimated effect of 5 to 10 percent higher levels of credit in election years is substantially larger than the average annual growth rate of credit. Efforts to isolate government banks from political pressure, as is done with many central banks, may reduce these effects. Agricultural credit lent by public banks is substantially higher in election years. More loans are made in "swing" districts in which the ruling state party had a narrow margin of victory (or a narrow loss) than in less competitive districts. This targeting is not observed in nonelection years or in private bank lending. Closed for comment; 0 Comments.
- 01 Aug 2008
- Research & Ideas
Does Market Capitalism Have a Future?
Does capitalism have a future? That intriguing topic was the subject of an HBS faculty colloquium led by professor Joe Bower, with fellow faculty members Dutch Leonard, David Moss, and Lynn Pain. Closed for comment; 0 Comments.
- 30 Jul 2008
- Op-Ed
Why the U.S. Should Encourage FDI
American financial executives are courting foreign direct investors, particularly sovereign wealth funds, for new investments. Should these investments draw increased scrutiny from U.S. regulators? Harvard Business School professor Mihir Desai argues that most of these deals work out in America's best financial interest. Key concepts include: Foreign direct investors in the United States appear to systematically earn low returns on their investments in American corporate assets—less than what U.S. multinationals earn with their investments abroad. Rather than erecting barriers, America should be thanking foreign direct investors for investments that appear to be, on average, transferring wealth from abroad to the United States. Closed for comment; 0 Comments.
- 22 Jul 2008
- Working Paper Summaries
Financial Development, Bank Ownership, and Growth. Or, Does Quantity Imply Quality?
Government ownership of banks, a common phenomenon, is among the most important policy tools used to influence financial development. But what is the actual effect of such ownership on the financial development of a country? This paper uses a policy experiment in India to evaluate the effect of government ownership of banks on development. Key concepts include: Had the Indian government required bank expansion into rural areas and set lending targets, without nationalizing banks, rural areas might have achieved the same, or better, outcomes. Despite a substantial increase in agricultural credit, there is no evidence of improved agricultural outcomes in markets with nationalized banks. Bank nationalization may have slowed the growth of employment in the more developed sectors of trade and services. Closed for comment; 0 Comments.
- 16 Jul 2008
- Op-Ed
What Should Employers Do about Health Care?
Companies that cut health care costs without improving the overall value of care eventually pay a price in terms of employee absenteeism and chronic ailments. According to Harvard University professor and strategy expert Michael E. Porter and coauthors, the best way to truly reduce health care costs is to improve quality. Closed for comment; 0 Comments.
- 14 Jul 2008
- Research & Ideas
HBS Cases: Reforming New Orleans Schools After Katrina
The New Orleans public school system, ravaged by Hurricane Katrina in 2005, is now getting a boost from charter schools—today about half of the city's 80 schools are charter schools, says HBS lecturer and senior researcher Stacey M. Childress. She explains what New Orleans represents for entrepreneurial opportunities in U.S. public education. Key concepts include: Charter schools are public schools of choice that operate outside the governance and policies of their local school districts. Prior to the hurricane, the New Orleans school district was one of the worst in the country. Today no other large school district in the United States has such a high percentage of charter schools as does New Orleans. The organization New Schools for New Orleans (NSNO), the subject of an HBS case study, aims to create networks of schools to receive shared support services while avoiding the dysfunctions of a large urban district. NSNO developed a strategy to focus on a subset of charter schools that it believed could be helped most. Was it the right strategy? Or should NSNO support all schools, not just charter schools? Closed for comment; 0 Comments.
- 23 Jun 2008
- Working Paper Summaries
Using Financial Innovation to Support Savers: From Coercion to Excitement
This paper acknowledges the wide range of solutions to the problem of low family savings. Families, and of particular interest to the authors, low-income families, save for a wide variety of purposes, including identifiable reasons such as education and retirement and others that are more broad, like rainy days or emergencies. Given societal pressures to consume, and given the diversity among people, it is unlikely that there is a single solution to the savings problem. Yet a number of programs described by Tufano and Schneider have great promise in supporting household savings. Tufano and Schneider discuss each program from the perspectives of would-be savers as well as from that of other key stakeholders. Key concepts include: Researchers must be sensitive to the needs of low- and moderate-income families, whose concerns about having the resources to cope with short-term emergencies are just as legitimate as needs to plan for a retirement that may be decades away. The continuum of solutions highlighted in this paper ranges from those that force families to save (coercion) to others that seek to work consumers into a frenzy about savings (excitement). These varied solutions emphasize different elements of human behavior or impediments to savings. Some solutions to low savings require massive government policy, some require small changes in existing regulations, and still others are completely market oriented. Some require large subsidies, while others might be profitable on their own. Closed for comment; 0 Comments.
- 23 Jun 2008
- Research & Ideas
Innovative Ways to Encourage Personal Savings
Saving money doesn't need to be so difficult. According to HBS professor Peter Tufano, "The most interesting ideas—indeed the oldest—try to make savings a fun or satisfying experience." As Tufano describes in this Q&A, different solutions appeal to different people. Here's what government policy, the private sector, and nonprofits can do. Key concepts include: A variety of levers can be used to support people who want to save (not to force someone to save who doesn't want to). Some levers are simple changes that make the process of savings easier. Other levers involve providing various incentives, be they financial or sociological. The oldest and most interesting ideas try to make savings a fun or satisfying experience. Closed for comment; 0 Comments.
- 19 Jun 2008
- Working Paper Summaries
Accounting Information as Political Currency
The study of accounting and the political process has long been viewed through the political cost hypothesis, the basic premise of which is that firms manage earnings in order to extract first-order benefits (or avoid first-order costs) from regulators. This paper develops and tests a distinct, yet likely, complementary hypothesis: Firms manage reported earnings in order to supply first-order benefits to regulators. Focusing on Democratic and Republican candidates in congressional races in 2004, Ramanna and Roychowdhury test whether the management of accounting information is in some circumstances akin to a political contribution from firms to politicians: in other words, whether accounting information can be used as political currency. The authors predict and find that identified corporate donors to candidates in closely watched races in 2004 managed information related to outsourcing, a hot-button issue in those races. Key concepts include: While corporate donors in general do not exhibit evidence of downward earnings management, corporate donors to candidates in closely watched congressional races exhibit significant evidence of downward earnings management in the second and third quarters of 2004. The evidence of downward earnings management is stronger for firms likely to have greater outsourcing activities. These findings are consistent with firms managing accounting information in circumstances where this is likely to benefit allied politicians, thus supporting the idea of a "political currency" hypothesis. Closed for comment; 0 Comments.
- 18 Jun 2008
- Working Paper Summaries
Evaluating the Impact of SA 8000 Certification
The Social Accountability 8000 Standard (SA 8000), along with other types of certification standards and corporate codes of conduct, represents a new form of voluntary "private-governance" of working conditions in the private sector, initiated and implemented by companies, labor unions, and nongovernmental activist groups cooperating together. There is an ongoing debate about whether this type of governance represents real and substantial progress or mere symbolism. This paper reviews prior evaluations of private codes of conduct governing workplace conditions, including Ethical Trading Initiative's Base Code, Nike's Code of Conduct, and Fair Trade certification. The authors then discuss several best practices that should be employed in future evaluations of such codes of conduct. Key concepts include: An ongoing debate is raging about whether such codes represent substantive efforts to improve working conditions or are merely symbolic efforts that allow organizations to score marketing points and counteract stakeholder pressure by merely filing some paperwork. Evaluations designed with the features described in this paper will help introduce systematic evidence to these important debates. This could help identify which particular codes are best able to distinguish organizations possessing superior working conditions. Such evaluations may shed light on which elements of the codes are most effective, which types of monitoring systems represent best practices, and which areas are most in need of improvement. Closed for comment; 0 Comments.
- 04 Jun 2008
- Working Paper Summaries
Accountability and Inequality in Single-Party Regimes: A Comparative Analysis of Vietnam and China
While both China and Vietnam have experienced rapid annual growth over the past two decades, income inequality has risen more rapidly in China than in Vietnam during the same period. Structural and socio-cultural determinants fail to account for these divergent paths, as nearly every variable predicts higher inequality in Vietnam. This paper by Regina Abrami and colleagues focuses on differences in political institutions to explain these divergent paths. In so doing, it contributes to a growing body of literature describing variation in authoritarian regimes, but focuses on variation within one authoritarian regime type. Key concepts include: Compared with China, Vietnam's institutions empower a larger group of insiders and place far more constraints on the party leadership, both through vertical checks and through semi-competitive elections. As a result, Vietnamese economic policies must consider a larger cross section of society. Vietnam spends a far larger portion of its revenue on transfers, and has been able to engender greater equalization among provinces and individuals. It is still too early to tell whether the development paths in China and Vietnam will converge or diverge. Growing income inequality has pressured the Chinese government to shift its focus from promoting all-out economic growth to solving social tensions. Closed for comment; 0 Comments.
- 04 Jun 2008
- Working Paper Summaries
Coming Clean and Cleaning Up: Is Voluntary Disclosure a Signal of Effective Self-Policing?
This paper demonstrates some of the benefits and limitations of industry self-policing programs. Many self-regulation programs are operated exclusively by the private sector, often in the hope of garnering goodwill with consumers or staving off more stringent government regulation. Less well known are voluntary self-regulation programs operated by government regulators seeking innovative approaches to further regulatory objectives and to stretch shrinking agency budgets. Little is known about the effects of these programs, or how they might contribute to the overall effectiveness of a regulatory regime. Michael Toffel and Jodi Short seek to determine whether the self-policing required under the U.S. Environmental Protection Agency's Audit Policy affects the behavior of regulators and participating facilities and the relationship between them. Specifically, the researchers examine whether self-policing is associated with improved environmental performance at these facilities and whether regulators reduce their scrutiny over self-policing facilities. Key concepts include: Among the facilities that participated in this self-policing program, only those with superior compliance records actually improved their environmental performance. Regulators rewarded self-policing facilities that already had clean past compliance records with an inspection holiday, but they did not significantly decrease scrutiny of self-policing facilities that had poor past compliers. Closed for comment; 0 Comments.
- 21 May 2008
- Research & Ideas
Going Negative in Political Advertising
Companies rarely run negative ads against competitors, but political candidates often do. Why the difference? It's a byproduct of our political system's winner-take-all approach, says professor John Quelch. Key concepts include: Negative ads ask us to vote against someone rather than for someone, an approach that sometimes works in political advertising. Companies rarely run negative ads against competitors; typically competitors won't be mentioned at all. In politics the winner takes all, an environment that encourages desperate candidates to go negative. Closed for comment; 0 Comments.
- 12 May 2008
- Research & Ideas
Accounting Information as Political Currency
Corporate donors that gave at least $10,000 to closely watched races in the U.S. congressional elections of 2004 were more likely to understate their earnings, say Harvard Business School's Karthik Ramanna and MIT colleague Sugata Roychowdhury. Such "downward earnings management" may have functioned as a political contribution. In this Q&A, Ramanna explains how accounting and politics influence each other. Key concepts include: Firms manage accounting numbers to avoid regulatory scrutiny. The implication is that firms manage accounting numbers to influence political decisions. Accrual accounting gives managers some flexibility to make estimates about the future. The data used to construct these measures are available for the larger companies in most developed and fast-developing nations. Closed for comment; 0 Comments.
- 10 Mar 2008
- Research & Ideas
Encouraging Entrepreneurs: Lessons for Government Policy
Who you know and how much money is in your pocket have always been significant contributors to entrepreneurial success. New research by Harvard Business School professor Ramana Nanda explores new wrinkles in this age-old formula—and how government policy may impact entrepreneurship. Key concepts include: Policymakers can benefit from understanding how peer networks and the financing environment impact the kinds of people who become entrepreneurs. People with a higher fraction of co-workers who have been entrepreneurs are more likely to try it themselves. Moreover, peer effects substitute for an individual's own background—those whose parents have been entrepreneurs benefit less from exposure to entrepreneurial peers. Not everyone who wants money to start a new business necessarily deserves it. Wealthy people are often able to start inadvisable businesses because they don't need to undergo the reality check of an investor's approval for funding. Closed for comment; 0 Comments.
- 28 Feb 2008
- Working Paper Summaries
Colonial Land Tenure, Electoral Competition and Public Goods in India
How is the impact of historical institutions felt today? This comparative analysis by Banerjee and Iyer highlights the impact of a specific historical institution on long-term development, specifically the land tenure systems instituted during British colonial rule. The paper compares the long-term development outcomes between areas where controls rights in land were historically given to a few landlords and areas where such rights were more broadly distributed. The paper also documents the impact of these differing historical institutions on political participation and electoral competition in the post-colonial period. Key concepts include: There are large differences in the development trajectories of areas that had different land tenure systems under British colonial rule. In particular, areas that were put under the control of landlords lag behind in the provision of public goods such as schools and roads compared with areas in which control rights in land were given to small cultivators. These differences are discernible even four decades after the end of colonial rule, and three decades after the landlord-based land tenure systems were officially abolished. Political participation and literacy levels are lower in landlord areas, but these differences are not sufficient to explain the differences in public goods provision. Closed for comment; 0 Comments.
- 27 Feb 2008
- Research & Ideas
Podcast: Revisiting Rental Housing
The subprime loan debacle, which has caused thousands of families to lose their homes, has cast light on another housing crisis in the U.S.: the lack of affordable rentals. In this podcast Harvard Business School professor Nicholas Retsinas discusses how this situation came to be, and his new book, Revisiting Rental Housing. Closed for comment; 0 Comments.
- 11 Feb 2008
- Research & Ideas
Does Democracy Need a Marketing Manager?
It's more than coincidence that we feel more association with our favorite consumer brands than with our elected politicians or government institutions. Can the power of marketing be used to promote public participation in politics? Harvard Business School professor John A. Quelch and research associate Katherine E. Jocz discuss their new book, Greater Good: How Good Marketing Makes for Better Democracy. Plus: book excerpt. Key concepts include: The core benefits of marketing align closely with the requirements of democracy: exchange, consumption, choice, information, engagement, and inclusion. Voter apathy in the United States could be improved by better marketing of candidates, the political process, political parties, and government institutions. This year's presidential race is increasing voter interest because it offers a diversity of choices. Closed for comment; 0 Comments.
Google-Yahoo Ad Deal is Bad for Online Advertising
A proposed advertising deal between Internet competitors Google and Yahoo would reduce competitiveness in the Internet advertising market, likely resulting in higher advertising rates, says Harvard Business School professor Benjamin G. Edelman. Closed for comment; 0 Comments.