Scarcity of productive factors poses a challenge
for firms entering underdeveloped regions. We
theorize that incumbent firms can overcome scarcity
of skilled human capital in local labor markets by
redeploying workers from existing units. We predict
that redeployment is more valuable when factor
markets exhibit large differences in resource
scarcity. Redeployment is also more valuable when
output is highly sensitive to worker skill and is
responsive to complementarities between labor and
other inputs. Important implications are that
redeployment can endow firms with superior
resources and enable them to enter more markets.
Data on sugar mills in Brazil, where a sudden
demand boom incentivized expansion, corroborate the
predictions. Our research identifies a new
mechanism of value-creation from resource
redeployment across factor markets.
We examine to what extent and when multi-unit firms
internally redeploy managers between units. While
theory has emphasized how changes in demand
conditions affect redeployment, we argue that
optimal internal resource allocation involves
consideration of both demand and each unit's
resource supply. We formalize this argument,
showing how redeployment arises from "supply-side
inducements"—return advantages in new over existing
resource uses resulting from changes in resource
supply. Empirical tests using manager deaths as an
exogenous, supply-side shock to firms' resource
stocks support our arguments, showing that firms
frequently redeploy resources away from
better-endowed and toward negatively affected
units. Incorporating supply-side inducements into
redeployment theory implies additional
value-creation opportunities from redeployment and
carries novel predictions for the direction of
intra-firm resource flows.
CEOs increasingly engage in activism on
controversial social and political issues that do
not directly affect their core businesses.
Simultaneously, the general public is increasingly
politically polarized. We examine how CEO support
for gun control after two mass shootings
differentially affected the behavior of liberal and
conservative consumers and the persistence of these
effects. Using mobile phone location data to
measure store-level visits, we find (a) consumer
visits to stores decreased by three percent; (b)
this decrease was asymmetric: visits in the most
conservative counties decreased by about five
percent but did not change in the most liberal
counties; and (c) these effects dissipated within
10 weeks after activism. Our results highlight the
strategic implications for executives pressured to
take stances on controversial issues.
The Growth of Hierarchy in Organizations: Managing Knowledge Scope
(with Megan Lawrence)
Strategic Management Journal.
44, no. 13 (December 2023): 3155–3184
Full Text from Journal Website
Theory posits hierarchy as a response to
coordination challenges and emphasizes organization
size and the need to transfer knowledge as the
mainspring of these challenges. This connection,
however, is largely based on the quantity of
knowledge to be transferred rather than its
characteristics. Building on the knowledge-based
view, we propose that knowledge scope—the variety
of knowledge across an organization's
members—affects coordination costs and hierarchy
expansion. Using an economy-wide database from
Brazil, we show that firms are more likely to
expand their hierarchy when knowledge scope
increases. This effect varies with firms'
capacities to manage knowledge; firms whose
employees perform more similar tasks or have shared
experience at previous employers are less likely to
expand hierarchy in response to increases in
knowledge scope.
There have been dozens of high-profile mass
shootings in recent decades. This paper
presents three main findings about the impact
of mass shootings on gun policy. First, mass
shootings evoke large policy responses. A
single mass shooting leads to a 15% increase in
the number of firearm bills introduced within a
state in the year after a mass shooting. This
effect increases with the extent of media
coverage. Second, mass shootings account for a
small portion of all gun deaths, but have an
outsized influence relative to other homicides.
Third, when looking at bills that were actually
enacted into law, the impact of mass shootings
depends on the party in power. The annual
number of laws that loosen gun restrictions
doubles in the year following a mass shooting
in states with Republican-controlled
legislatures. We find no significant effect of
mass shootings on laws enacted when there is a
Democrat-controlled legislature, nor do we find
a significant effect of mass shootings on the
enactment of laws that tighten gun restrictions.
What Makes the Bonding Stick? A Natural Experiment Testing the Legal Bonding Hypothesis
(with Amir N. Licht, Jordan I. Siegel, and Xi Li)
Journal of Financial Economics.
129, no. 2 (August 2018): 329–356
View on Journal Website |
View on SSRN
We use a U.S. Supreme Court case, Morrison v.
National Australia Bank (2010), as a natural
experiment to test the legal bonding hypothesis. By
decreasing the potential liability of U.S.-listed
foreign firms, particularly due to class action
lawsuits, Morrison arguably eroded their
legal bonding to compliance with disclosure duties.
Nevertheless, we find evidence of an increase or
insignificant change in share values. Tests of
longer-run effects of the legal event indicate that
foreign firms' disclosure quality and likelihood of
facing enforcement actions remained stable, as did
investors' revealed preferences for trading on US
markets. These results go against the legal bonding
hypothesis but are consistent with reputational
bonding and with market-based accounts of US
cross-listing. Our results may contribute to
ongoing debate about civil enforcement of
securities laws through class actions.
Handgun Waiting Periods Reduce Gun Deaths
(with Michael Luca and Deepak Malhotra)
Proceedings of the National Academy of Sciences.
114, no. 46 (November 14, 2017): 12162–12165
Open Access Article from PNAS
Handgun waiting periods are laws that impose a
delay between the initiation of a purchase and
final acquisition of a firearm. We show that
waiting periods, which create a "cooling off"
period among buyers, significantly reduce the
incidence of gun violence. We estimate the impact
of waiting periods on gun deaths, exploiting all
changes to state-level policies in the Unites
States since 1970. We find that waiting periods
reduce gun homicides by roughly 17%. We provide
further support for the causal impact of waiting
periods on homicides by exploiting a natural
experiment resulting from a federal law in 1994
that imposed a temporary waiting period on a subset
of states.
Citizens' Perceptions and the Disconnect Between
Economics and Regulatory Policy
(with Jonathan Baron and William T. McEnroe)
In
Regulatory Breakdown: The Crisis of Confidence
in U.S. Regulation. Ed. Cary Coglianese.
Philadelphia, PA: University of Pennsylvania Press, 2012.
View on JSTOR
Economic theory is clear about the advantages and
disadvantages of various ways of regulating
negative externalities, such as command and
control, cap and trade, taxation, subsidies, and
tort law. Yet public policy rarely follows the
recommendations that follow from the theory. For
example, the standard recommendations for reducing
CO2 emissions involve carbon taxes or
some form of cap and trade, but discussions of
"realistic" ways to reduce emissions in the U.S.
have involved mileage standards, command and
control regulation of power plants, and tax
subsidies for energy efficiency. In democracies
such as the U.S., policies must have at least some
public support. Citizens' limited understanding of
the economics of regulation can lead to lack of
support for optimal policies. In studies on the
World Wide Web, we document some failures, and some
successes, of ordinary citizens to think through
the economics of alternative policies. Among other
issues, we examine understanding of the secondary
effects of taxation vs. subsidies, and
understanding of the role of limited information
(on the part of polluters, or governments) in the
choice between command-and-control regulation and
tort law or taxation.