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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2022 Grand Challenge: Stakeholder Capitalism
Market-Based Solutions to Vital Economic Issues

strategy and entrepreneurship


Zach Clayton of Three Ships and Bill George of Harvard Business School, co-authors of the book “True North: Emerging Leader Edition,” spoke about the challenges and benefits of stakeholder capitalism as part of their appearance at a Dean’s Speaker Series event at UNC Kenan-Flagler Business School. Clayton describes stakeholder capitalism as a new way to describe the long-standing idea that businesses are rooted in their communities, care about their employees and want to improve the lives of their customers. Says George: “I think it all starts with having clarity about the purpose of your company and what its values are.”

Employee spinouts, defined as startups founded by prior employees of an industry firm, play a critical role in firm creation and knowledge transfer. Their superior performance often arises from resources and knowledge accrued during employment in parent firms. An understudied question is whether prior employment in parent firms impacts an employee

Financial intermediaries often provide guarantees resembling out-of-the-money put options, exposing them to undiversifiable tail risk. We present a model in the context of the U.S. life insurance industry in which the regulatory framework incentivizes value-maximizing insurers to hedge variable annuity (VA) guarantees, though imperfectly, and shift risks into high-risk and illiquid bonds. We calibrate the model to insurer-level data and identify the VA-induced changes in insurers' risk exposures.

Faced with demand uncertainty and heterogeneity in a nascent industry, entrants often consider how many customer segments to serve by tailoring the usage breadth of their product portfolios. Portfolio usage breadth is the extent to which products in a portfolio collectively span distinct customer segments. We suggest that when entrants have use experience in contexts that are potential users of the new product, their portfolios exhibit low usage breadth, due to demand-oriented cognition and knowledge.

How leaders can recast innovation's toughest trade-offs—efficiency vs. flexibility, consistency vs. change, product vs purpose—as productive tensions.

Mar 1, 2022

Managing Hybrid Work

As we return to a new normal post-pandemic, organizational and individual work arrangements will have to be designed to take into account that employees will range from not wanting to give up their autonomy of working from home to those who will want to come rushing back to the physical office. However, a large swath of the workforce will be somewhere in the middle. They would like to mix and match the benefits of working remotely and the advantages of coming to physical offices.

As of 2019, salary history bans were enacted by 17 states and Puerto Rico with the stated purpose of reducing the gender pay gap. We argue that salary history bans may negatively affect wages as employers lose an informative signal of worker productivity. We empirically evaluate these laws using a large panel dataset of disaggregated wages covering all public-sector employees in 36 states and find, on average, that salary history bans lead to a 3% decrease in new-hire wages.

Using 391 high-skilled firm entries in the U.S. from 1990–2010, we estimate the effects of the firm entry on incumbent residents’ consumption, finances, and mobility. We compare outcomes for residents living close to the entry location with those living far away while controlling for their proximity to potential high-skilled firm entry sites.

How does sentiment in a pitch affect an entrepreneur’s fundraising outcomes? Although research suggests that negativity in entrepreneurial “pitches” to investors adversely impacts resource acquisition, there is a lack of empirical research showing whether, and to what extent, this is true. We study over 30,000 entrepreneurial loan requests from one of the largest loan marketplaces to understand how the sentiment in text-only pitches to investors affects fundraising. In contrast to prior literature, we find that negatively-worded pitches are funded faster than positively-worded ones.

The Trends in Entrepreneurship Report brings together expertise and data from academia, industry and policy to highlight relevant topics facing entrepreneurs and investors today. For the 2022 annual report, we invited researchers to submit trends based on their own emerging research. We welcomed submissions related to current topics in entrepreneurship, with a particular interest on trends related to funding; ecosystems; teams and talent; emerging technologies; and addressing diversity, equity and inclusion in entrepreneurship and small business. Each trend was reviewed for quality and relevance by our editorial board

Do founder-CEOs have an expiration date? In the wake of Jack Dorsey’s resignation from Twitter, some have begun asking whether the move could herald a new era, in which founders voluntarily step aside rather than sticking around for decades or waiting to be ousted. To explore the value added by a founder-CEO, the authors analyzed stock price and financial performance data from more than 2,000 publicly traded companies.

Following state-level legal changes that increase labor dismissal costs, firms increase their innovation in new processes that facilitate the adoption of cost-saving production methods, especially in industries with a large share of labor costs in total costs. Firms with high innovation ability exhibit larger increases in process innovation and capital-labor ratios, an effect driven by both increases in capital investment and decreases in employment. By facilitating the adjustment of the input mix when conditions in input markets change, innovation ability allows firms to mitigate value losses and is a key driver of their performance.