April 18, 2017
Scott Stern of MIT and Josh Lerner of Harvard Business School, Organizers

Andreas Nilsson, Stockholm School of Economics, and David T. Robinson, Duke University and NBER

What is the Business of Business? (NBER Working Paper No. 23505)

This paper develops a simple framework for understanding the emergence of new organizational forms, such as socially responsible firms and social entrepreneurs, that embody the private sector's efforts to resolve problems that typically have been within the purview of government and traditional public charities. Nilsson and Robinson consider organizations that can generate both financial and social returns. Differences in the technologies between the for-profit sector and the social sector give rise to comparative advantages and play a key part in the analysis. This allows the researchers to analyze the conditions under which hybrid organizations emerge in place of traditional charities and profit-maximizers.

Aaron Chatterji, Duke University and NBER

Innovation and American K-12 Education (NBER Working Paper No. 23531)

Economists have long believed that education is essential to the acquisition of human capital and driving economic growth. However, there is concern about the quality and costs of the K-12 education system in the United States and the implications for the development of the nation's future workforce. There have been calls for more innovation in K-12 education, leveraging technology in the classroom and experimenting with different organizing models for schools, both as a means to lower costs and increase quality. In this paper, Chatterji reviews the economics literature at the intersection between innovation and K-12 education from two different, but related, perspectives. First, he summarizes the evidence about the efficacy of technological and other innovations in the classroom. Second, Chatterji discusses the state of research on how the American K-12 system influences the production of innovators and entrepreneurs. In both instances, he identifies implications for policy and opportunities for future research to generate actionable insights.

Glenn Ellison, MIT and NBER, and Sara Fisher Ellison, MIT

Search and Obfuscation in a Technologically Changing Retail Environment: Some Thoughts on Implications and Policy

Technologies, especially the Internet, have transformed how consumers search for products and prices. Price search has become cheap and easy and, therefore, ubiquitous, for many products. Just as technologies have made price search easier, however, they have increased incentives that firms have to obfuscate, or make price search harder. In this article, Ellison and Fisher Ellison focus on these actions that firms take and their effects on market participants. The researchers discuss empirical evidence on this phenomenon as well as its welfare impacts in the context of theories of search and obfuscation. Finally, they offer a framework for thinking about policy interventions based on this welfare analysis and outline some of the challenges facing policy makers.

Steven N. Kaplan, the University of Chicago and NBER

Are U.S. Companies Too Short-Term Oriented? Some Thoughts

U.S. companies are often criticized as overly short-term oriented. Kaplan documents that those criticisms have a long history, going back at least thirty-five years. Kaplan then considers the implications of sustained short-termism for corporate profits, venture capital investment and returns, private equity investment and returns, and corporate valuations. He finds little long-term evidence that is consistent with the predictions of the short-term critics.

Olav Sorenson, Yale University

Innovation Policy in a Networked World (NBER Working Paper No. 23431)

Social relationships channel information, influence, and access to scarce resources. As a consequence, social networks — the patterns of these relationships across the members of a community — influence who comes up with important innovations, whether and how rapidly those innovations get adopted, and who has the ability to commercialize them. They therefore also a ect the overall rate at which innovation occurs in the economy. In this essay, Sorenson provides an introduction to and review of the research on social networks most relevant to innovation, with a particular focus on the earliest stages of the innovation process. It then discusses the likely consequences of a variety of policy interventions that could either reduce the importance of social relationships to innovation or alter the patterns of relationships in ways that might promote innovation.

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