The Institute for Business Innovation supports research activities in innovation, entrepreneurship, information technology, dynamic capabilities, intellectual capital, governance, competitive strategy and related fields. The Institute provides this support by disseminating research results, organizing academic conferences and seminars, hosting visiting scholars to pursue joint work with our faculty, administering fellowships to support graduate students, and facilitating the process of grant applications to fund future research. The Institute also publishes the academic journal Industrial and Corporate Change (with Oxford University Press).
Please click on a link to learn more about our research activities:
Faculty Innovation Grants
IBI funds faculty research in the areas of entrepreneurship and innovation through a competitive process open to Haas faculty. In 2018, IBI funded projects examining gaps between theory and evidence in entrepreneurship, the effect of new technologies on finance, and the impact of specific innovations on healthcare and climate change. Below is a short description of the projects funded.
Digital Sales and Inventory Data to Assess Creditworthiness of Microenterprises, by Paul Gertler and Ulrike Malmendier
Microenterprises in developing countries tend not to have digital data on sales and inventories, which hampers their ability to obtain credit. Professors Malmendier and Gertler partnered with a bank, a large supplier of goods and a software developer in the Dominican Republic to introduce digital sales and inventory technology in microenterprises, in this case corner stores of 4-6 employees. After a first pilot with 20 corner stores, which led to improvements in the software and training of users, the researchers plan on implementing and assessing a second pilot of the technology and then conducting a randomized evaluation of the technology’s impact on credit access, business investment, profits and growth. The second pilot will be tested on a new set of 20 corner stores. The randomized evaluation will require a sample size of approximately 700 treated and 700 control businesses (based on power calculations informed by data from the first pilot and data and results from other studies of microenterprises in the literature). Specifically, using a database of eligible corner stores from a large goods supplier, the researchers will randomly select about 700 businesses to receive the technology early in the gradual scale-up, and another 700 businesses—the control group—to receive it one year later. The study will contribute to empirical literature on credit rationing and its impact in developing countries.
Unlocking Credit Access through Technological Innovation, by Brett Green, Paul Gertler and Catherine Wolfram
Pay-as-you-go financing (PAYGO) has emerged as the leading business model for the sale of mobile and solar products in the developing world. The typical PAYGO contract requires the customer to make a modest down payment to take possession of the product followed by frequent small payments that “unlock” the product for some amount of time or usage. PAYGO crucially relies on an embedded lockout technology that allows the financier to remotely and temporarily disable the product. As payments are made, the customer builds equity in their solar home system. Once the pre-specified number of payments have been made, the system unlocks permanently. At this point, the customer has established a credit history with the financier and owns an asset with a lockout technology that can be re-collateralized. This project examines the extent to which the lockout technology embedded in one product can be re-used to facilitate credit for other household investments, such as school fees. The researchers are partnering with the largest PAYGO solar provider in Uganda to evaluate a school-fee loan program that is now offered to solar home system borrowers. First, they will rigorously quantify the impact of the school-fee loan program on enrollment, attendance, test scores, and other outcomes. Second, they will quantify how utilizing the lockout technology affects repayment rates for the school-fee loan. Third, they will evaluate the interaction of offering the school-fee loans with other lending outcomes. For example, does telling customers head of time that they are eligible for school-fee loans increase repayment on solar home systems? And, does receiving the school-fee loan increase subsequent repayment? These experiments will discern the key factors driving payment and usage as well as explore the extent to which the lockout technology can be used more efficiently.
Entrepreneurship, Human Capital, and Liquidity Constraints, by Ross Levine
Entrepreneurship is central to understanding innovation, the commercialization of innovation, economic growth, job creation, and business cycles. But there are major gaps in the study of entrepreneurship concerning the human capital and liquidity constraints facing entrepreneurs, and the behavior of entrepreneurship during the business cycle. Levine and co-author Yona Rubinstein (LSE) develop a theoretical three-sector Roy model that distinguishes between entrepreneurs, salaried employees, and other self-employed. They plan on testing the model’s three major predictions, namely that: (1) entrepreneurs are positively selected on entrepreneurial abilities; but the self-employed are negatively selected on these same factors; (2) entrepreneurs face liquidity constraints; but the self-employed do not; and, (3) entrepreneurship is pro-cyclical but self-employment is counter-cyclical. Evidence on these predictions would materially close the gap between entrepreneurship theory and evidence.
Adoption and Discontinuation by Physicians of Prescription Drug Innovations, by Mathijs De Vaan
The adoption of innovation in health care has the potential to slow down growth of healthcare spending in the United States. Specifically, the adoption or discontinued use of prescription drugs have the potential to reduce cost and improve health care. Newly introduced drugs may provide novel and effective treatment options for patients and drugs that are about to go off- patent often provide room for cheaper alternatives with clinically similar health effects. But despite these seemingly obvious benefits of some drugs over others physicians exhibit substantial variation in the rate at which they adopt new innovations and replace older innovations by generic alternatives. This project aims to understand the antecedents of the adoption and discontinuation of prescription drugs by physicians.
The researcher first identifies all newly introduced prescription drugs in the U.S. and all instances in which a patented prescription drug goes off-patent. The precise timing of these changes is used to construct pre- and post-event windows of observation.
Second, the project uses data in the Massachusetts All Payers Claims Database, which contains remarkably comprehensive information derived from the medical and pharmacy claims of virtually every resident in Massachusetts.
Third, de Vaan collects a dataset of all providers that practice under an MA license. Building on these data, the research explores how innovative new drugs and off-patent events alter treatment.
The first question addressed is how prescription rates of the drugs that are being substituted change in the pre- compared to the post-event window. A second set of analyses will map variation between physicians in the rate at which they substitute one drug for another. The third set of analyses will focus on finding the antecedents of substitution. Specifically, are physicians in large provider groups (compared to doctors in solo or small practices) more or less likely to switch to alternative drugs when they become available?
In sum, this project aims to improve our understanding of how are innovations adopted within a population of physicians. The research has the potential to shed new light on why patients’ outcomes and health care costs vary.
The Value of Public Satellite Imagery for Climate Change Research and Deforestation: Evidence from the Landsat Commercialization Act of 1984,by Abhishek Nagaraj
What is the economic value of publicly-provided satellite imagery? Nagaraj evaluates this question by estimating the impact of the commercialization of Landsat data between 1985- 1994 on climate-change research at a global scale. Adopting a quasi-experimental approach, the research aims to establish a causal link between the lack of low-cost Landsat imagery and climate-change research. Specifically, Nagaraj exploits block-level gaps in Landsat coverage driven by lack of data collection and cloud-coverage in numerous regions around the world combined with discontinuous changes in the cost of access to Landsat images after the Land Remote-Sensing Commercialization Act of 1984. These variations are matched with a novel database that tracks over 70,000 scientific publications that use Landsat imagery. This “big data” approach leverages novel machine-learning algorithms that detect geographical entities from scientific texts to specific Landsat WRS grid-cells. Preliminary findings support the view that the commercialization of Landsat information delayed and harmed the publication of key papers using Landsat information. This research provides some of the first data-driven estimates of the realized value of public Landsat imagery in fueling climate-change research.