Professor Stern explores how innovation and entrepreneurship differ from more traditional economic activities, and the consequences of these differences for strategy and policy. His research in the economics of innovation and entrepreneurship focuses on entrepreneurial strategy, innovation-driven entrepreneurial ecosystems, and innovation policy and management.
Voting History
| Statement | Response |
|---|---|
| The U.S. Federal Trade Commission’s proposed ban on noncompete agreements will impact innovation and entrepreneurship outside of existing technology hubs. Strongly agree | “A ban on noncompetes will induce more competition for knowledge workers in local labor markets, particularly those where there is a relatively small number of potential employers (that is, nontech hubs). The fantastic work of Matt Marx (and colleagues with important follow-on work) has demonstrated the impact of noncompetes on reducing innovation and entrepreneurship, and, while it will take some time to unfold, banning noncompetes is a targeted policy change that has a high likelihood of spurring high-quality startups and innovation. There are also likely to be more minor impacts in terms of investments by corporations in their workers, but my read of the evidence is that these effects are small relative to the upgrading of labor markets due to competition and flexibility.” |
| The diametric experiences of Disney and UEFA illustrate that firms should refrain from making political statements in support of particular stakeholders. Disagree | “While companies (correctly) need to choose their battles in terms of what broader social and environmental challenges to champion, their engagement with key stakeholders can be powerfully shaped by their ability to stand “for something” that aligns with the core value that the company delivers. Indeed, the mistake of Bob Chapek at Disney was not so much that he did not speak out but that he was too tentative early on (creating a political opportunity for an ambitious Ron DeSantis). Bob Iger seems to have righted the ship by standing up clearly and linking the fight with Florida to Disney’s core values.” |
| BP’s decision to dial back plans for cutting oil and gas production shows that short-term financial performance pressure will make it difficult for many firms to transition their strategies toward more sustainable business models. Agree | “The energy transition will be achieved by setting appropriate prices on carbon and fundamental investments in innovation and the commercialization of competitive sustainable energy. Unless companies have clear incentives to commit to an energy transition, they are unlikely to make that transition of their own accord. The primary driver for energy transition is a change in the business environment that rewards transition rather than the current environment, which continues to reward further exploitation of fossil fuel.” |
| New salary transparency laws will cause companies to increase bonus pay and other nonreportable perks as a share of total compensation. Disagree | “This is a great topic where we are learning more every day (for example, through the fantastic work of Zoe Cullen and coauthors). The primary impacts of pay transparency are to increase visible wage compression for comparable jobs, reduce individual worker bargaining power (and indeed reduce average pay for stayers), and increase (at least at first) quit rates and efficient reallocation while workers identify more generous employers. While there will be instances where particularly valuable workers may end up with more “nonvisible” perks, I believe this will be the exception rather than the rule. Pay transparency increases the degree of labor market competition on the basis of observable wages and job characteristics, reducing the overall salience of nonvisible compensation.” |
| Charging for user verification will lead to increased user engagement and trust on Twitter. Agree |
“The fundamental error of social media platforms is that, due to the “cold start” problem at founding, social platforms have adopted an ad-supported model in which “users” cannot pay (even if they would like to!). This has been, to first approximation, a disaster for our civics and democracy.
Giving users an option to pay (for value-added services such as user verification, promotion of Tweets, and more tailored incoming ads) can refocus Twitter on value creation for users (not just on ads) and so encourage the development of a meaningful and effective public square (what the paying users want!). But the problem is that Elon Musk seems to be implementing this approach in a haphazard way that may cause more damage than good (not only for Twitter but also for society).” |
| Corporate investments in diversity, equity, and inclusion should be expected to generate a monetary return on investment. Disagree | “Investment in DEI certainly has the potential to also generate a monetary ROI but should be aimed at how organizations ensure DEI objectives in their workforces and with other stakeholders. While there are certainly opportunities to leverage DEI directly for competitive advantage (such as in an industry that has historic patterns of discrimination that lower productivity), adopting DEI leads to consequences of mitigating the ability of any given firm to be advantaged.” |
| Starbucks’s plans to increase wages for nonunionized workers is a shortsighted strategy. Agree | “While the decision to raise wages to $15 per hour reflect the tight labor market, Starbucks has a more serious challenge in reestablishing a more collaborative relationship with its workers in the face of unionization. To date, Starbucks has ended up in the worst of both worlds; it has not been ambitious enough to deter unionization, and its half-hearted efforts have likely only fueled further commitment to the labor movement.” |
| Sanctions against Russia will cause multinational companies to consider human rights protections in supply chains more broadly. Neither agree nor disagree | “The Russian invasion of Ukraine is prompting managers to rethink their risks to global security disruptions. The concern over global supply chains was already heightened during COVID but now has put broader geopolitical risks and human rights front and center. How much this will impact actual operations, strategy, and investment remains to be seen.” |
| The field of strategic management has overlooked the role of corporate purpose in driving business performance. Disagree | “Corporate purpose (and focus) are a key tenet of both academic and practitioner discussions within strategic management. Indeed, the “strategy” field considers the role of corporate purpose more systematically than either traditional economics or finance (though perhaps less systematically than our colleagues in organizational behavior). However, despite this long-standing interest (that goes back at least to Edith Penrose and [has been] a topic of research and practice since Bartlett and Ghoshal (1994), there is no agreed-upon framework for how to choose a corporate purpose or the role of corporate purpose in shaping financial performance. Recent empirical research (e.g., by Claudine Gartenberg and coauthors, and Don Sull and coauthors) offers a path for empirical study going forward.” |
| Socially responsible mutual funds are more of a marketing tool than a solution to environmental and social problems. Neither agree nor disagree | “While some “triple bottom line” mutual funds (and other investment vehicles) are pure marketing (dubious metrics, etc.), there are many that are putting their money where their mouth is and are beginning to have a meaningful impact on overall investor demand. There needs to be a significant upgrade (and holistic approach) toward ESG, but there is now momentum toward more accountable investing, particularly in the area of climate.” |
| When hackers take data hostage, companies should pay the ransom. Disagree | “This is a great question, but it is hard to pin down an easy answer. The most obvious point is that companies today need to proactively invest in ensuring that their data is not being taken hostage — at least since Sony, it has been clear how vulnerable corporates are. And, I think that large corporates have a responsibility to overcome this challenge (and paying the ransom only exacerbates the problem going forward). However, for a midsized corporate or startup (or municipal government), I can understand how they might be hacked and also why they might end up paying. On the margin, I disagree, but I also believe that the problem defies an easy solution for managers.” |
| Relaxing the rules around physical presence in the office will improve employee productivity and firm performance. Disagree | “While I agree that identifying opportunities to work from home and remotely are here to stay (and valuable), I think the precise problem is with the idea of ‘relaxing the rules.’ Indeed, proactive companies need to reestablish their post-COVID-19 workplace culture through clear expectations and norms for their workforce. In-person presence is a coordination game, and so the incentives of each individual may be very different than what is best for the firm. Allowing workers to work from home for n days per week (say, moving to Monday-Tuesday-Thursday in office, and Wednesday-Friday from home) is likely to be more effective over the long run than simply relaxing the rules.” |
| The COVID-19 pandemic has permanently changed how companies should think about business strategy. Disagree | “COVID-19 has changed a lot of things, some of them permanently. However, it has not changed the foundational drivers of value creation and capture, nor the broad structure about what managers, entrepreneurs, and leaders can do to shape the potential to drive value creation and capture through active strategic choice. With that said, COVID has opened up new opportunities for companies (e.g., digital transformation, remote work) and also accelerated competitive pressure in other areas.” |
| The COVID-19 pandemic will lead companies to relocate infrastructure and employees away from dense urban locations. Agree | “High uncertainty — but likely to reduce tendency toward agglomeration at least in the medium term.” |
| The California Consumer Privacy Act will undermine the targeted advertising market by giving consumers the right to opt out of allowing companies to sell personal data to third parties. Neither agree nor disagree | “Like GDPR, the CCPA will shift targeted advertising — and involve more clicks (!) and perhaps more public information in targeting efforts — but is unlikely to significantly reduce the overall incidence of targeted ads over the long term.” |
| In the wake of recent climate-related disasters and related events, such as the bankruptcy of PG&E, corporations are now planning for the increased operational risks and potential liabilities caused by climate change. Agree | “It is clear some firms are starting to plan and that this number is growing rapidly, but many corporates — particularly in emerging economies — are still ‘head in the sand.‘ At the end of the day, global emissions keep rising (even if emissions per unit of GDP is falling).” |
| Antitrust policy should intervene more decisively to limit the scope of large technology platforms. Neither agree nor disagree | “While antitrust should be far more proactive promoting competition among platforms, we are asking too much of antitrust to address the main policy challenges — privacy, distortions from ad platforms, misinformation. For example, the player with arguably the most ‘traditional’ market power (Apple) attracts arguably the least antitrust concern. We need regulation directly addressing core issues.” |
| U.S. regulations have been rolled back in a number of areas, including emissions standards and clean water. Companies will decide to voluntarily adhere to rules that closely resemble the original standards. Neither agree nor disagree | “It is a good question, but I think it will vary by sector (a lot!). For those with long cycles and global markets (e.g., autos), they will likely sustain regulation in anticipation of future standards. Where firms have opportunity for transitory advantage or irreversibility (e.g., mining), [we are] much more likely to see exploitation of weakness standards.” |
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The Business Roundtable’s new Statement on the Purpose of a Corporation indicates a shift away from shareholder value maximization as the sole purpose of the corporation and toward a broader view of value creation. This shift will have material impact on the well-being of U.S. workers. Disagree |
“Declaration does not have any meaningful commitment device. [It's] more likely to diffuse accountability than enhance worker well-being. [We] would need change in corporate governance (labor board seats) and changes in law (union strength) to move the dial.” |
| In the next decade, we will see the first sustainably profitable private commercial activities in space. Agree | “There is a fledgling investment boom, but the feasibility of space as an industry (beyond telecom and mapping satellites) requires [not only] engineering feasibility but the creation of economic value.” |