Strategy Forum / Panelist

Scott Stern

MIT Sloan School of Management

Massachusetts Institute of Technology

United States

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
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.”
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.”
Introducing 5G networks 3-5 years ahead of other countries will give Chinese firms an advantage. Agree “There are multiple versions of 5G, and many companies and countries are trying to leapfrog in this area, but some of the key strategic adoption initiatives in China are likely to allow Chinese firms such as Huawei to have some advantages over competitors such as Ericsson and Nokia. But not sure if these advantages are decisive.”
The increase in stock market volatility that began in 2018 will last for another three to five years. Agree “Definitely not my area of expertise, but significant global uncertainty and differences in beliefs among investors seem likely to persist.”
A hard Brexit will have a significant negative impact on many businesses, even if they do not have a U.K. or European presence. Agree “With London as a center for global finance, the potential for global macro effects seems significant, and uncertainty itself can be a source of hysteresis (see Nick Bloom and coauthors). It seems like most people believe that ‘something will be worked out,’ but it is not clear what will be done or by whom, to avoid significant economic impact on firms regardless of location.”
China is no longer the most attractive growth opportunity for Western multinationals. Agree “There are a large number of emerging markets including Africa, MENA, and Southeast Asia. China continues to grow but seems less a unique juggernaut.”
In the next five years, the blockchain will have a transformative effect on finance in emerging markets. Strongly disagree “Blockchain has been seeking an application for more than a decade to no avail. While there are important use cases (e.g., Ripple international settlement), blockchain will survive as the use of cloud databases by distributed players who agree on particular verification standards increases. In the absence of a separate fundamental innovation, this will be an incremental rather than transformative advance.”
In the absence of a carbon tax, industry self-regulation can help mitigate the worst fallout from climate change. Disagree “In the absence of an effective price for carbon, industry self-regulation is likely to have at best a very small impact on global climate emissions (even though emissions may go down dramatically in some regions [Europe] or industries [IT]). The problem is that, even if a given group reduces emissions, the overall impact of emissions depends on global output.”