Timothy Simcoe’s research covers topics in innovation, technology, intellectual property, and corporate strategy. He has consulted for major corporations in the information technology sector. During 2014 and 2015, Professor Simcoe served as a senior economist on President Obama’s Council of Economic Advisers. He is a faculty research fellow at the National Bureau of Economic Research, and an editor at several journals, including Management Science.
|Corporate investments in diversity, equity, and inclusion should be expected to generate a monetary return on investment. Disagree||“This question asks whether firms should accept that some investments in DEI may have a negative financial ROI, and I think the answer is yes. All firms face constraints — such as laws — that must be satisfied before they can worry about earning a profit. In that context, one could argue that addressing historical and socioeconomic injustice is part of the cost of every firm’s social license to operate. Of course, DEI initiatives are not always a burden, and when they are, firms need not share those costs equally. But smart managers will recognize that investments in social justice typically serve shareholders’ long-term interests, even if the immediate financial ROI is negative.”|
|The era of dominance for Tesla in the EV market is coming to an end. Agree||“Competition comes for us all. I can’t “strongly agree” only because I am no car industry expert, but all signs point toward increased choice and competition in EVs.”|
|Online education and specialized degrees will supplant the traditional two-year full-time MBA. Agree||“This is definitely true at the margin, but I don’t think online and micro MBAs will “supplant” the traditional MBA in the near future. The online experience is undoubtedly improving. Students who are more sensitive to price and opportunity costs, or who are looking to upskill without switching employers, will find these new formats and options attractive. That will put pressure on B-schools that use in-person, part-time, and evening programs to make up for the lack of scale in the two-year MBA, and it may lead to more concentration in the full-time segment. But there is still plenty of demand for well-rounded managers who can understand an entire business, and if that is what you aspire to, the in-person approach still delivers a lot of value, both inside and outside the classroom.”|
|Starbucks’s plans to increase wages for nonunionized workers is a shortsighted strategy. Neither agree nor disagree||“I don’t know whether or not this is a good strategy. But I don’t think you can call it shortsighted, since they must have some expectations about how this move changes the behavior of workers who would otherwise unionize.”|
|Sanctions against Russia will cause multinational companies to consider human rights protections in supply chains more broadly. Disagree||“A host of recent events (not just the war in Ukraine) should cause firms to reevaluate risks associated with international supply chains. While many health, climate, political, and technological risks are linked to human rights, firms are more likely to respond to these other factors, rather than address human rights issues directly.”|
|Blockchain is more likely to be a sustaining innovation than a disruptive innovation in the financial sector. Agree||“While blockchain already appears “disruptive” in the colloquial sense of changing how things are done, I don’t see any reason to think it is “disruptive” in the strategic management sense of undermining the sources of competitive advantage enjoyed by large, established financial institutions.”|
|The field of strategic management has overlooked the role of corporate purpose in driving business performance. Strongly agree||“The normative debate about business purpose has been with us for a very long time, even if Milton Friedman’s famous answer (“to increase profits”) seemed to settle the matter for much of the 80s through the aughts. Perhaps because that view became so entrenched, management scholars have not produced much credible knowledge about how firms define purpose-beyond-profit, or whether it matters for performance (measured as either profit or some broader set of goals). Scholars like Claudine Gartenberg are starting to fill the gap, and that is exciting. But for this research to make a real impact, it will be important not to overemphasize “doing well by doing good” cases that skirt hard trade-offs, and to develop new and better ways of measuring social impact.”|
|Socially responsible mutual funds are more of a marketing tool than a solution to environmental and social problems. Agree||“Measuring social costs and benefits is very hard. CSR-oriented investment funds rely on third-party metrics that purport to measure corporate environmental and social responsibility, but the evidence that those indices are valid is very weak. So, I agree with the statement, though I also believe that many managers and investors want to do (and not just look) good and that the popularity of these funds sends an important signal about investors’ objectives and beliefs.”|
|When hackers take data hostage, companies should pay the ransom. Disagree||“Perhaps this is arguing the premise, but I think strategy offers two basic lessons on this topic: (1) Plan ahead so you have a backup. (2) A public commitment NOT to pay is one good way to deter hackers before they strike.”|
|Relaxing the rules around physical presence in the office will improve employee productivity and firm performance. Neither agree nor disagree||“Flexibility may raise the productivity of experienced employees. But it will take longer for new hires to acclimate, and creativity will suffer from fewer serendipitous interactions.”|
|The COVID-19 pandemic has permanently changed how companies should think about business strategy. Strongly disagree||
“The answer to this question turns on how one thinks about resiliency and risk management.
Many firms found that their supply chains were not as resilient as they assumed (similar to banks that discovered latent risks in the financial crisis). This will probably lead to greater emphasis on risk management and a reevaluation of some types of operational decisions.
But the pandemic did not alter any of the fundamental lessons about value creation and value capture that form the core of business strategy.”
|The COVID-19 pandemic will lead companies to relocate infrastructure and employees away from dense urban locations. Disagree||“It could happen a bit at the margins, but I don’t think COVID-19 is going to completely reshuffle the geographic deck. There is a lot of sunk investment in large cities and plenty of evidence that economies of density are substantial. The stronger imperative is to build redundancies into international supply chains.”|
|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. Disagree||“So far, experience suggests that most people do not opt in to these programs. It’s hard to see a change unless no-sale becomes the default.”|
|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||“I think large corporations are working on this. They feel pressure from various stakeholders, including some of their larger shareholders like BlackRock. I have no confidence that smaller firms on the competitive fringe are planning for risks created by climate change. And even the largest firms can do little about risk to shared infrastructure.”|
|Antitrust policy should intervene more decisively to limit the scope of large technology platforms. Agree||“This is a sweeping statement, but on balance I agree (and especially so if mobile carriers are included among the ‘large tech platforms’). For some problems, such as privacy, regulation may beat antitrust. But we should toughen up on platform merger review and policing exclusionary practices.”|
|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. Agree||“The auto companies clearly want to stick with a uniform (and more stringent) rule. Despite the DOJ’s threats, they should have antitrust liability under Noerr-Pennington, so I see California succeeding with auto emissions. I’m less informed and more worried about clean water, so it’s just ‘Agree’ instead of ‘Strongly Agree.’”|
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. Agree
|“One can debate the causes, but it's clear that the era of shareholder capitalism — starting with Friedman's op-ed, or maybe Reagan's election — has not been great for U.S. labor, especially compared to capital or top-percentile earners. I hope that this statement reflects a less credulous view of welfare economics among the next generation of top managers.”|
|In the next decade, we will see the first sustainably profitable private commercial activities in space. Strongly agree||“I believe OneWeb (and possibly other private satellite networks) stands a reasonable chance of generating sustainable profits.”|
|Introducing 5G networks 3-5 years ahead of other countries will give Chinese firms an advantage. Strongly disagree||“Which Chinese firms? Not the carriers, for whom competition is local. Not device makers, for whom 5G (because it’s a standard) will not be a differentiating feature. Maybe infrastructure producers, like Huawei or ZTE, but it looks like security concerns will harm them in the U.S., and their real advantage in addressable markets is cost-based.”|
|The increase in stock market volatility that began in 2018 will last for another three to five years. Agree||“My confidence is low on any question about market forecasting. But a working hypothesis is that current volatility reflects some combination of political uncertainties and the length of the expansion. I see few signs that politics will get less volatile over the next few years.”|