Lynn Wu

Lynn Wu and Ranthsbotham, Sam (2024), Can AI Help Your Company Innovate? It Depends, Harvard Business Review, 102 (4).

Lynn Wu, Bowen Lou, Lorin M. Hitt (2024), Innovation Strategy After IPO: How Data Analytics Mitigates the Post-IPO Decline in Innovation, Management Science.

Abstract: We examine the role of data analytics in facilitating innovation in firms that have gone through an initial public offering (IPO). It has been documented that an IPO is associated with a decline in innovation despite the infusion of capital from the IPO that should have spurred innovation. Using patent data for over 2,000 firms, we find that firms that possess or acquire data analytics capability experience a smaller decline in innovation compared to similar firms that have not acquired that capability. Moreover, we find this sustained rate of innovation is driven principally by the continued development of innovations that either combine existing technologies into new ones or reuse existing innovations by applying them to new problem domains—both forms of innovation that are especially well-supported by analytics. Our results suggest that the increased deployment of analytics may reduce some of the innovation decline of IPOs, and that investors and managers can potentially mitigate post-IPO reductions in innovative output by directing newly acquired capital to the acquisition of analytics capabilities.

bryan hong and Lynn Wu (2023), How Robots Can Enhance Performance Management for Humans, Sloan Management Review, 64 (4), pp. 1-3.

Abstract: New research finds that individuals’ performance can be measured more accurately when robots work alongside them.

Xiaoning Wang and Lynn Wu (2023), Social Media Alleviates Venture Capital Funding Inequality for Women and Less Connected Entrepreneurs, Management Science, 70 (2).

Abstract: Startups are increasingly using social media to signal quality and provide information to potential investors. However, the effectiveness of social media on VC financing is likely to be heterogeneous, differing by demographic and network characteristics of the venture management team. In this paper, we examine whether social media use can improve funding outcomes for firms founded by women and by other people also lacking connections to the investor network, two groups who face greater difficulties in securing VC financing. Using Twitter data and data on VC investment in startups from Crunchbase, we explore the interaction effect between Twitter usage and gender, and between Twitter usage and the network constraint measure. Overall, we show that social media can mitigate some disparities in financing experienced by these firms through improving information access. We find this effect is stronger for first-time entrepreneurs than for experienced ones, stronger for attracting new investors than repeat ones, and stronger in more competitive markets. Collectively, these results suggest that social media could primarily help women and less-connected individuals obtain financing by alleviating information asymmetry between founders and investors.

Victoria Sevcenko, Lynn Wu, Olenka Kacperczyk, Sendil Ethiraj (2022), Surplus Division between Labor and Capital: A Review and Research Agenda, Academy of Management Annals, 16 (1).

Abstract: The division of firm surplus between labor and shareholders, and its impact on firms’ value creation, are central topics in strategy theory and practice. Early studies of value appropriation within firms devoted considerable attention to the dynamics of bargaining between labor— typically, organized labor—and the owners of capital. Since the 1960s, however, a decline in unionization across most of the major economies and a series of technological and economic changes have led to profound shifts in the bargaining process between labor and capital. This review synthesizes the findings of prior literature and argues for three increasingly important and often-overlooked consequences of these changes. First, individual bargaining has dramatically expanded the range of worker characteristics, values, and preferences that can now be accommodated in employment arrangements. Second, surplus division has become a strategic variable that organizations can differentiate on. Third, labor-market institutions have become more varied, and their role in setting the terms of negotiation has become more prominent.

Jay Dixon, bryan hong, Lynn Wu (2021), The Robot Revolution: Managerial and Employment Consequences for Firms, Management Science, 67 (9).

Abstract: As a new general-purpose technology, robots have the potential to radically transform industries and affect employment. Preliminary empirical studies using industry and geographic region-level data have shown that robots differ from prior general-purpose technologies and predict substantial negative effects on employment. Using novel firm-level data, we show that investments in robotics are associated with increased employee turnover, but also an increase in total employment within the firm. Examining changes in labor composition, we find that manager headcount has decreased but non-managerial employee headcount has increased, suggesting that robots displace managerial work that in prior waves of technology adoption was considered more difficult to replace. However, we also find that firms are more likely to hire managers from outside the firm and invest in additional training, suggesting that firms require different employee skills as the nature of work changes with robot investment. We also provide additional evidence that robot investments are not generally motivated by the desire to reduce labor costs but are instead related to an increased focus on improving product and service quality. With respect to changes in the way work is organized within the firm, we find that robot adoption predicts organizational changes in ways that differ from prior technologies. While information technology has generally been found to decentralize decision-making authority within organizational hierarchies, we find that robots can either centralize or decentralize decision-making, depending on the task. Overall, our results suggest that the impact of robots on employment is more nuanced than prior studies have shown.

Lynn Wu and Gerald Kane (2021), Network-biased Technical Change: How Information Management Tools Overcome Some Biases but Exacerbate Others, Organization Science, 32 (2), pp. 273-292.

Abstract: Organizations have long sought to improve employee performance by managing knowledge more effectively. In this paper, we test whether the adoption of digital tools for expertise search and access within an organization, often referred to as a support to an organization’s transactive memory system (TMS), improves employee performance. Using three years of data from more than 1,000 employees at a large professional services firm, we find that adopting an expertise search tool improves employee performance on financial dimensions, which results from improvements in network connections and information diversity. However, it does not affect all employees equally. We find that two types of employees appear to benefit from adoption more than others. First, traditionally information-disadvantaged employees (junior employees and women) appear to gain more from the adoption of Digital TMS tools (DTMS) because the tool overcomes the institutional barriers to resource access that these employees face in searching for knowledge. Second, employees with greater structural capital at the time of adoption also benefit more, because the tool eliminates natural networking barriers present in traditional offline interpersonal networks, allowing these employees to network more strategically. We also find that communication volume increases more for junior employees and women and increases it less for people with strong social networks, suggesting the mechanisms that benefit people with strong networks differ from those for women and junior employees, a finding consistent with our theoretical mechanisms. Taken together, an important implication of these findings is that implementing and adopting expert search tools for TMS has the potential to shift organizational sources of power and influence away from demographic-based characteristics and toward network-based ones—a characteristic we call “network-biased technical change.”

Bowen Lou and Lynn Wu (2021), AI on Drugs: Can Artificial Intelligence Accelerate Drug Development? Evidence from a Large-scale Examination of Bio-pharma Firms, MISQ, 45 (3).

Abstract: Advances in artificial intelligence (AI) could potentially reduce the complexities and costs in drug discovery. Using a resource-based view, we develop an AI innovation capability and find it to help firms identify new drug-target pairs for preclinical studies. The effect is particularly pronounced for developing new drugs whose mechanism of impact on a disease is known and for drugs at the medium level of chemical novelty. However, AI is less helpful in developing drugs when there is no existing therapy. AI is also less helpful for drugs that are either entirely novel or those that are incremental “me-too” drugs. Examining AI skills, a key component of AI innovation capabilities, we find that a main effect of AI innovation capabilities come from employees possessing the combination of AI skills and domain expertise in drug discovery as opposed to employees possessing AI skills only. Having the combination is key because developing and improving AI tools is an iterative process requiring synthesizing inputs from both AI and domain experts. Taken together, our study sheds light on both the advantages and the limitations of using AI in drug discovery and how to effectively manage AI resources for drug development.

Lynn Wu, Lorin M. Hitt, Bowen Lou (2020), Data Analytics Skills, Innovation and Firm Productivity, Management Science, 66 (5), pp. 1783-2290.

Abstract: We examine the relationship between data analytics capabilities and innovation using detailed firm-level data. To measure innovation, we first utilize a survey to capture two types of innovation practices, process improvement and new technology development for 331 firms. We then use patent data to further analyze new technology development for a broader sample of more than 2,000 publicly-traded firms. We find that data analytics capabilities are more likely to be present and are more valuable in firms that are oriented around process improvement and that create new technologies by combining a diverse set of existing technologies than they are in firms that are focused on generating entirely new technologies. These results are consistent with the theory that data analytics are complementary to certain types of innovation because they enable firms to expand the search space of existing knowledge to combine into new technologies, as well as prior theoretical arguments that data analytics support incremental process improvements. Data analytics appear less effective for developing entirely new technologies or creating combinations involving a few areas of knowledge, innovative approaches where there is either limited data or limited value in integrating diverse knowledge. Overall, our results suggest firms that have historically focused in specific types of innovation—process innovation and innovation by diverse recombination—may become the leading investors in data analytics and receive the most benefits from it.

C. Eesley and Lynn Wu (2020), For Startups, Adaptability and Mentor Network Diversity can be Pivotal: Evidence from a Randomized Experiment on a MOOC Platform, MISQ, 44 (5), pp. 661-697.

Abstract: Entrepreneurs leading digital ventures are often advised to be adaptable. However, research on how to pursue adaptable strategies and whether such strategies improve short- or long-term digital venture outcomes is sparse. By utilizing the ability to control content presentation and to measure outcomes through a course using a MOOC platform, we can introduce exogenous variation in strategies and mentorship characteristics, and link these attributes to venture outcomes over time. Contrary to expectations, we find that minimizing adaptability by adhering to a strong, persistent vision often results in better short-term outcomes as measured by quality of the pitch in digital startups. It also however results in worse long-term outcomes as measured by revenue, funding, and pivoting to a new venture. A more adaptable approach, when combined with a mentor who can facilitate this strategy by providing access to a structurally diverse social network, can offer the best combination of short- and long-run outcomes. The results suggest that guidance on mentor selection—especially selecting for the mentor’s social network attributes—is important over time for reaping the benefits of an adaptable strategy, particularly for digital ventures at their early-stage.