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Deishin Lee

Assistant Professor of Business Administration

Contact (617) 495-6409
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Published Papers

Lee, Deishin, and Eric J. Van den Steen. "Managing Know-How." Management Science (forthcoming). (Articles in Advance published online on November 25, 2009.) Abstract

We study how firms can use a knowledge management system to optimally leverage employee-generated know-how. In particular, we consider the following practical strategic questions for the manager of a knowledge-intensive firm: should her firm develop a formal knowledge system? And if so, how should it be managed, particularly in terms of what information to record? We find that firms benefit more from a knowledge system when they are larger, face the same issues more frequently, have higher turnover, and face problems about which there is less general knowledge. In terms of what information to record, a key insight is that recording moderately successful practices can be counter-productive, since doing so may inefficiently reduce employees' incentives to experiment. This "strong-form competency trap" forces firms into an exploration-exploitation trade-off. Firms that value a knowledge system most should also be most selective in recording information. We further find that recording successes is more valuable than recording failures, which supports firms' focus on best practice. Beyond these main principles, we also show that it may be optimal to disseminate know-how on a plant-level but not on a firm-level, and that recording back-up solutions is most valuable at medium levels of environmental change.
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Lee, Deishin, and Haim Mendelson. "Divide and Conquer: Competing with Free Technology under Network Effects." Production and Operations Management 17, no. 1 (summer 2008): 12-28. Abstract

We study how a commercial firm competes with a free open source product. The market consists of two customer segments with different preferences and is characterized by positive network effects. The commercial firm makes product and pricing decisions to maximize its profit. The open source developers make product decisions to maximize the weighted sum of the segments' consumer surplus, in addition to their intrinsic motivation. The more importance open source developers attach to consumer surplus, the more effort they put into developing software features. Even if consumers do not end up adopting the open source product, it can act as a credible threat to the commercial firm, forcing the firm to lower its prices. If the open source developers' intrinsic motivation is high enough, they will develop software regardless of eventual market dynamics. If the open source product is available first, all participants are better off when the commercial and open source products are compatible. However, if the commercial firm can enter the market first, it can increase its profits and gain market share by being incompatible with its open source competitor, even if customers can later switch at zero cost. This first-mover advantage does not arise because users are locked in, but because the commercial firm deploys a divide and conquer strategy to attract early adopters and exploit late adopters. To capitalize on its first-mover advantage, the commercial firm must increase its development investment to improve its product features.
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Lee, Deishin, and Haim Mendelson. "Adoption of Information Technology under Network Effects." Information Systems Research 18, no. 4 (December 2007).

Other Papers

Ata, Baris, Deishin Lee, and Mustafa H. Tongarlak. "Operating and Regulating Waste-to-Energy." Working Paper, 2010.

Lee, Deishin. "Turning Waste into By-Product." Harvard Business School Working Paper, No. 07-098, July 2007. (June 2009.) Abstract

This paper studies how the conversion of a waste stream into a useful and saleable by-product affects a firm's optimal operating strategy. We determine whether local implementation can be optimal, i.e., continuing business-as-usual to produce the original product and merely converting the collaterally generated waste stream into by-product, or whether global implementation - that re-optimizes the now joint production process - is required to maximize profit. Whereas local BPS implementation can be managed as if it were an alternate method of waste disposal, global implementation requires managerial attention at a strategic level. To determine which implementation mode is profit-maximizing, we derive optimality conditions for three possible operating regimes. These optimality conditions depend crucially on the waste disposal cost, which acts as a subsidy for the by-product that "consumes" the waste, and also on the virgin raw material cost, which acts as a subsidy for the original product that "feeds" the by-product process. These two costs create a symbiotic relationship between the original product and by-product. Since BPS turns waste into useful raw material, the firm may increase profit by generating more "waste". Although BPS is generally lauded as a win-win for business and the environment, the firm may actually increase emissions if it acts to maximize profit because it increases production to leverage the competitive advantage it gains from its operational synergy.


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HBS Course Materials

Lee, Deishin, Michael W. Toffel, and Rachel Gordon. "Cook Composites and Polymers Co." Harvard Business School Case 608-055. (This case describes how a company improves resource efficiency and process quality in its manufacturing process by developing a waste by-product into a new product. The case describes how CCP cleans production equipment between batches using styrene, which becomes a costly hazardous waste. Having worked on minimizing waste for the past 20 years, CCP believed it could not reduce the use of styrene without risking product quality. Instead, CCP was exploring the development of a by-product from its "rinse styrene," but faces uncertainty regarding the operational, financial, and environmental implications of doing so. This case contains data to support quantitative analyses of financial, operational, and environmental issues including some basic life-cycle analysis (LCA) calculations that focus on greenhouse gas emissions.)

Lee, Deishin, and Michael W. Toffel. "Cook Composites and Polymers Co. (TN)." Harvard Business School Teaching Note 608-079.

Lee, Deishin, and Lionel Bony. "Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability." Harvard Business School Case 607-003.

Lee, Deishin. "Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability (TN)." Harvard Business School Teaching Note 609-013.