Alliance Formation and Firm Value


Management Science

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : firm alliances, matching, competitive advantage

We consider the formation of alliances that potentially create complementarities, that is, when the value function is super-modular in firm resources. We show that, in a frictionless world where information is perfect and managers optimize, firm alliances disproportionately increase the value of high-resource-level firms, resulting in higher variance and higher skewness of the distribution of firm value; moreover, higher-value alliances are subject to regression to the mean at a faster rate. These effects are magnified if the degree of complementarities is endogenously determined by each firm’s investment. We also consider alliances where matching and/or information about firm resources are imperfect, and show that complementarities are a necessary but not sufficient condition for alliances to cause an increase in firm value; and that complementarities are neither a necessary nor a sufficient condition for alliances to be correlated with higher firm value

Bouncing Back: Building Resilience Through Social and Environmental Practices in the Context of the 2008 Global Financial Crisis


Journal of Management

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : organizational resilience; social and environmental practices; strategic and tactical practices; global financial crisis; survival analysis

Even though organizational researchers have acknowledged the role of social and environmental business practices in contributing to organizational resilience, this work remains scarce, possibly because of the difficulties in measuring organizational resilience. In this paper, we aim to partly remedy this issue by measuring two ways in which organizational resilience manifests through organizational outcomes in a generalized environmental disturbance—namely, severity of loss, which captures the stability dimension of resilience, and time to recovery, which captures the flexibility dimension. By isolating these two variables, we can then theorize the types of social and environmental practices that contribute to resilience. Specifically, we argue that strategic social and environmental practices contribute more to organizational resilience than do tactical social and environmental practices. We test our theory by analyzing the responses of 963 U.S.-based firms to the global financial crisis and find evidence that support our hypotheses

Categorizing Institutional Logics, Institutionalizing Categories: A Review of Two Literatures


Academy of Management Annals

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

This review assembles two highly referenced streams of research in organization and management studies over the past decade: institutional logics and categories. We present the gist of each literature focusing on the interaction within and between organizations vis-à-vis the institutional logics and category systems that condition behavior. Then, we suggest that both streams have compatible assumptions that warrant further integration, and suggest opportunities for future research stemming from (1) complementarities related to inter- and intra-audience variance, formation and recombination of logics and categories, and actors’ identity and (2) differences related to theory level of analysis, incorporation of conflict, and methods of analysis. Integration can lead to better specified mechanisms, processes, and contexts important to improving accuracy and development of these research streams

Do stakeholder orientation and environmental pro-activity impact firm profitability?


Journal of Business Ethics

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : Environmental proactivity, Firm profitability, Resource-based theory, Stakeholder orientation, Stakeholder theory

The impact of socially responsible corporate behavior on economic performance is a major preoccupation of managers today. This article explores the links between narrowly defined constructs: stakeholder orientation, environmental proactivity and profitability, from the perspectives of stakeholder theory and resource-based theory. We collected data on the food and beverage, and household and personal products industries. Using structural equation modeling, this paper makes two contributions. We found a negative link between companies simply having a higher stakeholder orientation and profitability. Importantly, however, environmental proactivity not only had a positive impact on profitability, but also appeared to mediate the relationship between stakeholder orientation and profitability. In other words, if a company is more environmentally proactive, it will be more attentive to a broad array of stakeholders, and this will in turn contribute positively to profitability

Family Firms in the Ownership Network: Clustering, Bridging, and Embeddedness


Entrepreneurship: Theory and Practice

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : family firms, community, embeddedness, network

In this paper, we investigate family firms’ position in the intercorporate ownership network. Rooting our predictions in the Behavioral Agency Model and a Network analytical framework, we predict and find that family involvement decreases the likelihood of business group affiliation and of cross-group ties leading to a lower embeddedness within the overall network. We predict and find the opposite effect for community involvement. We use the complete longitudinal dataset of publicly listed firms’ corporate ownership ties in India (2001, 2005, and 2009). Theoretical and substantive contributions are to research on family businesses and to research on interorganizational networks

Firm Non-Market Capabilities and the Effect of Supranational Institutional Safeguards on the Location Choice of International Investments


Strategic Management Journal

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : International investment location choice; non-market capabilities; political connections; supranational institutions; bilateral investment treaties

We investigate the extent to which firms rely on supranational institutional safeguards versus their non-market capabilities to offset the risks of investing abroad. We argue that firms with non-market capabilities are insensitive to supranational institutional safeguards when choosing the location of their international investments. We show that supranational agreements between an investor’s home and host nation, operationalized as Bilateral Investment Treaties (BITs), increase the likelihood of investment, but there is substantial firm heterogeneity with respect to this relationship. Firms with various forms of non-market capabilities are not sensitive to BITs, whereas other firms are more likely to invest under BITs. We advance the understanding of how firm non-market capabilities can substitute for supranational institutional arrangements in addressing risks associated with host country institutional weaknesses

How Do Firm Political Connections Impact Foreign Acquisitions? The Effects of Decision Makers’ Political and Firm Embeddedness


Global Strategy Journal

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : political connections, non-market strategies, foreign acquisitions, French firms, mental models

Research summary: We examine how firm political connections established through the political embeddedness of senior decision makers affect firms’ foreign acquisition strategy. We argue that such political embeddedness affects the mental models of decision makers and, in turn, influences their preferences for particular strategies. We propose that political embeddedness leads to the formation of mental models that favor foreign acquisition strategies. We further argue that the firm embeddedness of politically-embedded decision makers alters their mental models, thereby mitigating their inclination for such strategies. We find evidence consistent with our mental models explanation using a sample of foreign acquisitions made by French publicly-traded firms during the 2009-2014 period. Overall, this study contributes to a better understanding of the mechanisms through which political connections impact global strategy. Managerial summary: We investigate how firm political connections affect firms’ foreign acquisition strategies. We argue that when firms have top decision makers with close connections to the government, they will make more foreign acquisitions. We further argue that this inclination towards foreign acquisitions is primarily driven by non-executive board members, with politically-connected executives appearing to be more reluctant to engage in such strategies. We find evidence consistent with these ideas when examining foreign acquisitions made by French publicly-traded firms managed by graduates of the prestigious ENA government school, which trains many government and senior civil servants in France

NGOs and the Creation of Value in Supply Chains


Strategic Management Journal

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : NGO, Non-Governmental Organizations, Nonprofit, Firm-NGO collaboration, Value creation

Research abstractFirms and NGOs often collaborate to establish new supply chains. With a formal model, we analyze how NGOs can alleviate market failures and improve supplier economic inclusion while strategically interacting with firms. We account for the specific goals of the NGO and the need to induce collaboration between firms and their suppliers. The analysis reveals a "valley of disappointment", when NGO efforts benefit all actors but only marginally the firm. We also show that more powerful firms might prefer to internalize NGO functions, while firms with lower bargaining power and higher investment requirements are better off collaborating with NGOs. Finally, we study NGOs-firms matching patterns and find that firms with higher bargaining power match with NGOs holding stronger capabilities.Managerial abstractThis paper analyzes interactions between firms and NGOs aiming to improve the economic inclusion of suppliers or to promote the adoption of specific (e.g., sustainable) practices. For firm executives, this study shows the constraints and benefits associated with working with NGOs, the conditions under which integration of NGO functions is preferable, as well as the types of NGOs that offer better prospects for a successful collaboration. For NGO executives, it highlights the need to provide enough economic incentives to firms and suppliers alike to ensure their collaboration and the tradeoffs associated with this constraint, in particular if NGO capabilities are limited. Overall, the study provides a comprehensive understanding of how NGO activities can influence value creation in a vertical value chain.

Shine on me: Industry coherence and policy support for emerging industries


Administrative Science Quarterly

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Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : markets, institutional change, institutionalization, social movements, categories

It has long been recognized that government support can catalyze the emergence and growth of new industries. But under what conditions does an emergent category of organizations come to receive state support in the first place? In this paper, we theorize how government support for a nascent industry is jointly determined by the industry's internal features and external forces. We test our arguments by analyzing feed-in-tariff policies for the emergent solar photovoltaics (PV) industry in 28 European countries over more than two decades. We find that feed-in-tariffs were more likely in countries with greater numbers of solar PV producers and in countries where the industry was more coherent, containing fewer producers coming from industries with a contrasting identity. Further, we find that the concentration of the incumbent energy sector enhances the effect of the number of producers on policy support when the industry is coherent, but not when it is incoherent. Our results shed new light on the relationship between public policy and industry category emergence, and extend our understanding of how new industries can attain valuable state support while operating in seemingly hostile environments

Signal Incongruence and Its Consequences: A Study of Media Disapproval and CEO Overcompensation


Organization Science

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Départements : Stratégie et Politique d’Entreprise

Mots clés : media, CEO compensation, social evaluations, philanthropy, signaling

We draw on the signaling and infomediary literatures to examine how media evaluations of CEO overcompensation (a negative cue associated with selfishness and greed) are affected by the presence of corporate philanthropy (a positive cue associated with altruism and generosity). In line with our theory on signal incongruence, we find that firms engaged in philanthropy receive more media disapproval when they overcompensate their CEO, but they are also more likely to decrease CEO overcompensation as a response. Our study contributes to the signaling literature by theorizing about signal incongruence, and to infomediary and corporate governance research by showing that media disapproval can lead to lower executive compensation. We also reconcile two conflicting views on firm prosocial behavior by showing that, in the presence of incongruent cues, philanthropy can simultaneously enhance and damage media evaluations of firms and CEOs. Taken together, these findings shed new light on the media as agents of external corporate governance for firms and open new avenues for research on executive compensation