Aligning Ambition and Incentives


Journal of Law, Economics and Organization

octobre 2011, vol. 27, n°3, pp.655-688

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Mots clés : Reputation, Asymmetric learning, Relative performance contracts, Transparency

Labor turnover creates longer term career concerns incentives that motivate employees in addition to the short-term monetary incentives provided by the current employer. We analyze how these incentives interact and derive implications for the design of incentive contracts and organizational choice. The main insights stem from a trade-off between “good monetary incentives” and “good reputational incentives.” We show that the principal optimally designs contracts to create ambiguity about agents’ abilities. This may make it optimal to contract on relative performance measures, even though the extant rationales for such schemes are absent. Linking the structure of contracts to organizational design, we show that it can be optimal for the principal to adopt an opaque organization where performance is not verifiable, despite the constraints that this imposes on contracts

Ambiguity Models and the Machina Paradoxes

L. Placido, O. L'HARIDON, A. Baillon

American Economic Review

juin 2011, vol. 101, n°4, pp.1547-1560

Départements : GREGHEC (CNRS)

mail de Marc le 21/01/2010Machina (2009) introduced two examples that falsify Choquet expected utility, presently one of the most popular models of ambiguity. This article shows that Machina's examples falsify not only the model mentioned, but also four other popular models for ambiguity of the literature, namely maxmin expected utility, variational preferences, ??-maxmin, and the smooth model of ambiguity aversion. Thus, Machina's examples pose a challenge to most of the present field of ambiguity. Finally, the paper discusses how an alternative representation of ambiguity-averse preferences works to accommodate the Machina paradoxes and what drives the results. *UTILITY theory *RATE of return *ECONOMICS -- Research *UTILITY functions EXPECTED utility AMBIGUITY

An Empirical Investigation of the Relationship of IS Strategy with Firm Performance

D. Leidner, J. LO, D. Preston

Journal of Strategic Information Systems

2011, vol. 20, n°4, pp.419-437

Départements : Informations Systems and Operations Management, GREGHEC (CNRS)

pas sous affiliation HECGiven the important impact that an IS strategy has on the potential value IS brings to an organization, we develop and test a model of IS Strategy and Firm Performance. Our survey-based study provides strong evidence that firms with defined IS strategies (either IS Innovator or IS Conservative) perform better than those without defined IS strategies. Organizations without a clearly defined IS strategy actually experienced a negative relationship with firm performance. These organizations should realize the potentially negative outcomes of such a lack of strategy and work to extricate themselves before a consistent pattern of investing in IS without clear organizational benefit develops. Furthermore, the study suggests that the IS Innovator strategy is, in particular, associated with more superior firm performance than the IS Conservative strategy under conditions of environmental dynamism. Organizational leaders need to consider the external environments under which their organizations are operating and evaluate the influence those environments may have on their IS strategy's ability to impact performance. Post hoc analysis results also reveal a fourth potential IS strategy, one that strives for ambidexterity. Ambidextrous firms were found to be associated with the most superior performance, leading to a potential extension of the existing IS strategy typology and a call for future research.

An On-line Process Model of Second-Order Cultivation Effects: How Television Cultivates Material Values and Its Consequences for Life Satisfaction


Human Communication Research

janvier 2011, vol. 37, n°1, pp.34-57

Départements : Marketing, GREGHEC (CNRS)

Two studies investigated the interrelations among television viewing, materialism, and life satisfaction, and their underlying processes. Study 1 tested an online process model for television’s cultivation of materialism by manipulating level of materialistic content. Viewing level influenced materialism, but only among participants who reported being transported by the narrative, supporting a processmodel in which cultivation effects for valuejudgments occur online during viewing. Study 2 further investigated television’s cultivation of materialism and its consequences for life satisfaction. A survey of U.S. respondents found cultivation effects for materialism and life satisfaction, and materialism mediated the cultivation effect for life satisfaction, suggesting that television’s specific cultivation of materialism (proximal effect) mediates a more general cultivation effect for life satisfaction (distal effect).

Applying a Transformative Consumer Research Lens to Understanding and Alleviating Poverty

C.P. Blocker, J. Ruth, S. Sridharan, C. Beckwith, A. Ekici, M. Goudie-Hutton, J. Antonio Rosa, B. SAATCIOGLU, D. Talukdar, C. Trujillo, R. Varman

Journal of Research for Consumers

2011, n°19, pp.1-9

Départements : Marketing

Increasing attention to global poverty and the development of market-based solutions forpoverty alleviation continues to motivate a broad array of academicians and practitioners tobetter understand the lives of the poor. Yet, the robust perspectives residing within consumerresearch remain to a large degree under-utilized in these pursuits. This paper articulates howapplying a transformative consumer research (TCR) lens to poverty and its alleviation cangenerate productive insights with potential to positively transform the well-being of poorconsumers.

Approches stratégiques des émissions CO2: figures libres ou figures imposées? Les cas de l'industrie cimentière et de l'industrie chimique [Strategic Approaches of CO2 Emissions: Short Program or Long Program ? The Cases of the Cement Industry and Chemica

D.-L. ARJALIES, C. Goubet, J. Ponssard

Revue Française de Gestion

juin 2011, n°215, pp.123-146

Départements : Comptabilité et Contrôle de Gestion

Mots clés : CO2, Développement durable, Innovation, Stratégie

La capacité des entreprises à transformer une contrainte environnementale en source d'opportunité stratégique est un sujet controversé dans la littérature. S'appuyant sur une étude comparative des stratégies de lutte contre les émissions CO2 mises en place par les industries cimentière et chimique, l'article démontre que la latitude des entreprises à adopter une approche proactive en termes de développement durable est fortement contrainte par les caractéristiques du secteur en termes de dépendance vis-à-vis des ressources naturelles, de flexibilité dans la composition du portefeuille d'activités et de structure du secteur aval.Mots-clefs : CO2 ' Développement Durable ' Innovation ' Stratégie

Are Family-Friendly Workplace Practices A Valuable Firm Resource?


Strategic Management Journal

avril 2011, vol. 32, n°4

Art and Money

W. Goetzmann, L. Renneboog, C. SPAENJERS

American Economic Review

mai 2011, vol. 101, n°3, pp.222-226

Départements : Finance, GREGHEC (CNRS)

This paper investigates the impact of equity markets and top incomes on art prices. Using a newly constructed art market index, we demonstrate that equity market returns have had a significant impact on the price level in the art market over the last two centuries. We also find evidence that an increase in income inequality may lead to higher prices for art. Finally, the results of Johansen's cointegration tests strongly suggest the existence of a long-run relation between top incomes and art prices

Balancing specialized and generic capabilities in the provision of integrated solutions

F. Ceci, A. MASINI

Industrial and Corporate Change

février 2011, vol. 20, n°1, pp.91-131

Départements : Informations Systems and Operations Management, GREGHEC (CNRS)

Mots clés : Capabilities, Integrated Solutions, Cluster Analysis

Integrated bundles of products and services are gaining importance in various sectors and are reshaping the competitive landscape of many industries. They also pose new challenges to established firms, who need to reconfigure their capabilities. Drawing upon the resource-based view and contingency theory, we test a model of fit between environmental requirements and integrated solutions capabilities in the IT sector. We use the model to interpret the current industry structure and analyze its dynamics. The analysis suggests the existence of four different configurations and indicates that differences in fit between environmental variables and strategic choices partially account for performance differences among integrated solution providers. The results also suggest that, although the provision of bundled products and services confers some a priori advantages to IS providers over generic IT firms, these advantages are greater for firms that are able to align their capabilities to the characteristics of their operational environment

Before You Make That Big Decision


Harvard Business Review

2011, vol. June 2011

Départements : Stratégie et Politique d’Entreprise

When an executive makes a big bet, he or she typically relies on the judgment of a team that has put together a proposal for a strategic course of action. After all, the team will have delved into the pros and cons much more deeply than the executive has time to do. The problem is, biases invariably creep into any team’s reasoning—and often dangerously distort its thinking. A team that has fallen in love with its recommendation, for instance, may subconsciously dismiss evidence that contradicts its theories, give far too much weight to one piece of data, or make faulty comparisons to another business case.That’s why, with important decisions, executives need to conduct a careful review not only of the content of recommendations but of the recommendation process. To that end, the authors—Kahneman, who won a Nobel Prize in economics for his work on cognitive biases; Lovallo of the University of Sydney; and Sibony of McKinsey—have put together a 12-question checklist intended to unearth and neutralize defects in teams’ thinking. These questions help leaders examine whether a team has explored alternatives appropriately, gathered all the right information, and used well-grounded numbers to support its case. They also highlight considerations such as whether the team might be unduly influenced by self-interest, overconfidence, or attachment to past decisions.By using this practical tool, executives will build decision processes over time that reduce the effects of biases and upgrade the quality of decisions their organizations make. The payoffs can be significant: A recent McKinsey study of more than 1,000 business investments, for instance, showed that when companies worked to reduce the effects of bias, they raised their returns on investment by seven percentage points.Executives need to realize that the judgment of even highly experienced, superbly competent managers can be fallible. A disciplined decision-making process, not individual genius, is the key to good strategy