Cahiers de recherche

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Départements : Marketing, GREGHEC (CNRS)

Conventional wisdom holds that service failure creates customer misery and reduces firm profitability. This paper challenges this view and shows that occasional service failure can be profitable for the firm when optional protection against the resulting customer misery can be marketed. It also shows that a firm that uses such a protection strategy inflicts a calculated misery on unprotected customers and wastes resources to provide the protection. Despite these inefficiencies, using the protection strategy can lead to market expansion and social welfare gains due to lower prices

Mots clés : Service Failure, Customer Damage, Random Versioning

Départements : Finance, GREGHEC (CNRS)

This paper develops a model in which traders receive a stream of private signals, and differ in their information processing speed. In equilibrium, the fast traders (FTs) quickly reveal a large fraction of their information, and generate most of the volume, volatility and profits in the market. If a FT is averse to holding inventory, his optimal strategy changes considerably as his aversion crosses a threshold. He no longer takes long-term bets on the asset value, gets most of his profits in cash, and generates a "hot potato" effect: after trading on information, the FT quickly unloads part of his inventory to slower traders. The results match evidence about high frequency traders

Mots clés : Trading volume, inventory, volatility, high frequency trading, price impact, mean reversion

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

This paper examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that, as a result of the economic crisis, budgeting became more important for planning and resource allocation but less important for performance evaluation. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises.

Mots clés : Budgeting, budgeting functions, economic crisis, crisis management

Départements : Marketing, GREGHEC (CNRS)

When developing new brand names, marketers face the dilemma of how similar their new brand name is or should be to familiar brand names in the market. The current research tests the complete range of conditions exploring how the degree of similarity of a new brand name to an existing one may affect attitudes toward the new brand name. The authors first replicate an inverted-U pattern suggested by congruency theories. However, this result holds only in the case of positive pre-existing attitudes toward familiar brand names. Additional tests demonstrate a U-shaped pattern in the case of negative attitudes toward familiar brand names, and a linear relation between similarity and attitudes in the case of no pre-existing attitudes toward familiar brand names. A field study replicates these findings, testing actual choice of products that bear different levels of resemblance to real positive and negative brand names (Oreo and Spam).

Mots clés : Brand name, Branding, Brand attitudes, Similarity, Familiarity, Innovation

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

Research summaryWe examine how human-capital-intensive firms deploy their human assets and how firm-specific human capital interacts with incentives to influence this deployment. Our empirical context is the UK M&A legal market, where micro-data enable us to observe the allocation of lawyers to M&A mandates under different incentive regimes. We find that law firms actively equalize the workload among their lawyers to seek efficiency gains while ‘stretching’ lawyers with high firmspecific capital to a greater extent. However, lawyers with high firm-specific capital also appear to influence the staffing process in their favor, leading to unbalanced allocations and less sharing of projects and clients. Paradoxically, law firms may adopt a seniority-based rent-sharing system that weakens individual incentives to mitigate the impact of incentive conflicts on resource deployment.Managerial summaryThe study highlights the dilemmas when professional service firms allocate their key individuals to incoming projects and the role that monetary incentives play in aggravating or alleviating these dilemmas. In the context of UK M&A law firms we find that partners have a tendency to be attached to too many projects and not to share enough work, which is exacerbated when individual monetary incentives are stronger. Firms adopting a seniority based incentive system (lockstep system) are able to alleviate this effect. This implies that there is a tradeoff between rewarding personal performance versus balancing workloads and fostering collaboration among professionals.

Mots clés : Human-Capital-Intensive Firms, Human Capital, Managerial Dilemmas, Incentives, Capabilities, Micro-foundations, Mergers and Acquisitions, Law firms

Départements : Droit et fiscalité, GREGHEC (CNRS)

Emboldened by the Spitzenkandidaten process, the new European Commission emerges as the most political yet. The Commission asks EU citizens to judge its operation by its ability ‘to deliver solutions to the big issues that cannot be addressed by the Member States alone’. The Better Regulation Package translates this political commitment into an actionable approach assuring EU citizens that the Commission will remain ‘big on big things, small on small things’. To deliver on this promise, the Commission extends the Impact Assessment system, renews its consultation procedures and adds a few institutional mechanisms so as to enhance its ‘ability to deliver’ throughout the policy cycle. But in order to do so the Commission needs to bind – and somehow control – the European Parliament and the Council, on the one hand, and the Member States, on the other, in relation to their commitment to openness, participation and evidence-based policymaking. While legitimate, this attempt raises serious doubts about the compatibility of this reform with the principle of separation of powers and, in particular, that of institutional balance. A closer look at the Better Regulation Package reveals an entirely new understanding of the Commission’s own prerogatives and the way it intends to exercise its legislative and regulatory powers. And this in spite of the apparent continuity between the new and old Better Regulation initiatives and the instruments it had chosen to attain the declared objectives. With a view to lay out a future research agenda on EU Better Regulation, this article identifies the most immediate questions raised by the publication of the Package and makes a first timid attempt at addressing some of them. It aims at determining how much better, if any, is the new Better Regulation Package. It does so by discussing, first, the major novelties enacted by the Commission within its own Better Regulation system and, second, those proposed in the framework of the Interinstitutional Agreement on Better Regulation.

Mots clés : Regulatory reform, Better Regulation, Regulatory Scrutiny Board, Impact Assessment, REFIT, CBA, comparative institutional analysis, trilogues, trialogues, TTIP

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

Should society encourage scientific researchers at universities to become entrepreneurs? Using data on U.S. university-employed scientists with a Ph.D. in STEM disciplines leaving their university to become entrepreneurs during 1993-2006 and similar data from Sweden we show evidence suggesting that owning your idea outright (the “Professor’s Privilege”) rather than sharing ownership with your university employer (the Bayh-Dole regime) is strongly positively associated with the rate of academic entrepreneurship but not with apparent economic gain for the entrepreneur. Further analysis show that in both countries there is too much entry into entrepreneurship, and selection from the bottom of the ability distribution among scientists. Targeted policies aimed at screening entrepreneurial decisions by younger, tenure-track academics may therefore produce more benefits for society than general incentives.

Mots clés : Academic entrepreneurship, economic incentives, Bayh-Dole, Professor’s Privilege

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

Despite the potential benefits, many organizations have failed in service-oriented architecture implementation projects. Prior research often used a variance perspective and neglected to explore the complex interactions and timing dependencies between the critical success factors. This study adopts a process perspective to capture the dynamics while providing a new explanation for the mixed outcomes of SOA implementation. We develop a system dynamics model and use simulation analysis to demonstrate the phenomenon of “tipping point.” That is, under certain conditions, even a small reduction in the duration of normative commitment can dramatically reverse, from success to failure, the outcome of an SOA implementation. The simulation results also suggest that (1) the duration of normative commitment can play a more critical role than the strength, and (2) the minimal duration of normative commitment for a successful SOA implementation is associated positively with the information delay of organizational learning of SOA knowledge. Finally, we discuss the theoretical causes and organizational traps associated with SOA implementation to help IT managers make better decisions about their implementation projects.

Mots clés : Service-oriented architecture (SOA), System dynamics, Tipping point, Organizational traps, Normative commitment

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

Suppose that a group of individuals must classify objects into three or more categories, and does so by aggregating the individual classifications. We show that if the classifications, both individual and collective, are required to put at least one object in each category, then no aggregation rule can satisfy a unanimity and an independence condition without being dictatorial. This impossibility theorem extends a result that Kasher and Rubinstein (1997) proved for two categories and complements another that Dokow and Holzman (2010) obtained for three or more categories under the condition that classifications put at most one object in each category. The paper discusses an interpretation of its result both in terms of Kasher and Rubinstein's group identification problem and in terms of Dokow and Holzman's task assignment problem.

Mots clés : Aggregation of classifications, Group identification problem, Task assignment problem, Nonbinary evaluations

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

Harsanyi invested his Aggregation Theorem and Impartial Observer Theorem with utilitarian sense, but Sen described them as "representation theorems" with little ethical import. This critical view has never been subjected to full analytical scrutinity. The formal argument we provide here supports the utilitarian relevance of the Aggregation Theorem. Following a hint made by Sen himself, we posit an exogeneous utilitarian ordering that evaluates riskless options by the sum of individual utilities and we show that any social observer who obeys the conditions of the Aggregation Theorem evaluates social states in terms of a weighted variant of this utilitarian sum.

Mots clés : Utilitarianism, Aggregation Theorem, Impartial Observer Theorem, Cardinal utility, VNM utility, Harsanyi, Sen