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

What role does distributive injustice play in joint venture (JV) termination? We define distributive injustice as a deviation from the contractual allocation of JV-related benefits caused by private benefits. Drawing on social exchange theory, we argue that perceptions of distributive injustice severely damage relationship quality and lead to eventual JV termination. We also suggest that, while both economic and justice considerations influence joint venture termination, they have different implications for JV termination mode. Based on a sample of 284 joint ventures formed between 1996 and 2010, we find evidence that distributive injustice increases the likelihood of JV termination in general, and the likelihood of acquisition of the JV by one of the partners, in particular.

Mots clés : Joint ventures, joint venture termination, distributive justice, social exchange theory, private benefits

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

We debate the motivation for and effectiveness of public policies to encourage individuals to become entrepreneurs. Reviewing established evidence we find that most western world policies do not greatly reduce or solve any market failures but instead waste taxpayers’ money, encourage those already intent on becoming entrepreneurs, and mostly generate one-employee businesses with low growth intentions and a lack of interest in innovating. Most policy initiatives that would have the effect of promoting valuable entrepreneurship would not be recognizable as such, because they would primarily address other market failures: a central-payer healthcare would remove health-care related distortions affecting employment choices; greater STEM education would produce more engineers of which some start valuable new firms; and labor market reform to encourage hiring immigrants in jobs they have been educated for would reduce inefficient allocation of talent to entrepreneurship.

Mots clés : entrepreneurship; public policy

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

This on-line appendix contains more details on the sampling process, more details on the sample, a comparison to a matched sample of Canadians, more technical details on various measures and procedures, and further robustness analysis.

Mots clés : Creativity, Prior Employment Variety, Jack-of-all-Trades, Invention Quality

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

We use creativity theory to analyze the effects of occupational job variety and industry variety on invention quality and entrepreneurial earnings. We test our ideas with survey data from 770 inventor-entrepreneurs who commercialized their own inventions. Results suggest that occupational and industry variety substitute for each other in positively affecting invention quality whereas a lack of industry variety is associated with greater entrepreneurial earnings. Results are consistent with the idea that high levels of both occupational and industry variety enables the generation and discovery of inventions, but these ideas are usually not technically feasible or financially viable.

Mots clés : Creativity, Prior Employment Variety, Jack-of-all-Trades, Invention Quality, Entrepreneurial Earnings

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS), Comptabilité et Contrôle de Gestion

We study the impact of a new nationally advertised six-month intensive training program to encourage social entrepreneurship among youth. Program costs were on the order of 12,000 euros per participant. We conduct a randomized field experiment where 50 applicants were randomly allocated to the program and 50 similar applicants were rejected. We measure social entrepreneurial skills, intentions, aspirations and actions, progress towards launching a venture, and some non-cognitive skills pre and post treatment. Treatment effects were marginal on ventures’ progression six months after program completion. We find no treatment effects on non-cognitive skills, intentions or aspirations. Those that had made more progress on their venture prior to the start of the program were more likely to make progress afterwards, irrespective of whether they joined the program or not. Training people to become entrepreneurs seems to be difficult and costly.

Mots clés : Field experiment, Social entrepreneurship, Entrepreneurship

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

“Category spanning” – the provision of a range of distinct services – has long been frowned upon by organizational experts, because it’s seen to drain a producer firm’s appeal to audiences. Compared to “purer” competitors, category spanners are traditionally less feted and more poorly rewarded, and it’s become conventional wisdom that clients prefer focused producers – those who “stick to their knitting” in the colloquial British expression.Yet when it comes to corporate legal services, we found in a study of hundreds of law firms in New York, London and Paris over a decade that this generalised theory just doesn’t hold up. As clients expect more sophisticated services – particular in relation to acquisitions – they tend to value category spanners more positively and are willing to pay higher prices for them. That’s because clients assess a producer as a broader entity, rather than looking at expertise in isolation, when issues are complex.So we concluded that – at least as far as legal services are concerned – clients have no general preference for a single category of expertise. Instead, what matters is the “theory of value” – clients’ perception of issues and solutions, and how these can best be provided from a goal-based perspective.Our study – just published in the Academy of Management Journal – looked at eight practice areas that span most of corporate legal practice: competition; litigation; intellectual property; property; tax; mergers & acquisition; bankruptcy and employment over the period 2000 to 2010. We examined rankings given the law firms by three top guides for the legal profession – The Chambers and Partners, The Legal 500 and PLC Which lawyer – which rank according to practice area and location, and we also collected complementary information (on numbers of partners, gross revenue and other data) from a journal focusing on each city: American Lawyer for New York, The Lawyer for London and Juristes et Associés for Paris.What we found is that what matters more to clients is not whether firms straddle practice categories, but rather the clients’ own ability to identify, understand and appreciate the combinations of categories offered by law firms.The ability to convince clients that such a combination is beneficial also helps boost law firms’ bottom lines. As the Paris-based partner of a U.S. law firm law firm told us, the way to develop the more profitable areas of practice such as litigation and M&A is to demonstrate skill in tax, property, employment and other less glamorous areas of the law – because demonstrating diversity can be the best way to close the high-profitability deal.Some might suggest that clients often stick with their diversified law firms not out of appreciation of their many skills, but simply due to inertia: to minimize the cost of searching for another provider and haggling over a new contract. Yet we found no evidence for this, and in fact one study found that 56% of big companies from 60 countries use up to 10 multi-practice law firms. While we found insignificant evidence of a direct effect of category spanning on law firm performance – i.e., higher revenue per lawyer, our statistical results suggest that category spanning has an indirect positive impact on performance through the positive evaluation of clients (i.e., higher ranking positions).Plenty of “new economy” companies have shown they can thrive by spanning categories: Amazon, after all, quickly broadened its offerings from books to diapers and cloud computing storage. We hope our look at “old economy” law firms will help shed some further light on this evolving and fascinating area of organizational economics and sociology.

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

In this article, we critically evaluate what the existing research shows regarding the individual determinants of entrepreneurship. We begin by documenting a set of facts that seem to pose a challenge for interpretations of entrepreneurship based on the standard expected utility framework. Drawing on research in behavioral economics we then review three sets of possible interpretations — risk aversion, overconfidence, and non-pecuniary, taste-based factors — for understanding the empirical facts related to the entry into, and persistence in entrepreneurship. The central thesis of this article is that while all these candidate explanations have merit and can account for some aspects of the facts above, there is little evidence of a “smoking gun” that can completely account for all the puzzling patterns we observe.

Mots clés : entrepreneurship, risk aversion, overconfidence, taste

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

Beside making organizations look like their peers through the adoption of similar attributes (which we call alignment), this paper highlights the fact that conformity also enables organizations to stand out by exhibiting highly salient attributes key to their field or industry (which we call conventionality). Building on the conformity and status literatures, and using the case of major U.S. symphony orchestras and the changes in their concert programing between 1879 and 1969, we hypothesize and find that middle-status organizations are more aligned, and middle-status individual leaders make more conventional choices than their low- and high-status peers. In addition, the extent to which middle-status leaders adopt conventional programming is moderated by the status of the organization and by its level of alignment. This paper offers a novel theory and operationalization of organizational conformity, and contributes to the literature on status effects, and more broadly to the understanding of the key issues of distinctiveness and conformity.