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

In this essay, we propose a recursive model of institutional change building on the Annales School, one of the 20th century’s most influential streams of historical research. Our model builds upon three concepts from the Annales — mentalities, levels of time, and critical events — to explore how punctual disruptions affect different dimensions of institutional logics and exert short- or long-range influences. On these bases, organizations make choices, from decoupling to more radical shifts in logics, leading to severe institutional changes that become a matter of history. As much as organizations are influenced by their times and the prevalent institutional logics, their choices trigger macro-level changes in a recursive manner. More broadly, we comment on how fruitful it our approach to historicize organization studies.

Mots clés : Annales School; Institutional change; Institutional Logics; Events


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

We study organizational search in the presence of intuitive biases. Drawing from work on the psychology of human decision making, we construe biases as unjustified preferences that arise due to automatic, spontaneous thinking. This property of decision making gives rise to a mechanism we label generative recurrence. Present this mechanism, unjustified preferences produce two opposing effects on organizational adaptation: they curb excessive experimentation but at the expense of knowledge accumulation. In the context of organizational search, these regularities allow behavioral treatments to strategically leverage the value of biases. Specifically, our results suggest that re-biasing (adopting the opposite bias) often dominates both de-biasing (eliminating the bias) as well as consistently unbiased search. Our paper provides evidence that managing rather than eliminating biases can be an effective instrument of behavioral strategy

  • SPE-2016-1156
  • Estimating Value Creation from Revealed Preferences: Application to Value-Based Strategies
  • O. CHATAIN, D. MINDRUTA

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

We develop and apply a new set of empirical tools consistent with the tenets of value-based business strategies, leveraging the principle that “no good deal comes undone” and the methods of revealed preferences to empirically estimate drivers of value creation. We demonstrate how to use these tools in an analysis of value creation in buyer-supplier relationships in the UK corporate legal market. We show how the method can uncover evidence of subtle mechanisms that traditional methods cannot easily distinguish from each other. Furthermore, we show how these estimates can be used as parameters of biform games for out-of-sample analyses of strategic decisions. With readily available data on relationships between firms, this approach can be applied to many other contexts of interest to strategy researchers.

Mots clés : Value-based strategy, Revealed preferences, Cooperative game theory, Buyer–supplier relationships, Client-specific economies of scope


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)

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)

“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)

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.


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

How do subsidiaries respond to normative demands from both their headquarters and local external constituents? We propose that subsidiaries pay varying levels of attention to either demands depending on their peers’ norm-conforming behavior, resulting in heterogeneous practice implementation. We study the implementation of 25 practices, associated with three corporate social responsibility (CSR) issues in 101 worldwide subsidiaries of a multinational enterprise (MNE). Consistent with the idea that attention is limited and therefore selective, we find that external peers' conformity to the CSR norm directs subsidiaries’ attention toward the CSR-related demands of external constituents at the expense of the demands from the headquarters. However, internal peers’ conformity increases attention to both external and headquarters’ demands related to CSR. As higher attention levels result in higher practice implementation, internal and external peers' conformity drives the heterogeneity of practice implementation in the MNE. Our results suggest the need to rethink the influence of peers’ conformity on subsidiaries’ implementation of practices, as it not only triggers mimicry based on legitimacy but also and simultaneously a more strategic response based on internal and external competitive threats and attention allocation.


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

This paper examines the impact of the macro-institutional environment on exploitative-explorative innovation. Building on organizational learning, institutional economics, and innovation studies, we identify country-level institutions that might foster or hinder firms’ incentives and ability to explore or exploit. We test our conjectures by analyzing all patented firm innovations in 22 countries over the 1985-2008 timeframe. Empirical tests demonstrate the role of national institutions in explaining cross-country differences in the level of exploitative and exploratory innovation. The results also suggest that firms’ incentives to explore are influenced by changes in the institutions that regulate the ecology of competition in an economy.

Mots clés : Exploration versus exploitation, Innovation and R&D, Patents, Institutional environment, Panel data


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

We investigate the mechanisms that shape social comparison in organizations and generate social comparison costs. Drawing on the notions of inequity aversion and envy, we argue that heterogeneity in the strength and type of incentives provides an impetus for envy, and that the resulting social comparison costs are shaped not only by the magnitude of this impetus, but the distance of envy’s objects. In other words, the more proximate socially, structurally and geographically are those one envies the larger the costly behavioral response. To test our predictions, we use a quasi-experimental event during which outlets of a retail bank, previously operating under homogenous incentives, were assigned to four distinct tournament groups with differing ex ante probabilities of winning a prize — an event that provides envy’s impetus. We then explore how, for each outlet, the proximity of those assigned to more advantaged outlets — objects of envy — shape productivity responses. We find that organizational units with more socially, geographically, and structurally proximate peers assigned to ‘better’ tournament groups decreased their productivity, when compared to peers whose objects of envy were more socially, geographically, and structurally distant. We also show that these effects are stable over time. We discuss implications of these results for organizational design and boundaries.

Mots clés : Incentives, Social Comparison Costs, Envy, Organization Design


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