Research Paper Series

  • Title
  • Author(s)


Departments: Finance, GREGHEC (CNRS)

We review the extent literature on systemic risk, both theoretical and empirical, and connect it to recent regulatory debates and reforms. While we take stock of the achievements of this rapidly growing literature, we also point towards a gap between two approaches. The first one studies different sources of systemic risk in isolation, uses confidential data, and inspires targeted but heavy-handed regulatory tools. The second approach aims to produce global measures of systemic risk from market data, which are by design not directly connected to any particular theory, but could support a simpler and more efficient regulatory framework. Bridging this gap is a major avenue for future research on systemic risk, and will require both new encompassing theoretical models and improved data disclosure.

Keywords: Banking, Macroprudential Regulation, Systemically Important Financial In- stitutions, Financial Crises, Too-Big-To-Fail


Departments: Operations Management & Information Technology, GREGHEC (CNRS)

A discrepancy exists in the literature regarding the type of suppliers to consider when targeting discontinuous innovation (DI). Some authors suggest that DI require leveraging knowledge from a selection of familiar and trustful suppliers, whereas others claim that DI requires leveraging distant knowledge from new suppliers. We argue that establishing relationships with a new supplier mastering knowledge distant from the firm’s one, requires a specific process. Based on a longitudinal study in a firm that developed such relationships and succeeded in enhancing DI, we underline three characteristics of the approach adopted: (i) proposing an open enough formulation to give the suppliers the opportunity to value their competencies but well documented, (ii) having a structured and transparent process, supporting a mutual progressive commitment and (iii) dedicating a specific entity with access to the top management and technical specialists, with a global vision of the questions to be tackled.

Keywords: Discontinuous innovation, early supplier involvement, leveraging external knowledge


Departments: Finance

This paper computes the certainty equivalent of the United States Social Security in a calibrated life-cycle model when the stock and labor markets are cointegrated. In the baseline calibration, the certainty equivalent of current workers and retirees is found to be 37% lower at the national scale than the sum of expected cash flows discounted at the risk-free rate. The results suggest that the present value of pension entitlements and the transition cost to a funded system may be largely overestimated if not properly risk-adjusted.

Keywords: Household finance, Social Security, Public liabilities, Portfolio choices


Departments: Strategy & Business Policy, 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.

Keywords: Incentives, Social Comparison Costs, Envy, Organization Design


Departments: Tax & Law, GREGHEC (CNRS)

Nudge and the Law explores the legal implications of the emergent phenomenon of behaviourally informed intervention. It focuses on the challenges and opportunities it may offer to the policymaking of the European Union. This dual focus on law and on Europe characterises our endeavour. This volume has been structured by taking as a point of the departure the current nudging debate, which mainly comprises two strands of enquiry: when is it legitimate for States to use psychology to inform policy? (the legitimacy debate) and, to the extent that it is legitimate, how can behavioural insights in practice be incorporated into the decision making processes? (the practicability debate). Against this backdrop we brought together scholars who could analyse what behavioural insights might bring to EU law, both at a horizontal level and at a sectoral level. This volume endeavours to present the results of their research in a manner that is accessible both to EU law specialists who are not yet familiar with behavioural sciences and to behavioural lawyers who are not specialists in EU law.

Keywords: EU Law, behavioural sciences, nudges, regulation, libertarian paternalism, regulatory policy, policymaking, behavioural policy, impact assessment, randomized control trials


Departments: Accounting & Management Control

The first part of the paper presents the specificities of management control in service activities. The second part of the paper is more specifically dedicated to the assessment of discretionary activities; it proposes a general framework for the evaluation of discretionary activities before reviewing the assessment tools available. The third part of the paper addresses the problems specific to the control of service companies. Based on a general model of cost vale creation in a service company, it discusses some issues related to the organisation of control in multi-site and network companies. Finally, the last part of the paper focuses on support departments and structures the recent debates about their possible control through new organizational forms.

Keywords: Service activities, management control, performance assessment


Departments: Economics & Decision Sciences, GREGHEC (CNRS)

This handbook chapter covers the existing theoretical literature on social preference and social welfare under risk (i.e., when probability values enter the data of the situation) and uncertainty (i.e., when this is not the case and only subjective probability assessments can be formed). Section 1 sets the stage historically by contrasting classical social choice theory and welfare economics, which are restricted to the certainty case, with Harsanyi's pathbreaking attempt at extending these fields to the risk case. Section 2 reviews the work, both ancient and recent, stemming from Harsanyi's Impartial Observer Theorem. Section 3 does the same job for Harsanyi's Social Aggregation Theorem and discusses Sen's objections against the utilitarian relevance of either theorem. Section 4 explains why the Social Aggregation Theorem does not carry through from risk to uncertainty, a major conundrum that can also be expressed as a clash between ex ante and ex post welfare assessments; the proposed solutions are covered, including some very recent ones. Section 5 explains that equality, like social welfare, can be defined either ex ante or ex post, and using a basic example by Diamond, that these two definitions clash with each other. Section 6 covers the main solutions that egalitarian writers have given to this problem, again including some very recent ones.


Departments: Accounting & Management Control

This article presents a summary of the Strategic Management Accounting (SMA) literature. In its first part, the article shows how authors define SMA (by its characteristics, its practices and methods) and compares SMA to Strategic Cost Management (SCM). The second part of the article discusses the empirical research work conducted in the SMA/SCM field and its main results. The article then questions the theoretical contribution of the SMA/SCM literature and its limitations before proposing a framework which relates the concepts of costs, value and price, and incorporates many of the practices usually connected to SMA.

Keywords: Strategic Management Accounting, Strategic Cost Management, literature review


Departments: Operations Management & Information Technology, GREGHEC (CNRS)

This paper examines the relationship among IT capability, operations strategy decisions and operational performance. Using primary data from a sample of European firms, we test a model of fit between two specific IT capability-building decisions and three competitive priorities, and we analyze the impact of IT capability alignment on several dimensions of process performance. After uncovering three stylized configurations, we note that firms tend to adopt internally coherent IT capability-building decisions but we find only mixed evidence of alignment between IT capability-building decisions and competitive priorities. Interestingly, however, failing to achieve alignment has negative performance consequences but only for firms that develop limited IT capability. Our results suggests that IT plays a central role in the fulfillment of a firm’s operations strategy, not only for firms that pursue differentiation and are interested in improving the effectiveness of their customer-oriented functions, but also for firms seeking efficiency improvements in back-office operations. Although it is, a priori, more expensive, the development of advanced IT capability can support cost leadership strategies more effectively than a frugal approach, as long as IT projects are used to generate operational knowledge and thus improve process efficiency. At the same time, our results cast further doubt on the value of frugal IT capability, even for firms that strive to reduce cost.

Keywords: This paper examines the relationship among IT capability, operations strategy decisions and operational performance. Using primary data from a sample of European firms, we test a model of fit between two specific IT capability-building decisions and three competitive priorities, and we analyze the impact of IT capability alignment on several dimensions of process performance. After uncovering three stylized configurations, we note that firms tend to adopt internally coherent IT capability-building decisions but we find only mixed evidence of alignment between IT capability-building decisions and competitive priorities. Interestingly, however, failing to achieve alignment has negative performance consequences but only for firms that develop limited IT capability. Our results suggests that IT plays a central role in the fulfillment of a firm’s operations strategy, not only for firms that pursue differentiation and are interested in improving the effectiveness of their customer-oriented functions, but also for firms seeking efficiency improvements in back-office operations. Although it is, a priori, more expensive, the development of advanced IT capability can support cost leadership strategies more effectively than a frugal approach, as long as IT projects are used to generate operational knowledge and thus improve process efficiency. At the same time, our results cast further doubt on the value of frugal IT capability, even for firms that strive to reduce cost.


Departments: Economics & Decision Sciences, GREGHEC (CNRS)

This paper proposes and characterises a model of uncertainty averse preferences that can simultaneously accommodate three divergences from subjective expected utility: imprecision of beliefs (or ambiguity), imprecision of tastes (or multi utility), and state dependence of utility. Moreover, it characterises, in this context, a notion of state independence of utility borrowed from the literature on incomplete preferences. This notion is then shown to be basically inconsistent with the standard state-independence axiom, monotonicity, whenever tastes are imprecise. A new notion of state independence in the context of imprecise tastes, which is characterised by monotonicity, is proposed.

Keywords: State independence of utility, imprecise tastes, uncertainty aversion, multi utility, multiple priors, state-dependent utility.