Research Paper Series

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  • 794
  • The Drèze and Grossman-Hart criteria for production in incomplete markets: Voting foundations and compared political stability
  • Hervé CRES, Mich TVEDE
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Department Finance and Economics

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Departments: Strategy & Business Policy, GREGHEC (CNRS)

To investigate time compression dis-economies (TCD), this study estimated time-cost elasticities using 459 oil and gas global investment projects (1997-2010). Results show that the average cost of accelerating investments is negative: a firm could cut $6.3 million in costs of a single project by accumulating asset stocks one month faster. About 88 percent of the projects exhibit negative time-cost elasticities with over 39 percent of unrealized economies of time compression. Only 12 percent of the projects are subject to TCD. These time inefficiencies or frictions do not negate the existence of TCD, but suggest they are less prevalent than assumed in the literature. Management experience, R&D investment, firm size, economic development and political stability are shown to be associated with greater time compression efficiency.

Keywords: Sustainable Competitive Advantage, Temporal Frictions, Time Compression Diseconomies, Time Inefficiencies, Time-Cost Tradeoff


Departments: Strategy & Business Policy, GREGHEC (CNRS)

We consider the formation of alliances that potentially create complementarities, that is, when the value function is super-modular in firm resources. We show that, in a frictionless world where information is perfect and managers optimize, firm alliances disproportionately increase the value of high-resource-level firms, resulting in higher variance and higher skewness of the distribution of firm value; moreover, higher-value alliances are subject to regression to the mean at a faster rate. These effects are magnified if the degree of complementarities is endogenously determined by each firm’s investment. We also consider alliances where matching and/or information about firm resources are imperfect, and show that complementarities are a necessary but not sufficient condition for alliances to cause an increase in firm value; and that complementarities are neither a necessary nor a sufficient condition for alliances to be correlated with higher firm value.

Keywords: Firm Alliances, Matching, Competitive Advantage


Departments: Tax & Law, GREGHEC (CNRS)

This article examines the concept of “significant imbalance” (SI) under French law and its impact on international business transactions. “Significant imbalance” is a legal standard meant to assess whether a contractual clause is unfair (abusive). Although initially restricted to consumer law, it has been extended to general contract law with the implementation of a reform entered into force on 1st October 2016. Previously, the Commercial Court of Paris in the ruling Ministry of Economy et al. v. Expedia, Inc. et al. (2015) had qualified SI as an “overriding mandatory provision” (loi de police) under EU Regulation No. 593/2008 on the applicable law to contractual obligations (Rome I). As a consequence, SI became operative in respect of international contracts despite an express choice of a foreign governing law made by the parties to the transaction. This article argues that, as a result of Expedia and the 2016 reform, French courts can interfere with international business transactions by striking down contractual terms that they deem unfair according to the SI standard. The analysis focuses on two key issues. On the one hand, notwithstanding recent judicial precedents, SI still fails to provide a reliable test for predicting which clauses or contracts are at risk of being deemed unfair. On the other hand, the legal arsenal supporting French legislator’s disapproval of SI allocates great power to French courts and the French government to pursue tort lawsuits against foreign companies allegedly oppressing their commercial partners with SI clauses. Empirical evidence shows that these actions are highly successful compared to those commenced by private actors. The article concludes that all these aspects, together with SI’s turbulent case-law throughout the years, will sprout uncertainty in international business transactions and may eventually disparage France in the global competition in such a field.

Keywords: Contract, International Business Transactions, French Law, Conflict of Laws


Departments: Tax & Law, GREGHEC (CNRS)

It is almost a truism to argue that data holds a great promise of transformative resources for social good, by helping to address a complex range of societal issues, ranging from saving lives in the aftermath of a natural disaster to predicting teen suicides. Yet it is not public authorities who hold this real-time data, but private entities, such as mobile network operators and business card companies, and - with even greater detail - tech firms such as Google through its globally-dominant search engine, and, in particular, social media platforms, such as Facebook and Twitter. Besides a few isolated and self-proclaimed ‘data philanthropy’ initiatives and other corporate data-sharing collaborations, data-rich companies have historically shown resistance to not only share this data for the public good, but also to identify its inherent social, non-commercial benefit. How to explain to citizens across the world that their own data – which has been aggressively harvested over time – can’t be used, and not even in emergency situations? Responding to this unsettling question entails a fascinating research journey for anyone interested in how the promises of big data could deliver for society as a whole. In the absence of a plausible solution, the number of societal problems that won’t be solved unless firms like Facebook, Google and Apple start coughing up more data-based evidence will increase exponentially, as well as societal rejection of their underlying business models.This article identifies the major challenges of unlocking private-held data to the benefit of society and sketches a research agenda for scholars interested in collaborative and regulatory solutions aimed at unlocking privately-held data for good.

Keywords: Big data, data, data governance, data sharing, data risk, data invisible, risk governance, philanthropy


Departments: Information Systems and Operations Management, GREGHEC (CNRS)

We examine empirically how different information types and information channels affect both the intention and the decision to adopt photovoltaic (PV) technology as affected by adoption stage. Analyzing data on a large European utility’s current and potential clients reveals how the effects of various drivers of adoption can change across phases of the adoption process. Our results challenge the common wisdom that information necessarily and homogeneously supports innovation adoption; instead, they strongly support the hypothesis that information types and channels have distinct effects on adoption rates. These results also highlight that, throughout the adoption process, the value of information changes. In addition, we clarify the effects of economic incentives on both the intention to adopt PV technology and actual adoption behavior. Our findings have critical implications for policy makers and for any technology manufacturing company that must optimize its marketing strategy and distribution channels to promote renewable energy systems.

Keywords: innovation adoption; renewable energy; information characteristics; empirical studies


Departments: Accounting & Management Control, GREGHEC (CNRS)

Evidence suggests society still does not view whistleblowers as wholly legitimate – despite legal protections now offered in some jurisdictions, such as the United States. Drawing on a discourse analysis, (i.e., an examination of statements), we investigate the well-publicized stories of seven whistleblowers from 69 sources, including books, first- and second-hand interviews, websites and videos. Our focus is to examine how whistleblower discourses can build legitimacy by more tightly defining the whistleblower role and demonstrating its alignment with social norms. Using whistleblower self-narratives, we identify four narrative patterns: (1) Trigger(s): the event(s) leading to whistleblowing; (2) Personality traits: whistleblower’s morality, resourcefulness, and determination; (3) Constraints: barriers requiring regulatory and organizational change; and (4) Consequences: the longer-term positive impact of the whistleblowing act. These patterns rely on symbolic, analogical, and metaphorical framing to allow others to better understand the role of whistleblowers and enlist their support. Exploring a data-set of 1,621 press articles, we find indications that these narrative patterns resonate in the media – which provide a form of support and may be instrumental in legitimizing the whistleblower role. Grounded on these results, we develop a legitimacy construction model of the whistleblower role, i.e., a representation of how role legitimacy is produced and sustained. From this model, we identify a number of important areas for future research.

Keywords: Whistleblowing, Fraud Detection, Role Definition, Discourse Analysis, Legitimacy, Securities and Exchange Commission (SEC), Sarbanes-Oxley Act (SOX)


Departments: Strategy & Business Policy, GREGHEC (CNRS)

This review assembles two highly referenced streams of research in organization and management studies over the past decade: institutional logics and categories. We present the gist of each literature focusing on the interaction within and between organizations vis-à-vis the institutional logics and category systems that condition behavior. Then, we suggest that both streams have compatible assumptions that warrant further integration and suggest opportunities for future research stemming from (1) complementarities related to inter-and-intra-audience variance, formation and recombination of logics and categories, and actors’ identity and (2) differences related to theory level of analysis, incorporation of conflict, and methods of analysis. Integration can lead to better specified mechanisms, processes, and contexts important to improving accuracy and development of these research streams.

Keywords: Institutional Logics, Categories


Departments: Strategy & Business Policy, GREGHEC (CNRS)

In this paper, we investigate family firms’ position in the intercorporate ownership network. Rooting our predictions in the Behavioral Agency Model and a Network analytical framework, we predict and find that family involvement decreases the likelihood of business group affiliation and of cross-group ties leading to a lower embeddedness within the overall network. We predict and find the opposite effect for community involvement. We use the complete longitudinal dataset of publicly listed firms’ corporate ownership ties in India (2001, 2005, and 2009). Theoretical and substantive contributions are to research on family businesses and to research on interorganizational networks.

Keywords: Family Firms, Community, Embeddedness, Network


Departments: Marketing, GREGHEC (CNRS)

Consumers gain choice closure when they perceive a sense of finality over a past decision and limit comparisons between the selected and the forgone options. We investigate consumers’ ability to make strategic use of choice closure to enhance outcome satisfaction. Seven studies show that consumers experience greater satisfaction when they achieve choice closure with an inferior outcome and when they do not achieve choice closure with a superior outcome; however, they expect to be more satisfied by avoiding choice closure with an inferior outcome and by seeking it with a superior outcome. We provide a rationale for this experience–expectation contrast based on rule overgeneralization. Consumers form their expectation on an implicit rule learned and internalized in a context in which it is appropriate and advantageous: when they aim to increase satisfaction with a future choice; however, consumers erroneously apply the same implicit rule to a different context, one in which they aim to increase satisfaction with a past choice. We conclude that consumers are unlikely to be able to make strategic use of choice closure to enhance satisfaction with the outcome of a decision they have made.

Keywords: choice closure, outcome valence, satisfaction, prediction error, rule overgeneralization


Departments: Tax & Law, GREGHEC (CNRS)

The EU’s approach to fake news, as epitomised by the European External Action (EEAS) Service East Stratcom Disinformation Review, violates the rights to freedom of expression and due process of those accused of distributing disinformation. The EU Disinformation Review is a publication of the European External Action Service (the European Union’s diplomatic service) to target fake news and online disinformation. Following our request for access to documents, EEAS conceded that the EU Disinformation Review uses an “ad hoc” methodology for conducting its fact-checks, which makes it an outlier in the international fact-checking community led by the International Fact-Checking Network (IFCN). Despite being a well-intentioned initiative to respond to the challenges posed by pro-Kremlin disinformation, the EU should ensure the respect of fundamental rights when engaging in fact-checking.The EU Disinformation Review seeks to control the right to freedom of expression by labelling publishers as “disinforming outlets” and their content as “disinformation,” creating a chilling effect on the work of journalists that is central to democracy. The right to freedom of expression is expressed in Article 11.1 of the Charter of Fundamental Rights of the European Union (2000/C 364/01) and Article 10 of the European Convention on Human Rights. The labelling of publishers as “disinformation outlets” is contrary to principle of the freedom of press established by the European Court of Human Rights: “[a] general requirement for journalists systematically and formally to distance themselves from the content of a quotation that might insult or provoke others or damage their reputation is not reconcilable with the press’ role of providing information on current events, opinion and ideas.”In addition, the methodology used by EEAS in the EU Disinformation Review is “ad hoc,” which constitutes a violation of the fundamental right to good administration in Article 41 of the European Charter of Fundamental Rights. Specifically, the ad hoc design and operation of the EU Disinformation Review fails to ensure the review acts “impartially, fairly and within a reasonable time.”First, publications are not provided with the right to be heard or proper notice. The EU Disinformation Review’s homepage offers an opportunity to contact the Task Force report a suspected mistake in a fact-check but the page is only available in English, in violation of the principle of multilingualism, and no notice if given to outlets accused of being “disinforming outlets” before or after fact-checks of their content are published.Second, the EEAS does not fulfil its duty to motivate. EEAS is given a broad margin of discretion to identify disinformation, but fails to do so according to a consistent methodology. Therefore, EEAS cannot justify, on the basis of objective criteria, its choice of which content to review and how to determine its truth or falsehood.To comply with EU law and ensure the respect of fundamental rights, the EEAS should develop and make public (1) a methodology for selecting partnerships and reviewing fact-checks in line with international standards and (2) a notice and response mechanism for journalists, publishers and citizens whose content is being reviewed. If EEAS is unable to comply with the above, the EU Disinformation Review should be shut down.

Keywords: Fake news, EU Law, European Ombudsman, Access to Information, Transparency


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