Alleviating Managerial Dilemmas In Human-Capital-Intensive Firms Through Incentives: Evidence From M&A Legal Advisors


Strategic Management Journal

February 2017, vol. 38, pp.232-254

Departments: Strategy & Business Policy, GREGHEC (CNRS)

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

We 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 firm-specific 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

Assembling international development: Accountability and the disarticulation of a social movement


Accounting Organizations and Society

February 2017, vol. 57, pp.18-32

Departments: Accounting & Management Control, GREGHEC (CNRS)

Keywords: Accountability, Social movements, International development, Non-governmental organizations (NGOs), Governmentality, Assemblages

This paper examines how international development funding and accountability requirements are implicated in the so-called disarticulation of a social movement. Based on field studies in Guatemala and El Salvador, we show and explain the way accountability requirements, which encompass management and accounting, legal, and financial technologies, constitute the field of international development through the regulation of heterogeneous social movement organizations. We highlight how accountability enables a form of governance that makes possible the emergence of entities (with specific attributes), while restricting others. Our analysis has implications for governmentality studies that have examined the interrelation of assemblages by analyzing how these interrelations are operationalized at the field level through the Deleuze-and-Guattari-inspired processes of territorialization, coding, and overcoding

Estimating Value Creation from Revealed Preferences: Application to Value-Based Strategies


Strategic Management Journal

2017, vol. 38, pp.1964-1985

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: buyer–supplier relationships; client-speciceconomies of scope; cooperative game theory; revealedpreferences; value-based strategy

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

Public-Private Collaboration, Hybridity and Social Value: Towards New Theoretical Perspectives


Journal of Management Studies

September 2017, vol. 54, n°6, pp.763-792

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: cross-sector collaboration, hybrid arrangements, interorganizational governance,organizational design, public-private partnerships, social value

Focusing on the collaboration intersecting public, non-profit and private spheres ofeconomic activity, we analyse the conceptual forms of hybridity embedded in these novel inter-organizational arrangements, and link them to different mechanisms of creating social value. Wefirst disentangle alternative notions of hybrid arrangements in existing literature by proposing aconceptual typology on two theoretically complementary yet distinct dimensions: hybridity ingovernance and hybridity in organizational logics. We show how both forms of hybridity canjointly occur in complex public-private and cross-sector collaborations, and propose the notion ofvalue as a crucial bridging point between these perspectives. Crucially, we develop a conceptualframework on key theoretical mechanisms leading to economic and social value in these inter-organizational collaborations. Our work deepens the understanding of how diverse, hybrid formsof collaboration can create value and builds critical links between previously disparate streams ofliterature on public-private interaction, cross-sect or collaboration and social enterprises

Strategic Investment in Renewable Energy Sources: The Effect of Supply Intermittency


Manufacturing & Service Operations Management

Summer 2017, vol. 19, n°3, pp.489-507

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

Keywords: Electricity Generation, Renewables, Intermittency, Capacity Planning and Investment, Incentives and Contracting

To analyze incentives for investing in the capacity to generate renewable electricity, we model the trade-off between renewable (e.g. wind) and nonrenewable (e.g. natural gas) technology. Renewable technology has a higher investment cost and yields only an intermittent supply of electricity; nonrenewable technology is reliable and has lower investment cost but entails both fuel expenditures and carbon emission costs. With reference to existing electricity markets, we model several interrelated contexts - the vertically integrated electricity supplier, market competition, and partial market competition with long-term fixed-price contracts for renewable electricity - and examine the effect of carbon taxes on the cost and share of wind capacity in an energy portfolio. We find that the intermittency of renewable technologies drives the effectiveness of carbon pricing mechanisms, which suggests that charging more for emissions could unexpectedly discourage investment in renewables. We also show that market liberalization may reduce investment in renewable capacity while increasing the overall system's cost and emissions. Fixed-price contracts with renewable generators can mitigate these detrimental effects, but not without possibly creating other problems. In short: actions to reduce the intermittency of renewable sources may be more effective than carbon taxes alone at promoting investment in renewable generation capacity

The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests


Contemporary Accounting Research

Spring 2017, vol. 34, n°1, pp.118-153

Departments: Accounting & Management Control, GREGHEC (CNRS)

Keywords: Joint Audits, Audit Quality, Auditor Independence, Impairment Testing, Conservatism

Using a sample of firms from France, where the law requires the use of two auditors, we study the effect of auditor pair composition on audit quality by examining a specific account, goodwill impairment. We document that firms audited by a Big 4–non-Big 4 auditor pair (BS) are more likely to book an impairment and book a larger impairment than firms audited by a Big 4–Big 4 auditor pair (BB) when low performance indicators suggest a greater likelihood of impairment. Moreover, firms audited by a BB pair reduce impairment disclosures when they book impairments, while firms audited by a BS pair do not, suggesting lower transparency for firms audited by a BB pair. Our results inform investors and firms in mandatory joint audit regimes, as well as regulators who are considering requiring joint audits.

The expanding domain of strategic management research and the quest for integration


Strategic Management Journal

January 2017, vol. 38, n°1, pp.4-16

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: literature reviews; paradigm; scholarly field; fragmentation, integration

This special issue of Strategic Management Journal was motivated by concern that the growing scope and diversity of the strategic management field creates the risk of incoherence and fragmentation and the belief that research reviews could contribute to synthesis and integration. In this introductory essay, we address the expanding domain of strategic management, consider where its boundaries lie, identify the forces engendering fragmentation, and discuss how this special issue—and research reviews in general—can assist convergence within the field of strategy. We conclude by addressing the potential for integration more broadly in relation to the theories we deploy, the phenomena we investigate, and cohesiveness of our scholarly community

The Recursive Nature of Institutional Change: An Annales School Perspective


Journal of Management Inquiry

January 2017, vol. 26, n°1, pp.17 - 31

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: Annales School, Institutional change, Institutional logics, Events

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 critical events affect different dimensions of institutional logics and exert short- or long-range influences. On these bases, organizations make choices, from decoupling to radical shifts in logics, leading to severe institutional changes that become the matter of history. As much as organizations are influenced by events and the prevalent institutional logics, their choices trigger macro-level changes in a recursive manner. More broadly, we comment on how fruitful is our approach to historicize organization studies

Where Do Market Categories Come From and How? Distinguishing Category Creation from Category Emergence


Journal of Management

January 2017, vol. 43, n°1, pp.87-110

Departments: Strategy & Business Policy, GREGHEC (CNRS)

Keywords: market category, category formation, strategic agency

This paper reviews several streams of research on market category formation. Most past research has largely focused on established category systems and the antecedents and consequences of categorical positioning (i.e. categorical purity vs. spanning; combination vs. replacement) but relatively ignored the formative processes leading to new categories. In this review, we address this lacuna to posit that scholarship would benefit from clearly disentangling category emergence from category creation. We analytically describe the differences between the two and elaborate the boundary conditions that guide and define which process is more likely to occur in a given market. Our review contributes to illuminating the role of organizational agency and strategic actions in market categories and their formation, which deserve greater attention due to their theoretical and practical implications

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Student posts

How impact investing brings solar power to Africa

Monica Moncayo Escobar 16 May 2017

Sub-Saharan Africa suffers from a lack of energy infrastructure. Increasingly, those without access (...)