S&O Research Seminar March 9th

For its March research seminar, the S&O Institute has  a great pleasure to welcome two guests:

Giovanna Michelon, Professor of Accounting at University of Bristol. 

Title: ESG Rating Agencies: from ‘arbiters of taste’ to ‘facilitators of taste’

Authors: Giovanna Michelon, L. Bouten, C. Cho and R. Roberts

Abstract : Our study examines how ESG rating agencies (RAs), which developed in local socially responsible investment (SRI) niches, infiltrated the transnational mainstream investment field. In particular, this study examines the evolution in the dynamics between ESG RAs and investors over the last three years, as well as the impact of these evolving dynamics on the production process(es) of ESG RAs. Using interviews with RAs and other actors, we document how ESG RAs and investors worked together to transpose an institutional infrastructure component of the SRI niches, the ratings themselves, to the mainstream investment field and the implications this had for the purpose and production process of ESG ratings. Our analysis reveals that ESG RAs transformed from being 'arbiters of taste' in the local SRI niches to 'arbiters of a palatable taste' in the transnational mainstream investment field, and eventually serving primarily as 'facilitators of taste', i.e., information brokers, in the latter field. We document that the transition to ‘facilitators of taste’ was in large part a function of two forces: the requirements by mainstream investors that ESG ratings more strongly reflect financially material risks and the demand by mainstream investors for granular ESG data that allows them to create their own proprietary system of companies’ ESG performance. While the increased interest of the mainstream investors triggered a significant devolution in their role as arbiters of taste, their governance role vis-à-vis the companies increased significantly. Ultimately, the production of taste in ratings has become increasingly driven by what corporate ESG attributes can be translated into the ‘beauty’ of dollars and the ‘truth’ of sales.

Nauman Asghar, HEC PhD Student at Strategy Department

Title: Purposeful Leadership and Innovative behavior

Authors: Nauman Asghar & Rodolphe Durand

Abstract : Our study is motivated by recent academic and practical focus on connecting organizational purpose with performance. In our study, we argue that mere existence of purpose might not translate into organizational benefits unless the leadership incarnates that purpose and integrates it with business strategy. Using a unique, longitudinal survey dataset of around 1500 firms, 75000 teams and above 350000 individual respondents and the most advanced mediation analysis methods, we evidence and calibrate two micro-foundational channels that mediate the positive effect of purposeful leadership on team innovativeness: worker autonomy and intra-team trust.

For more information, please contact Iiris Sacchet: sacchet@hec.fr