Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): self-control, cooperation, public good, risk, experiment JEL Classification: C91, D03, H40

We develop a model relating self-control, risk preferences and conflict identification to cooperation patterns in social dilemmas. We subject our model to data from an experimental public goods game and a risk experiment, and we measure conflict identification and self-control. As predicted, we find a robust association between self-control and higher levels of cooperation, and the association is weaker for more risk-averse individuals. Free riders differ from other contributor types only in their tendency not to have identified a self-control conflict in the first place. Our model accounts for the data at least as well as do other models.

Subject(s): Strategy & General Management, Keyword(s): entrepreneurship, strategic alliances, learning, alliance structure, complementary assets

Due to resource constraints, startup innovators often struggle to build the complementary assets necessary for successful product commercialization. Technology commercialization alliances are an important avenue for startups to access those assets, and are also an important means by which they can learn commercialization skills. However, learning alliance of this type may incur both inter-organizational governance and learning costs. Using data from biotechnology alliances, we examine how retaining rights to participate in the commercialization process affects the hazard of drug approval in the short run. We find that when less-experienced firms retain these so-called co-development rights, the product is less likely to be approved. However, firms that have retained co-development rights are more likely to be successful in commercializing subsequent products than firms that licensed out the rights completely. This latter effect suggests longer-term benefits to learning alliances.

You may download a copy of the original version here.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): women leaders, identity interference, collective self-esteem, well-being, motivation to lead, leader development, organizational demography

We explore the antecedents and consequences of women leaders’ identity interference related to the perceived conflict between their roles as both women and leaders. Drawing on identity development and organizational demography research, we propose that leadership experience reduces women leaders’ identity interference, whereas women’s numerical underrepresentation in organizations exacerbates it. Moreover, we hypothesize that identity processes related to collective self-esteem—personal regard for one’s collective identity and the perception of others’ views of it—mediate these effects. A sample of 722 women leaders representing a diverse range of countries and industries supported our hypotheses. We also demonstrate that identity interference reduces the psychological well-being of women leaders and undermines their affective motivation to lead. In contrast, perceived conflict between leader and female identities enhances women’s sense of duty to assume leadership roles. Importantly, women leaders’ personal regard for their female identity buffers the detrimental effect of identity interference on life satisfaction. We discuss the implications of our results for women’s advancement in organizations and the development of their identity as leaders.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): control similarity, leader-follower dyads, job performance evaluation, self-enhancement, 360-degree instruments

Control-related behaviors are an important attribute in leadership jobs, but do leaders appreciate being surrounded by followers with controlling personalities? Building on the self-enhancement and self-efficacy theories, we propose that leaders with high self-assessed control give better performance evaluations to subordinates who are also high in control. In contrast, leaders with low self-assessed control are quite reserved about the performance of subordinates high in control. We also propose that overall, leaders high in control evaluate more positively their followers’ performance than leaders low in control. We suggest that this difference is magnified if the leader-follower dyad is inconsistent with social norms related to age and hierarchical level. The results obtained by using polynomial regression and response surface techniques to analyze a sample of 138 leader-follower dyads supported our hypotheses showing a bias rooted in leaders’ self-assessed control. We conclude by deriving the theoretical and practical implications of these findings.

Subject(s): Economics, Politics & Business Environment, Keyword(s): primary school enrollment, school lunches, natural experiment, ITT

At the end of 2001, the Indian Supreme Court issued a directive ordering states to institute school lunches – known locally as “midday meals” – in government primary schools. This paper provides a large-scale assessment of the enrollment effects of India’s midday meal scheme, which offers warm lunches, free of cost, to 120 million primary school children across India and is the largest school feeding program in the world. To isolate the causal effect of the policy, we make use of staggered implementation across Indian states in government but not private schools. Using a panel data set of almost 500,000 schools observed annually from 2002 to 2004, we find that midday meals result in substantial increases in primary school enrollment, driven by early primary school responses to the program. Our results are robust to a wide range of specification tests.

Subject(s): Economics, Politics & Business Environment, Keyword(s): coordination games, organizational routines, decentralized information, ex-post equilibria, cursed equilibria, multi-agent learning, rational learning JEL Classification: C73, D23

We investigate dynamic coordination among members of a problem-solving team who receive private signals about which of their actions are required for a (static) coordinated solution and who have repeated opportunities to explore different action combinations. In this environment ordinal equilibria, in which agents condition only on how their signals rank their actions and not on signal strength, lead to simple patterns of behavior that have a natural interpretation as routines. These routines partially solve the team's coordination problem by synchronizing the team's search efforts and prove to be resilient to changes in the environment by being ex post equilibria, to agents having only a coarse understanding of other agents' strategies by being fully cursed, and to natural forms of agents' overconfidence. The price of this resilience is that optimal routines are frequently suboptimal equilibria.

Subject(s): Management Sciences, Decision Sciences & Quantitative Methods, Keyword(s): self-control, temptation, inter-temporal choice, pre-commitment JEL Classification: D01, D03, D69, D90

We model self-control conflict as a stochastic struggle of an agent against a visceral influence, which impels the agent to act sub-optimally. The agent holds costly pre-commitment technology to avoid the conflict altogether and may decide whether to procure pre-commitment or to confront the visceral influence. We examine naïve expectations for the strength of the visceral influence; underestimating the visceral influence may lead the agent to exaggerate the expected utility of resisting temptation, and so mistakenly forego pre-commitment. Our analysis reveals conditions under which higher willpower – and lower visceral influence – reduces welfare. We further demonstrate that lowering risk aversion could reduce welfare. The aforementioned results call into question certain policy measures aimed at helping people improve their own behavior.

Subject(s): Economics, Politics & Business Environment, Keyword(s): vertical contracts, rent shifting, renegotiation, buyer power

This paper analyzes the strategic use of bilateral supply contracts in sequential negotiations between one manufacturer and two differentiated retailers. Allowing for general contracts and retail bargaining power, I show that the first contracting parties have incentives to manipulate their contract to shift rent from the second contracting retailer and these incentives distort the industry profit away from the fully integrated monopoly outcome. To avoid such distortion, the first contracting parties may prefer to sign a contract which has no commitment power and can be renegotiated from scratch should the manufacturer fail in its subsequent negotiation with the second retailer. Renegotiation from scratch induces the first contracting parties to implement the monopoly prices and might enable them to capture the maximized industry profit. A slotting fee, an up-front fee paid by the manufacturer to the first retailer, and a menu of tariff-quantity pairs are sufficient contracts to implement the monopoly outcome. These results do not depend on the type of retail competition, the level of differentiation between the retailers, the order of sequential negotiations, the level of asymmetry between the retailers in terms of their bargaining power vis-à-vis the manufacturer or their profitability in exclusive dealing.

Subject(s): Economics, Politics & Business Environment, Keyword(s): buyer mergers, non-linear supply contracts, merger efficiencies, size discounts, waterbed effects JEL Classification: D43, K21, L42

This paper analyzes the welfare implications of buyer mergers, which are mergers between downstream firms from different markets. We focus on the interaction between the merger's effects on downstream efficiency and on buyer power in a setup where one manufacturer with a non-linear cost function sells to two locally competitive retail markets. We show that size discounts for the merged entity has no impact on consumer prices or on smaller retailers, unless the merger affects the downstream efficiency of the merging parties. When the upstream cost function is convex, we find that there are "waterbed effects," that is, each small retailer pays a higher average tariff if a buyer merger improves downstream efficiency. We obtain the opposite results, "anti-waterbed effects," if the merger is inefficient. When the cost function is concave, there are only anti-waterbed effects. In each retail market, the merger decreases the final price if and only if it improves the efficiency of the merging parties, regardless of its impact on the average tariff of small retailers.

Subject(s): Economics, Politics & Business Environment, Technology, R&D Management Keyword(s): patent system, patent examination, State Intellectual Property Office China, duration analysis

The number of patent applications filed at the Chinese State Intellectual Property Office SIPO grew tremendously over the last decades and the SIPO has become the world's third largest patent office by 2009. In this paper, we provide an overview of the institutional background of patent examination in China. Moreover, we empirically analyze the determinants of the grant lags applicants have to expect at the SIPO. The multivariate duration analysis is based on the population of 443,533 patent applications filed at the SIPO between 1990 and 2002. The average grant lag is 4.71 years with considerable variation across 30 different technology areas. Interestingly, we find that Chinese applicants are able to achieve faster patent grants than their non-Chinese counterparts (even after controlling for various other determinants of grant lags). This might be an indication of a differential treatment of Chinese applicants which would be in violation of Art. 3 (National Treatment) and Art. 4 (Most-favored Nation Treatment) of TRIPS that has been signed by China in 2001.

Subject(s): Marketing, Ethics & Social Responsibility, Keyword(s): corporate social responsibility, employee-customer relationships, organizational identification, customer orientation

Corporate social responsibility (CSR) is an asset that companies can leverage to improve relationships with both customers and employees. This paper extends prior research by examining when and how CSR improves an employee's relationship with customers. More specifically, we develop a model linking CSR activity to one of marketing's most central constructs - the customer orientation of frontline employees. Drawing from social identity theory, the model predicts that the effect of CSR activity on customer orientation is mediated by the dual identities of frontline employees: identification with customers and identification with the company. Moreover, the model predicts that distinct aspects of CSR are related to each of these identities; the extent to which an employee senses that customers share his or her "demand" for CSR contributes to identification with customers, while the perceived efficacy of CSR activities and the employee's participation in CSR contribute to organizational identification. A field study of 534 customer-contact employees from multiple companies in the hospitality and retail industries provides empirical support for the model.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): motivation to lead, identity, self-role alignment, value congruence

In this article, we studied the affective and social normative motivation to lead (MTL) components among a sample of business executives with considerable leadership experience. We built on a solid stream of the leadership literature which suggested that leadership development processes are ingrained in identity processes. The paper presents two studies. In study 1, we examined the importance and psychological attachment individuals place on the leadership role (what is referred to as 'leader-identity centrality') and how it relates to their motivation to lead. The process of building a leader-identity has been described as an alignment process through which leadership skills and values become personally shared. In study 2, we seek to understand how self-role alignment, in terms of skills and values, relates to individuals' MTL. Self-role alignment was conceptualized as the similarity to a previous leader and as self-role value congruence. Results showed that placing importance on the professional leader-identity had a positive impact on the MTL. The impact of the 'leader-identity centrality' was more important for people with low self-efficacy perceptions for the social-normative component. 'Similarity with a previous leader' related to the MTL and that relationship was found to be fully mediated by leadership self-efficacy perceptions. Values were found to have significant effects on the MTL. While individual and role values had a linear (additive) relationship in predicting SNMTL, they showed a more complex relationship with respect to the AffMTL component. Findings are discussed with reference to the MTL literature and practical implications are proposed.

Subject(s): Economics, Politics & Business Environment, Strategy & General Management, Management Sciences, Decision Sciences & Quantitative Methods, Technology, R&D Management Keyword(s): first‐mover advantage, mobile telecommunications, consumer‐centric, pre‐entry experience, firm pre-entry experience JEL Classification: C51, L10, O33

We study first-mover advantages and organizational pre-entry experience in a market with highly heterogeneous consumers – the global mobile telecoms industry. Specifically, we consider the fact that early consumers will be different from later ones. We suggest that early entrants will attract higher-value consumers, which results in first-mover advantages. This effect will be enhanced if these firms have acquired prior technical experience. Conversely, later, mass-market adopters are attracted by established (domestic) brand names. Our empirical results from the global telecommunications industry support our assertions and provide important insight for the study of first-mover advantages in high-technology industries.

You may download a copy of the original version here.

Subject(s): Economics, Politics & Business Environment, Keyword(s): tax competition, sales taxes, multinationals, decreasing marginal cost, economies of scale JEL Classification: F12, F23, H25, H71

We examine a multinational firm which has a decreasing marginal cost, and the optimal sales tax policies of the regions where that firm operates. We show that the regions set higher sales taxes than those given by a cooperative equilibrium. Each region fails to fully internalize the effects of its tax level on another region's welfare and the incentives for that region's authority. Exponential cost functions which exhibit economies of scale (for example Cobb-Douglas) and linear demand functions satisfy our assumptions. Our results suggest the need to coordinate sales tax levels between countries and between smaller entities, like states in the United States. Smaller regions benefit more from such coordination. Lowering sales taxes in each region increases welfare for all regions, profits for firms, and consumer welfare.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): professional transitions, learning methods, leadership development

Leadership effectiveness can be divided into two broad categories that include 'getting along' behaviours (teamwork and empowerment of others) and/or 'getting ahead' behaviours (visioning, energizing, designing and rewarding). This study examines the effects of emotional intelligence on getting along and getting ahead leadership behaviours at work. Results from an analysis of a dataset derived from a 360° leadership behaviour survey completed by 929 managers indicated that emotional intelligence had a significant effect on collaborative behaviours at work, and that collaborative behaviours directly affected the inspirational side of leadership performance. Further, getting along behaviours were found to fully mediate the relationship between emotional intelligence and getting ahead behaviours. Theoretical and practical implications are discussed.

Subject(s): Product & Operations Management,

The integration of systems for pricing and revenue management must trade off potential revenue gains against significant practical and technical challenges. This dilemma motivates us to investigate the value of coordinating decisions on prices and capacity allocation in a stylized setting. We propose two pairs of sequen- tial processes for making static decisions - on pricing and revenue management - that differ in their degree of integration (hierarchical versus coordinated) and their pricing inputs (deterministic versus stochastic). For a large class of stochastic, price-dependent demand models, these four processes admit tractable solutions satisfying intuitive sensitivity properties. We assess the relative performance of hierarchical and coordinated approaches, revealing the benefits of coordination and the advantages of modeling demand uncertainty in pricing. We use industry data to establish that coordination can yield significantly more revenue than a traditional hierarchical process that first sets prices using a deterministic model and then optimizes booking limit decisions. Yet we also find that most benefits of a fully coordinated process can be obtained using a hierarchical process in which prices are adjusted to reflect demand uncertainty. We conclude that stochastic pricing (i.e., capturing demand risk in pricing decisions) can mitigate the effects of poorly coordinated pricing and revenue management functions.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): psychodynamics, leadership, leadership development

This working paper is a comprehensive review of psychodynamic principles applied to understanding of leadership issues. We start by identifying the place of the psychodynamic approach in the overall field of organizational studies, and the field of leadership studies in particular. We then continue to review some of the pioneering work that brought psychodynamic issues to the fore of attention of leadership researchers and practitioners. The working paper then looks at research finding on the role specific psychodynamic concepts play in the practice of leadership. We concluded by reviewing new opportunities for application of the psychodynamic approach to studies of leadership and the practice of leadership and leadership development. Limitations of the acceptance of the psychodynamic approach to understanding modern leadership in organizations are also be discussed.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Economics, Politics & Business Environment, Keyword(s): reference-dependent utility, gain-loss utility, loss aversion, sticky prices, sales, supermarket pricing JEL Classification: D11, D43, D81, L13

We study the properties of a profit-maximizing monopolist's optimal price distribution when selling to a loss-averse consumer, where (following Kőszegi and Rabin (2006)) we assume that the consumer's reference point is her recent rational expectations about the purchase. If it is close to costless for the consumer to observe the realized price of the product, then - in a pattern consistent with several recently documented facts regarding supermarket pricing - the monopolist chooses low and variable "sale" prices with some probability and a high and sticky "regular" price with the complementary probability. Realizing that she will buy at the sale prices and hence that she will purchase with positive probability, the consumer chooses to avoid the painful uncertainty in whether she will get the product by buying also at the regular price. If it is more costly for the consumer to observe the realized price, then - in a pattern consistent with the pricing behavior of some other retailers (e.g. movie theaters) - the monopolist chooses a sticky price and holds no sales. In this case, a sale is less tempting and hence less effective in generating an expectation to purchase with positive probability. We also show that ex-ante competition for loyal consumers leads to sticky pricing while ex-post competition leads to marginal-cost pricing, and discuss several other extensions of the model.

Subject(s): Economics, Politics & Business Environment, Keyword(s): information externality, strategic waiting, delay, information cascade, investment boom, optimal taxation JEL Classification: D62, D83

We study a two-player dynamic investment model with information externalities and provide necessary and sufficient conditions for a unique switching equilibrium. Within this setup, we ask whether policymakers should interfere when better informed agents make individual investment decisions. We find that when the public information is sufficiently high and a social planer therefore expects an investment boom, investments should be taxed. Conversely, any positive investment tax is suboptimally high if the public information is sufficiently unfavorable. We also show that an investment tax may increase overall investment activity.

Subject(s): Strategy & General Management, Marketing, Ethics & Social Responsibility, Keyword(s): corporate social responsibility, competitive strategy, challenger brand, affective trust

This research builds on the complementary corporate social responsibility (CSR) literatures in strategy and marketing to provide insight into the efficacy of CSR as a challenger's competitive weapon against a market leader. Through an investigation of a real world CSR initiative, we show that the challenger can reap superior business returns among consumers who had participated in its CSR initiative, relative to those who were merely aware of the initiative. Specifically, participant consumers demonstrate the desired attitudinal and behavioral changes in favor of the challenger, regardless of their affective trust in the leader, whereas aware consumers' reactions become less favorable as their affective trust in the leader increases. Furthermore, participation, unlike mere awareness, transforms the nature of the consumer-challenger relationship from a transactional one to a communal, trust-based one.

Subject(s): Economics, Politics & Business Environment, Keyword(s): payment card networks, interchange fees, merchant fees JEL Classification: G21, L11, L42, L31, L51, K21

Payment card networks, such as Visa, require merchants' banks to pay substantial "interchange" fees to cardholders' banks, on a per transaction basis. This paper shows that a network's profit-maximizing fee induces an inefficient price structure, over-subsidizing card usage and over-taxing merchants. In contrast to the literature we show that this distortion is systematic and arises from the fact that consumers make two distinct decisions (membership and usage) whereas merchants make only one (membership). These findings are robust to competition for cardholders and/or for merchants, network competition, and strategic card acceptance to attract consumers.

Subject(s): Economics, Politics & Business Environment, Human Resources Management/Organizational Behavior, Marketing, Ethics & Social Responsibility, Keyword(s): self-control, pro-social behavior, public good experiment, conditional cooperation JEL Classification: D01, D03, D64, D70

When facing the opportunity to allocate resources between oneself and others, individuals may experience a self-control conflict between urges to act selfishly and preferences to act pro-socially. We explore the domain of conditional cooperation, and we test the hypothesis that increased expectations about others' average contribution increases own contributions to public goods more when self-control is high than when it is low. We pair a subtle framing technique with a public goods experiment. Consistent with our hypothesis, we find that conditionally cooperative behavior is stronger (i.e., less imperfect) when expectations of high contributions are accompanied by high levels of self-control.

Subject(s): Economics, Politics & Business Environment, Human Resources Management/Organizational Behavior, Marketing, Ethics & Social Responsibility, Keyword(s): self-control, pro-social behavior, altruism, experiment JEL Classification: D01, D03, D64, D70

We test the proposition that individuals may experience a self-control conflict between short-term temptation to be selfish and better judgment to act pro-socially. Using a dictator game and a public goods game, we manipulated the likelihood that individuals identified self-control conflict, and we measured their trait ability to implement self-control strategies. Consistent with our hypothesis, we find that trait self-control exhibits a positive and significant correlation with pro-social behavior in the treatment that raises likelihood of conflict identification, but not in the treatment that reduces likelihood of conflict identification.

You may download a copy of the original version here.

Subject(s): Economics, Politics & Business Environment, Strategy & General Management, Marketing, Ethics & Social Responsibility, Management Sciences, Decision Sciences & Quantitative Methods, Keyword(s): corporate social responsibility, cause marketing, signaling games JEL Classification: D42, D21, M3, M14

This paper analyzes the optimal strategy of a profit-maximizing firm in response to social responsibility concerns of consumers. We show that firms will address responsibility demands if consumers are sufficiently motivated and society provides minimal monitoring of false claims. We further show that there is an interaction between the firm's basic positioning and the type of responsibility initiative it undertakes. A firm selling a low quality product commits to social responsibility in the form of good citizenship by investing in compliance with social norms valued by all consumers. In contrast, a firm selling a high quality product tends to contribute to social causes endorsed by its target customers. Under asymmetric information, when consumers cannot observe product quality, we find that a firm can signal its commitment to social responsibility by charging a higher price and by making exaggerated claims that would be too damaging if they were not largely true. Finally, in a vertically differentiated duopoly, we find that only one firm will take on social responsibility initiatives. Overall, these findings suggest that profit-driven competitive marketing strategies can fulfill social responsibility just as much as any other driver of consumer utility.

Subject(s): Economics, Politics & Business Environment, Keyword(s): antitrust law, horizontal anticompetitive practices, quantification of damages JEL Classification: L12, L41, K21, K41, C10

This paper argues that empirical economic analysis in court proceedings is subject to important economic and legal restrictions, cumulating in a fundamental trade-off between accuracy and practicality. We draw lessons from two influential German court cases - the paper wholesaler cartel decision of 2007 and the cement cartel decision of 2009. We characterise the trade-offs arguing that they need to be well understood, made transparent, and that decisions on how to proceed in light of these trade-offs have to be taken upfront by the court. In this respect, we believe that the three-step procedure (design, application, and robustness checks) followed by the German court in the cement case is well suited to meet the appropriate legal standard and requirements, both with respect to accuracy and practicality.

Subject(s): Technology, R&D Management Keyword(s): technology partnerships, trust, relational quality JEL Classification: M19

The purpose of this paper is to propose a framework for the monitoring of new technology introduction in a B2B environment. We focus on B2B environments, i.e. on projects where a new technological solution is implemented (and often jointly developed) with a client being either a company or an organization. In such a situation, where a supplier and its client agree to implement a new technology, both are exposed to a risk. The management of these risks can be handled through a couple of approaches: control or trust. The management literature has put a lot of attention on these two modes that play an important role because they drive the quality of the relationship between partners. We will explore their respective roles and build a methodology to monitor them along the life of a buyer-supplier relationship aiming at implementing new technology.

Subject(s): Marketing, Knowledge, Information & Comms System Management, Keyword(s): assertive message, consumer compliance, hedonic consumption, utilitarian consumption, forceful language, persuasion, freedom of choice, reactance JEL Classification: D18, M37

This paper is concerned with the tension between consumer persuasion and
freedom of choice. We study how assertive language (as in the slogan Just do it!)
affects consumer compliance in hedonic vs. utilitarian contexts. Previous
literature consistently claimed that forceful language would cause reactance and
decreased compliance. However, we find in four studies that assertive persuasion
is effective in contexts involving hedonic goods and hedonically framed
utilitarian goods. Our hypotheses emerge from sociolinguistic research and
confirm the relevance of linguistic research in consumer behavior.

Subject(s): Economics, Politics & Business Environment, Keyword(s): international trade, standards, technical trade barriers, ISO 9000, networks JEL Classification: F13, L15, C51

International standards have the potential to both promote and hinder international trade. Yet empirical scholarship on the standards-trade relationship has been held up due to some methodological challenges: measurement problems, varied effects, and endogeneity concerns. We are able to surmount these challenges while considering the impact of one particular standard on the country-pair trade flows between 91 nations over the 1995-2005 period. To deal with these challenges, we measure the degree of standardization via the penetration of ISO 9000 in individual nations, allow ISO diffusion to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) effects, and use instrumental variable and panel data techniques to overcome endogeneity concerns. We find strong evidence in support of ISO 9000 involving a common-language effect that enhances country-pair trade; yet, the evidence is more mixed with regard to the quality-signaling and information/compliance-cost effects. While we find ISO-rich nations (most notably European) to clearly benefit from the worldwide diffusion of standardization, ISO 9000 represents a de facto trade barrier for nations (e.g., the US and Mexico) lagging behind in terms of adoption.

Subject(s): Strategy & General Management, Keyword(s): inter-organizational trust, willingness to rely on trust, trustworthiness, contractual safeguards, international joint ventures, business partnerships, international business JEL Classification: M16

We explore the determinants of the willingness to rely on trust in a business partnership where both partners are at risk. By focusing on the willingness to rely on trust (WTRT) we reduce the methodological challenge of perception-based approaches where trust is measured as an expectation on the partner's behavior. Executives in several countries were presented with a proposal for a business partnership and were asked about the level of safeguards they would require in the agreement, their main concerns as to future conditions, and to what extent their views would be affected by several behaviors and/or events. Twelve hypotheses are tested using path analysis and multiple/hierarchical regressions. Whereas our findings confirm prior results on differences in the propensity to trust between nationalities, they suggest that several organizational, functional and contextual variables mediate their impact in determining WTRT in inter-organizational ventures. Among these are the partners' cultural proximity, their concerns about business risk, and two organizational demographics regarding the size of the organization. In addition, we found that sensitivity to external information on partner's benevolence and the respondent's education and industry affected WTRT significantly.

Subject(s): Economics, Politics & Business Environment, Keyword(s): telecommunications, access regulation, unbundling, investment JEL Classification: C51, L59, L96

We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering 70+ fixed-line operators in 20 countries over 10 years. Our econometric model accommodates: different investment incentives for incumbents and entrants; a strategic interaction of entrants' and incumbents' investments; and endogenous regulation. We find access regulation to negatively affect both total industry and individual carrier investment. Thus promoting market entry by means of regulated access undermines incentives to invest in facilities-based competition. Moreover, we find evidence of a regulatory commitment problem: higher incumbents' investments encourage provision of regulated access.

Subject(s): Economics, Politics & Business Environment, Keyword(s): regulation, competition, telecommunications, broadband, strategic investment JEL Classification: L51, L96, L10, K23

This paper analyses how different types of access regulation to next generation networks affect investments and consumer welfare. The model consists of an investment stage with uncertain returns and subsequent quantity competition. The access price is a function of investment costs and the regulatory regime. A regime with fully distributed costs or a regulatory holiday induces highest investments, followed by risk-sharing and long-run-incremental cost regulation. Risk-sharing creates most consumer welfare, followed by regimes with fully distributed costs, long-run-incremental costs and regulatory holiday, respectively. Risk-sharing benefits consumers as it combines relatively high ex-ante investment incentives with strong ex-post competitive intensity.

Subject(s): Economics, Politics & Business Environment, Keyword(s): process innovation, managerial incentives, efficiency, natural experiment JEL Classification: L20, O31, M52, J33

This paper asks whether adversity spurs the introduction of process innovations and increases the use of managerial incentives by firms. Using a large panel data set of workplaces in Canada, our identification strategy relies on exogenous variation in adversity arising from increased border security along the 49th parallel following 9/11. Our longitudinal difference-in-differences estimates indicate that firms responded to adversity by introducing new or improved processes, but did not change their use of managerial incentives. These results suggest that the threat of bankruptcy may provide impetus for improving efficiency.

Subject(s): Economics, Politics & Business Environment, Keyword(s): privacy, opt-in/opt-out, insurance JEL Classification: D8, M38

This paper shows that privacy concerns in commercial contexts are not solely driven by a desire to control the transmission of personal information or to avoid intrusive direct marketing campaigns. When they express privacy concerns, consumers anticipate indirect economic consequences of data use, such as price discrimination. Our general hypothesis is that consumers are capable of expressing differentiated levels of concerns in the presence of changes that suggest indirect consequences of information transmission. We suggest that there is a homo economicus behind privacy concerns, not simply a primal fear. This hypothesis is tested in a large-scale experiment evoking the context of affinity-based direct marketing of insurances, which relies on data transmitted by alumni associations. Because opt-in and opt-out choices offered by firms to consumers usually capture non-situational preferences about data transmission, their ability to enact privacy concerns is questioned by our findings.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): expatriates, international assignment, cosmopolitanism, crossculture adjustment, multinational corporations, preference persistence, assignment duration, survey method JEL Classification: D23

This paper questions the notion that expatriates should adjust to their host country, by showing that adjustment and its consequences are affected by cosmopolitanism and expected assignment duration. A study of 260 expatriates in the U.S. reveals that cosmopolitans expecting shorter (longer) assignments adjust more (less) to both work and non-work aspects of their host country, and that this is associated with increased well-being. In contrast, for non-cosmopolitans, more well-being occurs when longer (shorter) expected assignments are accompanied by increased (decreased) work and non-work adjustment. Further, from the findings emerges a clash between two aspects of successful expatriation - well-being and professional success: while non-work adjustment is not always associated with well-being, work adjustment is positively related to assignment performance across conditions and subjects.

Subject(s): Strategy & General Management, Keyword(s): trust, partnerships, joint-innovation, co-development, creativity

In this article we report on the design, prototyping and results of a research effort aimed at identifying if and how trust affects the creativity of a partnership between two economic agents. The methodology combines an experiment and two questionnaires. The purpose of the research is to increase our understanding of trust and its impact on the outcome of cooperation, and to derive some guidance for economic actors, namely R&D managers and executives who want to build trustful innovation oriented relationships with their business partners. Specifically, we investigate the effect of trust on partners' creativity and willingness to invest financially in a joint development. Our results show that more trustful partners invest higher amounts in the alliance, while there seems to be an optimum amount of mutual trust between partners to maximize their joint creativity; if the level of mutual trust is below or above this threshold; their joint creativity seems to decrease.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): career entrepreneurship, career success, career investments, three ways of knowing

This article introduces "career entrepreneurship," a rapidly spreading phenomenon in the global knowledge-driven economy. Career entrepreneurship involves taking an entrepreneurial approach to managing our careers. It means doing things that seem "illegitimate" to other people and contradict socially-recognized and accepted sequences of work experiences in terms of age, education, or socio-economic progression. This kind of behavior challenges established norms about typical career development. The evidence presented in this article suggests new possibilities for thinking about the way individuals invest in their careers, new insights for organizations interested in capturing the potential of career entrepreneurship, and new ideas for career and life coaches to support people embracing the phenomenon. The article offers a primer on career entrepreneurship to all three groups of readers, calling for more effective collaborative relationships and more effective leveraging of individuals' career investments.

You may download a copy of the original version
here.

Subject(s): Finance, Accounting & Control [Finance, Accounting & Corporate Governance], Keyword(s): technology commercialization, biotech, applied game theory, biotechnology, capabilities, innovation, entrepreneurship

This paper analyzes the technology commercialization strategy of an innovating firm when the incumbent firms possess specialized commercialization capabilities. According to the predominant framework, if the innovation is protected by a strong appropriabilty regime the optimal strategy is to license the innovation to an incumbent product firm. This paper argues by contrast that if the innovating firm has the ability to learn from its commercialization experience, its optimal strategy may be to commercialize alone or to pursue a hybrid arrangement (called co-promotion) whereby it licenses the innovation but retains the rights to participate in the commercialization process. The paper develops a game-theoretic model of the technology commercialization process and derives the conditions under which these different strategies are equilibrium outcomes. It then uses these to explain the pattern of arrangements pursued by biotech firms attempting to commercialize products in the pharmaceutical industry between 1978 and 2008. The results show that a firm is significantly more likely to use the hybrid strategy when there is a higher probability of commercializing a subsequent product in the same product field in future, when there are more firms competing to license the innovation, and when it is in a stronger financial position.

Previous version: R1.

Subject(s): Economics, Politics & Business Environment, Keyword(s): organizational capital, IT, computers, workplace productivity, matched employer-employee data JEL Classification: D20, L20, M54, O33

Using a large longitudinal, nationally representative workplace-level dataset, we explore the productivity gains associated with computer use and organizational redesign. The empirical strategy involves the estimation of a production function, augmented to account for technology use and organizational design, correcting for unobserved heterogeneity. We find large returns associated with computer use. We also find that computer use and organizational redesign may be complements or substitutes in production, and that the productivity gains associated with organizational redesign are industry-specific.

Subject(s): Product & Operations Management, Keyword(s): capacity allocation, revenue management, dynamic pricing, nonprofit

Nonprofit firms sometimes engage in for-profit activities for the purpose of generating revenue to subsidize their mission activities. The organization is then confronted with a consumption vs. investment trade-off, where investment corresponds to providing capacity for revenue customers, and consumption corresponds to serving mission customers. Exemplary of this approach are the Aravind Eye Hospitals in India, where profitable paying hospitals are used to subsidize care at free hospitals. We model this problem as a multi-period stochastic dynamic program. In each period, the organization must decide how much of the current assets should be invested in revenue-customer service capacity, and at what price the service should be sold. We provide sufficient conditions under which the optimal capacity and pricing decisions are of threshold type. Similar results are derived when the selling price is fixed but the banking of assets from one period to the next is allowed. We compare the performance of the optimal threshold policy with heuristics that may be more appealing to managers of nonprofit organizations, and assess the value of banking and of dynamic pricing through numerical experiments.

Subject(s): Product & Operations Management, Keyword(s): queueing system, health care, public policy, nursing, staffing, many-server limit theorems

The immediate motivation of this paper is California Bill AB 394, legislation which mandates fixed nurse-to-patient staffing ratios as a means to address the current crisis in the quality of health care delivery. Modeling medical units as closed queueing systems, we seek to determine whether or not ratio policies are effective at managing nurse workload. Our many-server asymptotic results suggest that ratio policies cannot provide consistently high service quality across medical units of different sizes. As a remedy, we recommend policies that deviate from the restrictive linear nature of ratio policies, employing the 'square root rule' commonly used to staff large service systems. Under some quality of care assumptions, our policies exhibit a type of 'super' pooling effect, in which, for large systems, the requisite workforce is significantly smaller than the nominal patient load.

Subject(s): Economics, Politics & Business Environment, Strategy & General Management, Keyword(s): critical Mass, network effects, technology diffusion, cellular telephony JEL Classification: C53, L14, M37

Critical Mass is a common feature of technology diffusion processes. We develop a structural model of demand with network effects to provide a rigorous definition of critical mass as a function of installed base, price and network effects. Using data from the digital cellular telephony market, we identify critical mass phenomena and find that differences in the critical mass point in different countries rest mainly on different countries' socioeconomic characteristics and the extent of competition in a country. This application illustrates that our demand model can be operationalized easily and can generate theoretically grounded empirical insights about critical mass phenomena.

Subject(s): Economics, Politics & Business Environment, Keyword(s): critical mass, network effects, diffusion of innovations, compatibility JEL Classification: C53, L14, M37

This paper develops a structural model of demand for a network good to provide a rigorous definition of critical mass. Using simulations, we demonstrate that our model of critical mass can be operationalized easily and can generate theoretically grounded insights about critical mass phenomena identified in empirical settings. We then propose a number of extensions to illustrate the flexibility of our model.

This working paper has been revised, ESMT-08-004(R1), under the new title Estimating Critical Mass in the Global Cellular Telephony Market.

Subject(s): Strategy & General Management, Keyword(s): negotiation, dance, concessions, bargaining

In all the literature on the theory and practice of negotiation, the governing metaphor remains consistently one of war or fighting. This is true not only for tactical schools of power-based negotiation, but even for more constructive, interest-based approaches. Our language is infused with talk of tactics, flanks, concessions, gaining ground and winning. This article explores the possible consequences of abandoning this picture in favor of the far too little explored metaphor of the dance. We will see that both the content and the process of negotiation can change dramatically once when we think of bargaining as an aesthetic activity which provides intrinsic joy as well as extrinsic benefits. In such a dance, there is plenty of room for competition as well as cooperation, as movements can be spirited and confrontational as well as smooth and harmonious. We identify many forms of dance in negotiation, and explore three: the dance of positioning, where passions and presentations interact proudly; the dance of empathy, when the partners come to better understand each other; and then the dance of concessions, where the deal is struck and the music comes to an end. Finally, we will try to show how the dance can be employed pedagogically, in teaching and training negotiation and mediation. In particular, the Brazilian dance of capoeira illustrates holistically and experientially how movement and rhythm can be interpreted both as fight and as a dance and how we can come to see a process as both aesthetic and purposeful at the same time. First feeling, then thinking and finally speaking, we can use this medium to explore the dynamics of confrontation and cooperation in a negotiation setting.

Subject(s): Marketing, Keyword(s): innovation, legacy, internet banking, Europe JEL Classification: M31

How do firms cope with the challenges of disruptive change in their industry? Numerous studies have highlighted that success with any prior technology creates a negative legacy effect for the next radical technological shift. We question the overly pessimistic view of such legacy effects and ask how quickly firms embrace echnological breakthroughs by radically innovating and who wins in the longer term? In this paper, we argue that legacy is a multi-faceted construct whose diverse aspects could simultaneously have different effects on innovation speed and market performance. We identify three main types of legacy related to echnology, organizational, and country-level influences. Previous research tends to focus on technological or market effects in isolation, whereas we seek to study the effects of both firm and country legacy simultaneously on speed to radical innovation and market performance over time. Based on a conceptual framework we develop six hypotheses concerning the legacy effects on initial speed radical innovation and subsequent market performance. We chose the European retail banking industry and the focal innovation of transactional Internet banking as a suitable empirical context to employ quantitative hypothesis testing. Detailed and longitudinal (1996-2001) data were collected for a sample of 123 banks from six European countries: United Kingdom, Germany, France, Sweden, Finland, and Denmark. We specified a model and used threestage least squares (3SLS) as a method to estimate simultaneous regression equations due to endogeneity of a key variable. We show that the prevailing negative view of legacies is likely to be overstated.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): careers, intelligent career investments, career divestment, upsetting events, Russia

In this paper we examine the role of disruptive or upsetting events in people's professional lives and explore how they influence individuals' investments in their careers. Based on previous research we have assumed that due to considerable societal and economic changes in Russia and the reported negative consequences felt by many individuals, the context of that country is a fruitful arena for an investigation of the role of upsetting events on individuals' careers. At the same time, despite the negative events and a disruption of many traditional career-supporting structures, a significant number of Russians managed to reinvent their careers and achieve tremendous objective and subjective success in their careers in a relatively short time period.

This paper examines stories about career investments of 140 successful entrepreneurs from Russia. A significant portion of these people explicitly reported influence of upsetting events on their own career investments. Based on the exploration of career stories, the paper introduced a typology of the upsetting events in the Russian context. The events were generally classified into those that represented "macro" and "micro" upsetting events. Macro events refer to changes in socio-economic, and political systems. Micro events refer to the events that only concern the individual him- or herself, or may include events at work or at home. Our analysis of the career investments of the Russian entrepreneurs using the intelligent career concept shows that when faced with the upsetting events individuals tend to (a) reconsider their existing events, (b) divest from their old ways of knowing, and (c) invest in relatively new ways of knowing.

Our study calls a particular attention to the role of career divestments, or discontinuing certain ways of investing in order free resources for a different investment expected to be more fruitful in terms or returns. Attention to divestment may be warranted due to the increased unpredictability of working lives of today's career actors.

This study contributes to responding to a call for a better understanding of the role of upsetting events on people's careers and the society at large. We also bring further our understanding of human adjustment to the sometimes upsetting changes in their surroundings through working life, thus enhancing our understanding of the role of careers in socio-economic systems. Last but not least, the study also contributes to a better understanding of careers in modern Russia. With the increasing role of Russia on the international political and economic arena, understanding people through looking at their working lives is a good start for multiple potential research endeavors in the fields of career research and beyond.

Subject(s): Management Sciences, Decision Sciences & Quantitative Methods, Keyword(s): branding, brand choice, consumer behavior, decision making under uncertainty JEL Classification: C91, D10, D80, M31

This paper investigates situations where a sizable sub-set of consumers prefer an inferior (dominated) offer made by an established brand to a superior (dominating) offer made by a less-established brand. Established brands are those for which consumers hold more confident beliefs concerning overall quality. Through a series of eight experiments, we test the hypothesis that the preference for a dominated established brand is linked to ambiguity aversion, a seemingly unrelated pattern of choice behavior between monetary gambles. We first show a correlation between ambiguity aversion and the preference for dominated established brands. We then demonstrate that the preference for established brands is enhanced when ambiguity aversion is made more salient in unrelated preceding choices. To further study the ambiguity-reducing properties of established brands, the last experiments assign brand names to monetary gambles, and it appears that (a priori unrelated) established brand names increase the likelihood of choosing ambiguous gambles. Overall, this research argues that brand equity for longstanding brands derives (at least in part) from consumers' tendency to avoid ambiguity.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): organizational behavior, human resource management, executive education, identity, accelerated development

This working paper explores the challenges of accelerated development of organizational talent. The meaning of the word 'accelerated' is that such development takes place at a pace that is significantly higher than that of 'traditional' development that allows an individual to learn the intricacies of the current job, observe incumbents in a higher level position (usually, one level up), practice elements of the boss' job when being delegated tasks, undergoing formal training, or benefiting from the knowledge accumulated by others and codified in the knowledge management systems. Accelerated development means, contrary to the usual, more traditional developmental path, bypassing traditionally expected career steps, stretched over a longer period of time learning opportunities, and/or age-related developmental progression. Accelerated development is a necessity for organizations facing unprecedented growth, lack of qualified individuals in the internal or external labor markets, and significant pressures from other organizations that are ready to 'poach' talented executives and employees and offer them even higher levels of responsibility and remuneration. Organizations also respond with accelerated development initiatives to the individuals engaged in career entrepreneurship, i.e., those who make alternative career investments in order to enjoy quicker returns in terms of career growth and progression.

Subject(s): Economics, Politics & Business Environment, Keyword(s): cellular telephony, diffusion, usage intensity, network effects, consumer heterogeneity, fixed-mobile substitutability JEL Classification: L1, L52, O38

We study the dynamics of usage intensity of second-generation cellular telephony over the diffusion curve. Specifically, we address two questions: First, can we draw conclusions about the underlying drivers of technology diffusion by studying usage intensity? Second, what is the effect of high penetration of previous generations and competing networks on network usage intensity? Using an operator-level panel covering 41 countries with quarterly data over 6 years, we find that heterogeneity among adopters dominates network effects and that different technological generations are complements in terms of usage, but substitutes in terms of subscription.

Subject(s): Economics, Politics & Business Environment, Keyword(s): diffusion, information technology, retail competition JEL Classification: L5, L81, O33

Cross-country or cross-industry studies of technology diffusion typically estimate how independent factors affect diffusion speed or timing, often based on a two-stage approach. In many applications, however, countries (industries) differ most in the saturation level of diffusion. In a novel, single-stage econometric approach to a standard diffusion model, we therefore estimate how the saturation level co-varies with independent factors. In our application to diffusion of an important retail information technology, we focus on the competitive effect of hypermarkets (superstores). We also find standard scale, income and labor substitution effects.

Subject(s): Economics, Politics & Business Environment, Keyword(s): structural econometric model, network effects, compatibility, mobile telecommunications JEL Classification: C51, D12, L96

I develop a structural demand model for mobile telephone service, which facilitates the identification of network effects and compatibility between networks. Network effects are measured by the dependence of consumer willingness to pay on the installed base of subscribers. Compatibility is measured by the relative extent of cross- and own-network effects. I then estimate the model using quarterly panel data from the Polish mobile telephone industry from 1996-2001 and find strong network effects and - despite full interconnection of the mobile telephone networks - low compatibility. I also show that ignoring network effects leads to an overestimation of elasticity of demand.

Subject(s): Technology, R&D Management Keyword(s): patenting, patent thickets, patent portfolio races, complexity, technological opportunities JEL Classification: L13, L20, O34

We investigate incidence and evolution of patent thickets. Our empirical analysis is based on a theoretical model of patenting in complex and discrete technologies. The model captures how competition for patent portfolios and complementarity of patents affect patenting incentives. We show that lower technological opportunities increase patenting incentives in complex technologies while they decrease incentives in discrete technologies. Also, more competitors increase patenting incentives in complex technologies and reduce them in discrete technologies. To test these predictions a new measure of the density of patent thickets is introduced. European patent citations are used to construct measures of fragmentation and technological opportunity. Our empirical analysis is based on a panel capturing patenting behavior of 2074 firms in 30 technology areas over 15 years. GMM estimation results confirm the predictions of our theoretical model. The results show that patent thickets exist in 9 out of 30 technology areas. We find that decreased technological opportunities are a surprisingly strong driver of patent thicket growth.

Subject(s): Economics, Politics & Business Environment, Keyword(s): reference-dependent utility, price stickiness, monopoly pricing, kinked demand curve, countercyclical markups, sales, promotions, (seemingly) predatory pricing JEL Classification: D11, D42, L12, L16, L66, L67

We develop a model in which a profit-maximizing monopolist with uncertain cost of production sells to loss-averse, rational consumers. We first introduce techniques for analyzing the demand of such consumers, and then investigate the monopolist's pricing strategy. Compared to lower possible purchase prices, paying a higher price in the firm's pricing distribution is assessed by consumers as a loss, decreasing demand for the firm's product. We provide conditions under which a firm with continuously distributed marginal cost responds by (locally) eliminating this "comparison effect" and choosing a discrete price distribution; that is, prices are "sticky". Price stickiness is more likely to obtain when the cost distribution has high density, the price responsiveness of demand is low, or consumers are likely to purchase. Whether or not prices are sticky, the monopolist wants to at least mitigate the comparison effect, leading to countercyclical markups. On the other hand, if consumers expect to buy the product, they experience a loss if they end up not consuming it, increasing their willingness to pay for it. Thus, despite the tendency toward price stability, there are also circumstances in which a firm with unchanging cost offers random "sales" to increase customers' expectation to consume, attracting more demand at higher prices.

Subject(s): Economics, Politics & Business Environment, Keyword(s): estimation of equilibrium oligopoly models, competitive non-linear pricing, common agency JEL Classification: D43, D82, L96

This Paper estimates an equilibrium oligopoly model of horizontal product differentiation where firms compete in non-linear tariffs. The estimation explicitly incorporates the information contained in the shape of the tariffs offered by competing duopolists to recover the structural parameters associated to the distribution of consumers' unobserved heterogeneity. The model identifies the determinants of the non-uniform equilibrium markups charged to consumers who make different usage of cellular telephone services. Estimates are then used to evaluate the welfare effects of competition, a reduction of the delay in awarding the second cellular license, and alternative linear and non-linear pricing strategies. Our policy evaluations reveal that a single two-part tariff achieves 63% of the potential welfare gains and 94% of the profits of a more complex fully non-linear tariff.

Subject(s): Finance, Accounting & Control [Finance, Accounting & Corporate Governance], Keyword(s): decision-making uncertainty, industrial market offerings, complex solutions, typology

Customer decision-making uncertainty (DMU) is a persistent phenomenon in
business-to-business markets. However, there is substantial variation in the
degree customers perceive DMU and hence suppliers should react to it. Based
on existing industrial buying typologies, this paper proposes a new classification
scheme to explain variance in customer DMU. To this end, market offering
complexity and co-creation are used as defining dimensions and four ideal types
of industrial market offerings are constructed. We show theoretically that DMU is
especially prevalent for complex solutions. The paper closes with guidance for
suppliers of industrial market offerings and an outlook for future research.

Subject(s): Finance, Accounting & Control [Finance, Accounting & Corporate Governance], Keyword(s): Dienstleistungen, Unternehmensberatung, Wissensprodukte, Business-Märkte

In unserem Arbeitspapier betrachten wir ein Phänomen, welches erst seit kurzer Zeit insbesondere auf Business Märkten zu beobachten ist. Verstärkt treten nämlich Unternehmen, die ursprünglich auf traditionellen Industrie- oder Dienstleistungsmärkten tätig waren, mit eigenen Ausgründungen auch als Anbieter von professioneller Unternehmensberatung auf. Wir bezeichnen dies als Competence Commercialization. Zunächst analysieren wir einige allgemeine Entwicklungen, die die Entstehung dieses Phänomens begünstigt haben und seine Bedeutung auch künftig fördern werden. Wir entwickeln dann ein Rahmenkonzept für die Ableitung von Forschungsfragen und stellen vier solche Forschungsfragen vor. Theoriebasiert wird anschließend für jede Forschungsfrage eine erste Problemmodellierung vorgenommen. Ebenso leiten wir erste Schlussfolgerungen ab. Abschließend wird aufgezeigt, wie weitere Forschungsschritte aussehen könnten.

Subject(s): Finance, Accounting & Control [Finance, Accounting & Corporate Governance], Keyword(s): Law of small numbers, performance persistence, overreaction, hedge fund investors, hot-hand bias JEL Classification: G11, G14, G23

Believers in the law of small numbers tend to overinfer the outcome of a random process after a small series of observations. They believe that small samples replicate the probability distribution properties of the population. We provide empirical evidence indicating that investors are mistakenly driven by this psychological bias when hiring or firing a fund manager. Using quarterly data between 1994 and 2000 of 752 hedge funds, we look at investment and divestment decisions of investors after a successful (or losing) streak of a fund manager. Apparently, sophisticated investors exhibit a "hot-hand" bias that may seriously harm their wealth.

Subject(s): Finance, Accounting & Control [Finance, Accounting & Corporate Governance], Keyword(s): hedge funds, flow-performance relation, performance persistence, liquidity restrictions, fund monitoring, searching costs, smart money JEL Classification: G11, G23, G14, G15

We explore the flow-performance interrelation by explicitly separating the investment and divestment decisions of hedge fund investors. The results show that different determinants and evaluation horizons underlie both decisions. While money inflows are sensitive to past long-run performance, outflows exhibit an immediate and sustained response to past performance in the short run. As a consequence, the shape of the flow-performance relation differs depending on the time horizon being analyzed. We find a weaker flow-performance relation for winning funds at quarterly horizons compared to annual horizons, which may explain why quarterly persistence in hedge fund performance is not competed away. Indeed, we also find evidence that most investors are unable to exploit the persistence of the winners. Conversely, investors are fast and successful in deallocating from the persistent losers, ensuring a disciplining mechanism for lowquality funds. Further, our findings do not support the existence of smart money.

Subject(s): Economics, Politics & Business Environment, Keyword(s): measuring market power, banking JEL Classification: G2, L1, C3

This paper provides evidence on the empirical separability of input and output market imperfections. We specify a model of banking competition and simultaneously estimate bank conduct in output (loan) and input (deposit) markets. Our results suggest that firms display some degree of non-competitive behavior in both the loan and the deposit markets. Moreover, we find that the input side and the output side are empirically separable, that is the measurement of market power on one side of the market is not affected by assuming that the other side of the market is perfectly competitive. Our results suggest that empirical studies of market power that concentrate on either the input side or the output side are not subject to significant misspecification error.

Subject(s): Ethics & Social Responsibility, Knowledge, Information & Comms System Management, Technology, R&D Management Keyword(s): privacy, experiments

The purpose of this paper is to detect the presence of sophisticated economic motives behind individual concerns for privacy. Recent theories of privacy demands in commercial contexts have assumed an economically aware and sophisticated consumer, capable of evaluating the indirect consequences of information transmission. We present evidence, from a large-scale experiment evoking a realistic context, that privacy concerns are indeed sensitive to the indirect consequences of information transmission.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): leader and leadership development, distributed leadership, network building, boundaryless organizations, talent management, corporate universities

In this introduction to a book on leadership development, we argue that leaders in the 21st century need to recognize that building their organization's leadership capabilities is going to be a major differentiator for future success. We emphasize that organizations that do not have properly structured leadership development processes in place will be at a disadvantage. Organizations that take leadership development seriously outperform the competition. Furthermore, we also put forth that as the world is changing, leadership is no longer defined by what a single leader does (the "Great Man" trait theories) but by the ability to collaborate, motivate and to manage networks. In this day and age of highly diverse teams, matrix structures, and global organizations, the talent in network building is key to creating collaborative teams and a boundaryless organization. We suggest that due to the changing nature of organizations - a more distributed view of leadership will be needed thus shifting the focus from the traditional single leader to an intricate and complex web of leaders who possess a range of abilities and experiences necessary to ensure that the leadership function is carried out to the benefit of the wider organisation. From what we have learned from our own experience, we argue that the best approach to developing leaders is through various forms of self-assessment, action learning, and apprenticeship activities. Furthermore, with the emergence of the knowledge economy, we explore the fact that companies are now playing an increasingly active role in the continued education of their own workforce - one example being the creation of corporate universities. In this context, we also discuss the leadership development 'toolbox' that is needed to make leadership development activities a success. Some of the more commonly used tools in this toolbox include classroom lectures, leadership exercises, an outdoor adventure training, case analyses, simulations, and 360-degree evaluations (which is basically a technique involving the evaluation of leader by his/her boss, peers, subordinates and the leader himself/herself).

A pdf file of this working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): group work, 360-degree assessments, emotional intelligence, reflective space, leadership development, transformation, motivational need systems, clinical paradigm

Leadership development is not a quick fix. Although many people (including those entering leadership development programs) are impatient for results to materialize, quick-fix solutions put unrealistic expectations on everyone. Gimmicky programs promising supposedly instant results are not what leadership development is all about. In our experience, such programs rarely produce lasting results. Like it or not, developing leaders takes time-it can't be done overnight. Ironically, although leadership problems may take time to emerge, when it comes to finding solutions many people in the talent development business lose patience. They prefer instant answers and want instant change. But knowing what we know about human development, we should understand that people need time to evolve. Educating leaders is not something that can be achieved by a single event. It is a process.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Marketing, Ethics & Social Responsibility, Keyword(s): marketing, supply chain, CSR communication, stakeholder marketing, fair trade JEL Classification: M31

While considerable attention has been given to the harm done to consumers by marketing, less attention has been given to the harm done by consumers as an indirect effect of marketing activities, particularly in regard to supply chains. The recent development of dramatically expanded global supply chains. The recent development of dramatically expanded global supply chains has resulted in social and environmental problems upstream that are attributable at least in part to downstram marketers and consumers. Marketers have responded mainly by using CSR communication to counter the critique of CSR practice, but these claims of ethical corporate behavior often lack credibility and can result in a backlash against brands. The paper argues that more adequate attention to the harmful upstream effects of downstream marketing and consumption decisions requires greater attention to stakeholder marketing and marketer efforts to help create responsible consumers. It concludes by identifying implications for further research in this important emergent area of marketing ethics.

This working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): leadership, organization change, stress, oganizational culture

How do organizations become and remain great places to work? That is the question that primarily motivates this chapter. The authors claim that is precisely the adaptive capability of self-renewal which characterizes great places to work. But changing mindsets is never easy and the need for adaptation usually induces a high degree of stress, both at individual and organizational levels. Even if a simple recipe for facing continuous adaptation does not exist, learning how to manage organizational change processes effectively may serve as a platform to motivate people to create better organizations and to keep individual and organizational stress at acceptable levels. This chapter discusses the internal and external pressures that may trigger organizational changes. Then, it explores the four stages of the organizational change process - creating a shared mindset, changing behaviour, institutionalizing change, and transforming the organization. Implications and challenges for practitioners are drawn.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): transitional leadership development, evaluation of leadership development programs, psychodynamic orientation to leadership development

In this article, we describe transitional leadership development programs as the beginning of a journey, and we propose that for this type of program, an integrated collaborative approach to evaluation is logical and appropriate. We argue that the leadership development evaluation process for one program described in this article is continuous. On-going evaluation includes base line entry interviews, 360 degree testing, action planning and experimentation, and most significantly, live case study presentations and feedback loops, which are embedded into the rhythm of the work and lives of the participants who attend our program. Our post-program retest study has validated, albeit on a small scale, that change does occur in a direction that we predicted, as a result of the program.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): transformational leadership development programs, leadership group coaching, 360-degree feedback surveys, executive education outcomes, Global Executive Leadership Inventory

Although leadership development programs are in high demand, research into their long-term outcomes has been sparse. The main purpose of this article is to explore how a transformational leadership development program can affect the lives of its participants. We address three fundamental questions: (1) what do transformational leadership programs transform?, (2) how does the change process occur?, and (3) how are behavioral changes maintained over time?

To set the stage for this research, we begin by looking at why executives attend leadership development programs. Subsequently, we present the results of an exploratory longitudinal outcome study of a leadership development program for senior executives. Changes are evaluated both quantitatively through test-retest results of a 360° survey across 12 key leadership dimensions, taken by 11 senior executives in 2005 and again in 2006. We also explore change qualitatively through semi-structured interviews with the executives in our sample.

The results of this exploratory study show that, for one cohort of participants who have completed the program, individual 360° ratings one year post-program in several GELI dimensions have improved. Dimensions that show marked increase in ratings included rewarding and feedback and emotional intelligence-we posit that this indicates an enhanced level of self-awareness among participants. We identified several positive change factors mentioned consistently by participants in this program: involvement in group coaching; realistic actions plans; acting out and experimenting with new behaviors; and follow-up partnerships in a learning community. We look at the best practices that enhance individual development and change, and discuss limitations of this study as well as implications for future research.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior,

It is not surprising that roughly 70% of executives believe they are in the top 25% of their profession in terms of performance. Many of them are truly unaware of the way in which their behavior impedes functioning - their own, and others' - in their organization. The result is a serious gap between what many leaders say they do, and what they really do. Properly designed 360-degree feedback questionnaires can help by providing a tool to help leaders compare their self-perceptions with the observations of colleagues or others who know them well. This Working Paper describes the 360° feedback survey instruments developed by the INSEAD Global Leadership Center. The article provides an overview of the Global Leadership Executive Inventory, the Personality Audit, and the Leadership Archetype Questionnaire. We discuss the psychometric development and pedagogical use of each instrument in leadership development programs.

A pdf file of this working paper may be available at INSEAD.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): competencies, motives, emotional intelligence

In this study, we analyse empirically a competency model. We assert that the emotional intelligence (EI) model may not be the best way of grouping managerial competencies and we propose a new way of embedding competencies within a motivational domain. We build on McClelland's concept of motives to propose a new way of grouping competencies. This study is base on data from employees of three medium-sized organization (n=223) who complete a competency measure based on the proposal by Boyatzis and Goleman. We analyse empirically which of the factor structures (EI or motive-based) best fits the data. Our results confirm the appropriateness of grouping competencies into three clusters which have parallels with the three social motives of affiliation, power and achievement. Our study seeks to overcome the paucity of empirical research relevant to competency models and to expand the competency literature towards a theory of work motivation. Implications are drawn and future research directions are suggested.

This is a revised version of INSEAD Working Paper no. 2008/70/OB.

Subject(s): Human Resources Management/Organizational Behavior, Keyword(s): middle management, leadership development, learning methods, identity-based models, situated learning

Middle managers are usually forgotten in the leadership development efforts of organizations. Even if they make up more than half of the workforce, they are the collective group that receive the least training attention among the entire workforce. The main objective of this paper is to increase the understanding of the progression of intermediate managers in organizations from a leadership development perspective. Two issues are discussed: what changes delineate the transition from middle managers to middle leaders, and what are the needs of middle management in terms of leadership development. The paper proposes a constellation of practices that are in sync with the realities of adult and career development, based on some of the most recent literature advances concerning the notions of identity-based models and situated learning practices. The implications of this proposal for research on leadership development interventions are drawn.

This paper may be available at INSEAD.

Subject(s): Marketing, Ethics & Social Responsibility, Keyword(s): corporate social performance, stock price, advertising, R&D, risk

Develops a multivariate model linking corporate social performance, advertising, and R&D to firm-idiosyncratic risk, and tests it using data for a sample of Fortune magazine's "America's Most Admired Companies" and from Compustat and the Center for Research in Security Prices.

Subject(s): Marketing, Keyword(s): brand, brand health, measurement

In recent years business strategists have criticized managers for "market share mentality"-
an over-reliance on market share to measure brand performance. To build
long-term customer franchise, they suggest, more sensitive measures reflective of
underlying "brand health" are needed. This raises some important questions for
marketing researchers. What is brand health? What are its components? How do
we measure brand health? How does it relate to future brand performance?

Subject(s): Marketing, Keyword(s): brand, brand health, measure

The brand health survey was conducted during January and February 2002. The overall objective was to assess how brand strength/equity is currently being measured in leading firms. Many MSI members have expressed interest in sharing practices and benchmarking on other firms. The study dealt with very specific issues surrounding the kinds of measures managers currently use to track the health of their brands, the criteria they use to adopt these measures and their reactions to some new measures currently being developed.

Subject(s): Marketing, Ethics & Social Responsibility, Keyword(s): corporate social initiatives, corporate social responsibility, cause-related marketing, corporate social marketing, Procter & Gamble

Investment in corporate social initiatives is escalating in accordance with the increasing
recognition of the vast potential of such initiatives. For example, although it represents only a small proportion of overall corporate expenditure on social initiatives, U.S. corporate spending on cause-related marketing jumped from $125 million in 1990 to about $828 million in 2002 (Porter and Kramer 2002). In today's era of marketing accountability, corporate managers urgently need to assess the returns to social initiatives to justify and sustain commitment of resources to social issues. Addressing this need, our research develops a framework to assess the social and business returns to corporate social marketing (CSM) and empirically tests the framework in the context of "Crest Healthy Smiles 2010" program supported by Proctor & Gamble. CSM is a strategy that uses marketing principles and techniques to foster behavior change in a target population, improving society while at the same time building markets for products or services (Kotler and Lee 2004). In other words, a CSM initiative strategically combines business agenda with a social need and thus provides a context to examine simultaneously the social and business returns.

Subject(s): Economics, Politics & Business Environment,

This paper studies the effects of integration among downstream local distributors on the entry of upstream producers in a bargaining theoretic framework. We show that integration of downstream distributors may increase their bargaining power vis-à-vis upstream producers and thus lower incentives for entry in the upstream production industry. In order to explain price formation in such a market, we use a bargaining solution that generalizes the Nash solution.

Subject(s): Economics, Politics & Business Environment, Keyword(s): France, growth, infrastructure, lobbying, political economy JEL Classification: D72, D78, O40

This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985-91 suggest that influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. Moreover, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel and when imposing an exogenous preference for convergence in regional productivity levels.

Subject(s): Economics, Politics & Business Environment, JEL Classification: L12

This paper shows the profit-maximising pricing strategy of a monopolist selling a fixed capacity before a certain time. The driving example is an airline filling a plane before departure time. The results show that the fear of rationing taking place at departure induces consumers with a high valuation to pay a premium at an earlier date. This premium varies with the number of potential consumers and the number of remaining seats. Another equilibrium is for the monopolist to simply set prices at a high level and leave with unused capacity. The authors also analyse the incentives for the monopolist to reduce capacity ex ante, in order to increase the likelihood of rationing equilibria to emerge.