This is a picture of ESMT books and working papers

Publications

ESMT Berlin publishes in international academic journals, which are first-class in their respective fields. Research also provides cutting-edge and profound insights for the business community as well as the classroom through managerial publications and case studies. This rare integration of research and practice makes ESMT Berlin an outstanding location for generating relevant and ground-breaking knowledge.

Forthcoming

LeChatelier-Samuelson principle in games and pass-through of shocks

Journal of Economic Theory
Alexei Alexandrov, Özlem Bedre-Defolie
Abstract:
Subject(s): 
Economics, politics and business environment

The LeChatelier-Samuelson principle states that, as a reaction to a shock, an agent's short-run adjustment of an affected action is smaller than its long-run adjustment (when the agent can also adjust other related actions). We extend the principle to strategic environments where the long-run adjustment also accounts for other players adjusting their strategies. We show that the principle holds for supermodular games (strategic complements) satisfying monotone comparative statics and provide sufficient conditions for the principle to hold in games of strategic substitutes/heterogeneity. We discuss the principle's implications for cost pass-through of multiproduct firms.


Forthcoming

Willingness to rely on trust in global business collaborations: Context vs. demography

Journal of World Business
Francis Bidault, José de la Torre, Stelios H. Zanakis, Peter Smith Ring
Abstract:
Subject(s): 
Strategy and general management
Keyword(s): Inter-organizational trust; Propensity to trust; Willingness to rely on trust; Trustworthiness; Contextual factors in trust; Demographic factors in trust; Contractual safeguards; International joint ventures (IJVs) and collaborations
JEL Code(s): M16

We examine how 712 executives from several countries, industries and backgrounds are willing to rely on trust (WTRT) when entering a collaborative venture where both partners are at risk. Presented with a specific partnership opportunity they were asked about the level of safeguards required to enter into an agreement. We test for the impact of contextual and demographic conditions and confirmed differences in WTRT between nationalities, but find that several contextual variables mediate this impact. Different nationalities treat three dimensions of trust (integrity, reliability, and benevolence) differently as they are shown to be time dependent. We conclude that context is as important as demography in determining an executive’s WTRT.

With permission of Elsevier


Forthcoming

Naivete-based discrimination

The Quarterly Journal of Economics
Paul Heidhues, Botond Kőszegi
Abstract:
Subject(s): 
Economics, politics and business environment
Keyword(s): Sophistication, naivete, first-degree, price, discrimination, third-degree price discrimination, big data, privacy
JEL Code(s): D21, D49, D69, L19

We initiate the study of naivete-based discrimination, the practice of conditioning offers on external information about consumers’ naivete. Knowing that a consumer is naive increases a monopolistic or competitive firm's willingness to generate inefficiency to exploit the consumer's mistakes, so naivete-based discrimination is not Pareto-improving, can be Pareto-damaging, and often lowers total welfare when classical preference-based discrimination does not. Moreover, the effect on total welfare depends on a hitherto unemphasized market feature: the extent to which the exploitation of naive consumers distorts trade with different types of consumers. If the distortion is homogenous across naive and sophisticated consumers, then under an arguably weak and empirically testable condition, naivete-based discrimination lowers total welfare. In contrast, if the distortion arises only for trades with sophisticated consumers, then perfect naivete-based discrimination maximizes social welfare, although imperfect discrimination often lowers welfare. And if the distortion arises only for trades with naive consumers, then naivete-based discrimination has no effect on welfare. We identify applications for each of these cases. In our primary example, a credit market with present-biased borrowers, firms lend more than socially optimal to increase the amount of interest naive borrowers unexpectedly pay, creating a homogenous distortion. The condition for naivete-based discrimination to lower welfare is then weaker than prudence.


Forthcoming

The open innovation research landscape: Established perspectives and emerging themes across different levels of analysis

Industry and Innovation
Marcel Bogers, Ann-Kristin Zobel, Allan Afuah, Esteve Almirall, Sabine Brunswicker, Linus Dahlander, Lars Frederiksen, Annabelle Gawer, Marc Gruber, Stefan Haefliger, John Hagedoorn, Dennis Hilgers, Keld Laursen, Mats Magnusson, Ann Majchrzak, Ian P. McCarthy, Kathrin M. Moeslein, Satish Nambisan, Frank T. Piller, Agnieszka Radziwon, Cristina Rossi Lamastra, Jonathan Sims, Anne L. J. Ter Wal
Abstract:
Subject(s): 
Knowledge, information and comms system management, Technology, R&D management
Keyword(s): open innovation, review, research, theory, contingencies, knowledge, collaboration
JEL Code(s): D83, O30

This paper provides an overview of the main perspectives and themes emerging in research on open innovation. The paper is the result of a collaborative process among several open innovation scholars — having a common basis in the recurrent Professional Development Workshop (PDW) on “Researching Open Innovation” at the Annual Meeting of the Academy of Management. In this paper, we present opportunities for future research on open innovation, organized at different levels of analysis. We discuss some of the contingencies at these different levels, and argue that future research needs to study open innovation — originally an organizational-level phenomenon — across multiple levels of analysis. While our integrative framework allows comparing, contrasting, and integrating different perspectives at different levels of analysis, further theorizing will be needed to advance open innovation research. On this basis, we propose some new research categories as well as questions for future research — particularly those that span across research domains that have so far developed in isolation.


Forthcoming

Evaluating novelty: The role of panels in the selection of R&D projects

Academy of Management Journal
2016 TIE / VHB 2016 Jürgen Hauschildt Award best research publication in innovation management, 2016 EBS Best-Paper-Award “Innovation Management” 2016
Paola Criscuolo, Linus Dahlander, Thorsten Grohsjean, Ammon J. Salter
Abstract:
Subject(s): 
Technology, R&D management

Building on a unique, multi-source, and multi-method study of R&D projects in a leading professional service firm, we develop the argument that organizations are more likely to fund projects with intermediate levels of novelty. That is, some project novelty increases the share of requested funds received, but too much novelty is difficult to appreciate and is selected against. While prior research has considered the characteristics of the individuals generating project ideas, we shift the focus to panel selectors and explore how they shape the evaluation of novelty. We theorize that a high panel workload reduces panel preference for novelty in selection, whereas a diversity of panel expertise and a shared location between panel and applicant increase preference for novelty. We explore the implications of these findings for theories of innovation search, organizational selection, and managerial practice.

With permission of the Academy of Management


Forthcoming

Adverse incentives in crowdfunding

Management Science
Abstract:
Subject(s): 
Finance, accounting and corporate governance
Keyword(s): Financial disintermediation, crowdfunding, consumer lending
JEL Code(s): G01, G20, G21, G23

This paper analyzes the substantially growing markets for crowdfunding, in which retail investors lend to borrowers without financial intermediaries. Critics suggest these markets allow sophisticated investors to take advantage of unsophisticated investors. The growth and viability of these markets critically depends on the underlying incentives. We provide evidence of perverse incentives in crowdfunding that are not fully recognized by the market. In particular we look at group leader bids in the presence of origination fees and find that these bids are (wrongly) perceived as a signal of good loan quality, resulting in lower interest rates. Yet these loans actually have higher default rates. These adverse incentives are overcome only with sufficient skin in the game and when there are no origination fees. The results from the analysis in this paper provide more general implications for crowdfunding, its structure and regulation.

© 2015 INFORMS


Forthcoming

Contracts as a barrier to entry in markets with non-pivotal buyers

American Economic Review
Özlem Bedre-Defolie, Gary Biglaiser
Abstract:
Subject(s): 
Economics, politics and business environment
Keyword(s): Long-term contracts, breakup fees, foreclosure
JEL Code(s): D21, D86, L13

Considering markets with non-pivotal buyers we analyze the anti-competitive effects of breakup fees used by an incumbent facing a more efficient entrant in the future. Buyers differ in their intrinsic switching costs. Breakup fees are profitably used to foreclose entry, regardless of the entrant's efficiency advantage or level of switching costs. Banning breakup fees is beneficial to consumers. The ban enhances the total welfare unless the entrant's efficiency is close to the incumbent's. Inefficient foreclosure arises not because of rent shifting from the entrant, but because the incumbent uses a long-term contract to manipulate consumers' expected surplus from not signing it.


Forthcoming

Do credit shocks affect labor demand? Evidence for employment and wages during the financial crisis

Journal of Financial Intermediation
Jörg Rocholl, Alexander Popov
Abstract:
Subject(s): 
Economics, politics and business environment, Finance, accounting and corporate governance
Keyword(s): Credit shocks, financial crisis, labor demand, employment, wages
JEL Code(s): D92, G01, G21, J23, J31

We study the impact of exogenous funding shocks to German savings banks during the U.S. subprime mortgage crisis on the labor decisions of 30,000+ private and public firms in Germany. We find that firms with credit relationships with affected banks experience a significant decline in labor demand relative to firms with credit relationships with healthy banks, manifested in a simultaneous reduction in firm‐level employment and average wages. The employment effect is more pronounced in larger firms, while the wage effect is stronger in smaller firms. Both employment and wages go back to pre‐shock levels three years after the shock.

(Abstract from author's website.)


Forthcoming

How do brokers broker? Tertius gaudens, tertius iungens, and the temporality of structural holes

Organization Science
Eric Quintane, Gianluca Carnabuci
Abstract:
Subject(s): 
Human resources management/organizational behavior
Keyword(s): Brokerage process, unembedded interactions, tertius gaudens and tertius iungens, relational event model

Organizational network research has demonstrated that multiple benefits accrue to people occupying brokerage positions. However, the extant literature offers scant evidence of the process postulated to drive such benefits (information brokerage) and therefore leaves unaddressed the question of how brokers broker. We address this gap by examining the information-brokerage interactions in which actors engage. We argue that the information-brokerage strategies of brokers differ in three critical ways from those of actors embedded in denser network positions. First, brokers more often broker information via short-term interactions with colleagues outside their network of long-term relationships, a process we label “unembedded brokerage.” Second, when they engage in unembedded brokerage, brokers are more likely than are actors in dense network positions to intermediate the flow of information between the brokered parties, consistent with a tertius gaudens strategy. Conversely, and third, when they broker information via their network of long-term ties (embedded brokerage), brokers are more likely than are densely connected actors to facilitate a direct information exchange between the brokered parties, consistent with a tertius iungens strategy. Using a relational event model, we find support for our arguments in an empirical analysis of email communications among employees in a medium-sized, knowledge-intensive organization, as well as in a replication study. The theory and evidence we present advance a novel, temporal perspective on how brokers broker, which reconciles structural and process views of network brokerage. Our findings substantiate the notion of brokers as a dynamic force driving change in organizational networks, and they help to integrate within a unitary explanatory framework tertius iungens and tertius gaudens views of brokerage.

© 2016, INFORMS


Forthcoming

Infuriating impasses: Angry expressions increase exiting behavior in negotiations

Social Psychological and Personality Science
Jeremy A. Yip, Martin Schweinsberg
Abstract:
Subject(s): 
Human resources management/organizational behavior
Keyword(s): Negotiations, emotion, conflict, selfishness, timing, communication, social norms, impasses, anger

Prior research has focused on the influence of emotional expressions on the value of negotiated outcomes. Across three studies, we demonstrate that people interacting with angry counterparts become more likely to walk away from a negotiation, resulting in an impasse. In Study 1, participants who encountered counterparts expressing anger were more likely to choose an impasse, relative to those with neutral counterparts. In Study 2, building on the emotion-as-social-information model, we found that inferences of selfishness mediate the effect of angry expressions on impasses. In Study 3, we found that timing moderates the relationship between angry expressions and impasses. Furthermore, we demonstrated that perceptions of inappropriateness mediate the interactive effect of timing and angry expressions on impasses. Taken together, our work reveals that expressing anger is risky in negotiations because people infer that angry counterparts are selfish and become more likely to exit negotiations.


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