Showing papers by "HEC Paris published in 2004"

Executive Insights: Real Differences between Local and International Brands: Strategic Implications for International Marketers:

Abstract: In the current context of globalization, firms have concentrated their efforts on the development of international brands. As a result, international brand portfolios have been restructured, and many successful local brands have been eliminated. This article’s objective is to improve the understanding of local brand differences and competitive advantages relative to international brands. To achieve this, the authors reanalyzed the Young & Rubicam database Brand Asset Valuator and examined more than 744 brands across the four largest countries in Europe: the United Kingdom, Germany, France, and Italy. The authors discuss the managerial implications of the findings for international marketers as they develop their ideal international brand portfolios.

CEO charisma, compensation, and firm performance

Abstract: We examined the relationships among CEO perceived charisma, CEO compensation packages, and firm performance in a sample of Fortune 500 companies over a 10-year period. CEO charisma ratings obtained from company CFOs and VPs for HRM were directly related to total CEO pay but not to any firm performance measures. CEO perceived charisma also was related to shareholder value, under highly uncertain conditions. In essence, charismatic CEOs seem able to influence their compensation packages and stock prices but not other indicators of firm performance. Implications for future charismatic leadership research and CEO compensation–firm performance work are discussed.

Accounts Manipulation: A Literature Review and Proposed Conceptual Framework

Abstract: Accounts manipulation has been the subject of research, discussion and even controversy in several countries including the USA, Canada, the U.K., Australia, Finland and France. The objective of this paper is to provide a comprehensive review of the literature and propose a conceptual framework for accounts manipulation. This framework is based on the possibility of wealth transfer between the different stake‐holders, and in practice, the target of the manipulation appears generally to be the earnings per share and the debt/equity ratio. The paper also describes the different actors involved and their potential gains and losses. We review the literature on the various techniques of accounts manipulation: earnings management, income smoothing, big bath accounting, creative accounting, and window‐dressing. The various definitions of all these, the main motivations behind their application and the research methodologies used are all examined. This study reveals that all the above techniques have common elements, but there are also important differences between them.

Asymmetric performance: the market share impact of scale and link alliances in the global auto industry

Abstract: This study investigates how participating in strategic alliances with rivals affects the relative competitive positions of the partner firms. The paper builds on studies that show significant differences in the outcomes of scale and link alliances. The study argues that the more asymmetric outcomes of link alliances translate into greater changes in the relative market shares of the partner firms, due to unbalanced opportunities for inter-partner learning and learning by doing. We find support for this argument by examining 135 alliances among competing firms in the global automobile industry, from 1966 to 1995

Sunk Costs and the Depth and Probability of Technology Adoption

Abstract: I propose that sunk costs of learning and the output over which these costs are spread determine the probability and depth of technology adoption. Depth of adoption describes the extent to which firms exploit the advantages of the technology. I find that plant size but not firm size predicts CAD and CNC adoption. Learning costs are lumpy, are closely connected to technology adoption and determine both the probability and depth of adoption. Depth of adoption is considerably more plant idiosyncratic than the decision to adopt.

Queueing networks and the topological design of supply chain systems

Abstract: Manufacturing firms are linking their internal processes to external suppliers and customers. The resulting supply chain is often a very large network of activities and resources. Modeling and optimization of such complex systems is a new area of research for which exact analytical results are obviously very difficult if not impossible. We develop a methodology based on analytical queueing networks coupled with nonlinear optimization to design supply chain topologies and evaluate various performance measures. The results obtained from small network configurations as well as from the case study discussed in the paper demonstrate that our approach is a very useful tool to analyze congestion problems and to evaluate the performance of the network topologies.

Probabilities as Similarity-Weighted Frequencies

Abstract: A decision maker is asked to express her beliefs by assigning probabilities to certain possible states. We focus on the relationship between her database and her beliefs. We show that, if beliefs given a union of two databases are a convex combination of beliefs given each of the databases, the belief formation process follows a simple formula: beliefs are a similarity-weighted average of the beliefs induced by each past case.

How to Deal with Missing Categorical Data: Test of a Simple Bayesian Method

Abstract: We analyze the efficiency of six missing data techniques for categorical item non-response under the assumption that data are missing at random or missing completely at random. With efficiency we mean a procedure that produces an unbiased estimate of true sample properties that, as well, is easy to implement. The investigated techniques include list-wise deletion, mode substitution, random imputation, two regression imputations and a Bayesian model-based procedure. We analyze efficiency under six experimental conditions for a survey-based data set. We find that list-wise deletion is efficient for the data analyzed. If data loss due to list-wise deletion is an issue, the analysis points to the Bayesian method. Regression imputation is also efficient, but the result is conditioned on the specific data structure and may not hold in general. Additional problems arise when using regression imputation making it less appropriate.

Conducting and Evaluating Critical Interpretive Research: Examining Criteria as a Key Component in Building a Research Tradition

Abstract: The collection, analysis, and interpretation of empirical materials are always conducted within some broader understanding of what constitutes legitimate inquiry and valid knowledge In the Information Systems field, there are wellknown and widely accepted methodological principles consistent with the conventions of positivism However, the same is not yet true of interpretive research The emergence of interpretivism in IS research was advocated by Walsham (1995) and corroborated by a series of special issues in outstanding IS journals An example of the effort to advance the legitimacy of studies grounded in an interpretive position is the set of principles suggested by Klein and Myers (1999), which applies mostly to hermeneuticsHowever, because not all interpretive studies are built on a hermeneutical philosophical base, they recommended that other researchers, representing other forms of interpretivism, suggest additional principles This paper follows in this vein, advocating the timely emergence of a critical interpretive perspective in IS research and pressing the argument that an extended version of Golden-Biddle and Locke’s (1993) criteria is not only appropriate but comprehensive as initial guidelines for conducting and evaluating critical interpretive research Critical interpretive research, research criteria, intensive research, qualitative research

Axiomatization of an exponential similarity function

Abstract: An agent is asked to assess a real-valued variable y based on certain characteristics x=(x^{1},...,x^{m}), and on a database consisting of n observations of (x^{1},...,x^{m},y). A possible approach to combine past observations of x and y with the current values of x to generate an assessment of y is similarity-weighted averaging. It suggests that the predicted value of y, y_{n+1}^{s}, be the weighted average of all previously observed values y_{i}, where the weight of y_{i} is the similarity between the vector x_{n+1}^{1},...,x_{n+1}^{m}, associated with y_{n+1}, and the previously observed vector, x_{i}^{1},...,x_{i}^{m}. This paper axiomatizes, in terms of the prediction y_{n+1}, a similarity function that is a (decreasing) exponential in a norm of the difference between the two vectors compared.

Quid Pro Quo in IPOs: Why Book-building is Dominating Auctions

Abstract: The book-building procedure for selling initial public offerings to investors has captured significant market share from auction alternatives in recent years, despite significantly lower costs in both direct fees and initial underpricing when using the auction mechanism. This Paper shows that in the French market, where the frequency of book-building and auctions was about equal in the 1990s, the ostensible advantages to the issuer using book-building were advertising-related quid pro quo benefits. Specifically, we find that book-built issues were more likely to be followed and positively recommended by the lead underwriters and were also more likely to receive 'booster shots' post-issuance if the shares had fallen. Even non-underwriters' analysts appear to promote book-built issues more, but only when their underwriters stood to gain from acquiring shares in future issues from the recommended firm's lead underwriter. Book-built issues also appeared to garner more press in general (but only after they had chosen book-building, not before). Yet, we do not observe valuation or return differentials to suggest these types of promotion have any value to the issuing firm. We conclude that underwriters using the book-building procedure have convinced issuers of the questionable value of advertising and promotion of their shares.

Fact-Free Learning

Abstract: People may be surprised by noticing certain regularities that hold in existing knowledge they have had for some time. That is, they may learn without getting new factual information. We argue that this can be partly explained by computational complexity. We show that, given a database, finding a small set of variables that obtain a certain value of R^2 is computationally hard, in the sense that this term is used in computer science. We discuss some of the implications of this result and of fact-free learning in general.

The Organization of Delegated Expertise

Abstract: This Paper proposes a theory of the optimal organization of delegated expertise. For incentive purposes, a principal should reward an expert when their recommendation is confirmed either by the facts or by other experts' recommendations. With a single expert, we show that the agency costs of delegated expertise exhibit diseconomies of scale. Possible organizational responses to this problem include basing decisions on a less than optimal amount of information, and relying on multiple experts. We analyze the source of gains from having multiple experts in different contracting environments corresponding to different nexi of collusion between the principal and/or the experts.

Impact of e-Government Interoperability in Local Governments

Abstract: Interoperability is a key concept for understanding the changes in progress in e-government. These changes are made gradually and with a phased implementation. The paper proposes conceptual frameworks to analyse actual practices and to guide the development of electronic administration. It stresses the need to consider different dimensions (political, organizational, human and technical) when implementing interoperable systems in local governments.

Predictability of Long-Term Spin-Off Returns

Abstract: Investment strategies of buying and holding recently spun off companies and their parents have received significant attention from the investment community in the recent past. Despite their popularity, the existing evidence on the attractiveness of spin-offs appears piecemeal. In this paper, we examine in detail stock price performance of spin-offs and their parents on a comprehensive sample that covers the last 36 years. We show that excess returns are indeed positive for both subsidiary and parent companies over almost all holding periods considered. For subsidiaries, the results appear both economically and statistically significant after various adjustments for risk. This evidence is consistent with investors earning an above normal rate of return by investing in recently spun off subsidiaries. For parents, however, after correcting for one very large positive outlier, returns are not statically or economically different from zero.

Rationality of Belief. Or Why Bayesianism is Neither Necessary Nor Sufficient for Rationality

Abstract: Economic theory reduces the concept of rationality to internal consistency. The practice of economics, however, distinguishes between rational and irrational beliefs. There is therefore an interest in a theory of rational beliefs, and of the process by which beliefs are generated and justified. We argue that the Bayesian approach is unsatisfactory for this purpose, for several reasons. First, the Bayesian approach begins with a prior, and models only a very limited form of learning, namely, Bayesian updating. Thus, it is inherently incapable of describing the formation of prior beliefs. Second, there are many situations in which there is not sufficient information for an individual to generate a Bayesian prior. Third, this lack of information is even more acute when we address the beliefs that can be attributed to a society. We hold that one needs to explore other approaches to the representation of information and of beliefs, which may be helpful in describing the formation of Bayesian as well as non-Bayesian beliefs.

Les déterminants de la stratégie de « capitalisation » des frais de recherche et développement

Abstract: According to French ac- counting standards, companies have the possibility to capitalize their R&D expenses under certain condi- tions. By analyzing the annual reports of non-financial companies listed on the Paris stock exchange and in- cluded in the SBF250 index (annual reports 2000), we try to identify which firm characteristics can help predict this accounting choice. Our results provide evidence that compa- nies capitalizing R&D are those be- longing to hi-tech industries or hav- ing a high beta.

Structuration des processus de décision : le cas de la transfusion sanguine française (1950-1985)

Abstract: Ce travail est issu d'une reflexion de nature theorique sur les modes de structuration des processus de decision et d'action au sein des organisations, et d'une interrogation concrete sur les processus a l'oeuvre dans le systeme francais de la transfusion sanguine ayant conduit aux decisions de 1983-1985 qui ont fait l'objet de diverses procedures judiciaires (<< affaires du sang contamine"). La reflexion theorique s'inscrit au confluent de l'analyse strategique des organisations et de l'etude des processus de decision strategique, et s'appuie sur le concept de paradigme strategique de l'organisation. La recherche empirique se fonde sur une analyse historique tres approfondie du reseau d'etablissements de transfusion sanguine depuis la fin des annees 1940 et de deux institutions importantes dans son environnement: l'Association francaise des hemophiles et le ministere de la Sante. Elle analyse aussi de facon tres detaillee l'evolution des connaissances scientifiques sur les infections transmissibles par transfusion, et notamment les hepatites puis le sida. Les resultats font apparaitre le caractere particulierement structurant des paradigmes strategiques du reseau transfusionnel (ou l'autonomie strategique, technique et financiere de chaque etablissement emerge a la fois comme une valeur cardinale et comme une contrainte) et de l'Association francaise des hemophiles et de ses medecins conseils (qui privilegient, a partir du milieu des annees 1970, des modes therapeutiques dont les risques sont constamment minimises, notamment aupres des hemophiles), alors que le ministere de la Sante se concentre sur les problemes de regulation d'un systeme sur lequel il ne parvient pas a avoir prise. Par rapport a une approche judiciaire ayant privilegie une lecture tres individualiste des responsabilites, la recherche met en evidence le poids d'un contexte structurel qui determine largement les strategies des acteurs, et illustre la pertinence heuristique du concept de paradigme strategique.

Le développement d'offres des services dans les PMI

Abstract: Le developpement des services apparait comme une tendance majeure des economies developpees au XXeme siecle, a la fois en terme macro-economique (domination du secteur tertiaire) qu?en termes micro-economiques, du fait de la nature des tâches assurees au sein des entreprises ou de la nature des produits/services offerts par ces dernieres. En meme temps, le developpement d?offres de services est souvent presente comme une strategie de differenciation, susceptible d?eviter aux entreprises une confrontation directe sur les prix de produits banalises. Consciente de ces enjeux, l?Union Europeenne a finance un programme de recherche sur le developpement d?offres de services dans les PMI de l?Union. Ce programme de recherche avait les objectifs suivants : ? Faire un etat des lieux des pratiques existantes en matiere de developpement d?offres de service dans les PMI. ? Recenser les difficultes rencontrees par ces entreprises lors du developpement de services. ? Proposer des dispositifs favorisant la prise de conscience de l?importance des services chez les acteurs concernes, encourageant le developpement des services au sein de ces PMI et facilitant les necessaires adaptations de ces entreprises aux exigences liees a la production et a la vente de services. Dans ce cahier de recherche, nous rendons compte des resultats de la premiere phase du programme de recherche, phase qui avait pour objectif de realiser une etude des pratiques existantes, tant sur le plan theorique que sur le plan pratique. En particulier, nous avons cherche a repondre aux questions suivantes : de quels services parle-t'on ? ces services sont-ils largement commercialises par les entreprises ? pourquoi et comment les delivrent-elles ? quelles difficultes rencontrent-elles quand elles souhaitent passer de la production/commercialisation de biens a la production/commercialisation de services ? La premiere partie du document presente les principaux travaux existants autour du theme des « services dans l?industrie ». Elle definit par ailleurs les concepts qui seront utilises dans la recherche empirique, et debouche sur la constitution d?une liste nominative de services. La seconde partie du cahier de recherche est consacree a l?etude empirique (methode et resultats) qui a ete realisee dans quatre pays europeens pour connaitre l?etat de developpement de l?offre de services.

The Market Response to Restructuring: A Behavioral Model

Abstract: In this paper, I model the behavior of producers, consumers, and regulators in deciding to restructure the electricity sector and estimate their equilibrium response to the newly restructured market. The empirical model consists of simultaneous price and restructuring equations with endogenous switching and cross-equation correlation in the errors. This approach allow me to account for the influence of special interest groups and potential selection bias in which countries choose to restructure. I estimate distinct shifts from restructuring in both industrial and residential prices, and for English speaking, Scandinavian, and South American countries. I find that in all countries, it is industrial consumers that experience the price effects of restructuring, while residential consumers remain largely unaffected. In English speaking and Scandinavian countries, industrial prices decrease while in South American countries they increase. This is consistent with the political–economic environment in which these countries have considered restructuring.

The Fate of the Yugoslav Model: A Case Against Legal Conformity

Abstract: In the Socialist Federation of the Republics of Yugoslavia (the former Yugoslavia), enterprises were typically socially-owned. These enterprises were the flagship of the famous Yugoslav model of selfmanagement: neither private nor state-owned, they were a collective property controlled by their employees, the "workers." After the break-up of the former Yugoslavia in the early 90s, five successor States (the former Yugoslav republics) inherited the socially-owned enterprises: Bosnia and Herzegovina, Croatia, FYR Macedonia, Serbia and Montenegro, and Slovenia. Due to the complex federal organization of some of these States however, the notion of social ownership was in fact inherited by no less than nine distinct legal systems.1 At the time of the writing of this paper, hundreds of enterprises are still socially-owned,2 but the future of this legal form is already settled. In this regard, one would find it difficult to verify the famous Balkanic diversity clichd: the nine responses are in the form of a privatization law. In a context of transition to a market economy, the decision to privatize is banal, and so is, probably, the subsequent convergence towards western corporate forms and governance models. But the socially-owned enterprises are not, for their peculiar legal nature and their mode of governance entail disconcerting legal questions, e.g., what do they own? Who owns them? Can they be privatized without a prior nationalization?

Los fundamentos del Pensamiento y las Prácticas Administrativas. 2- LA TRILOGÍA ADMINISTRATIVA

Abstract: Para comprender las acciones y las conductas de una persona, es necesario rastrear los fundamento simplicitos. Esto exige prestar atencion no solo a las acciones concretas de la persona, a sus actitudes y a sus palabras, sino buscar sobre que estan profundamente apoyadas esas maneras de actuar, de comportarse y de hablar, mas alla de las explicaciones racionales y logicas que la persona pueda dar. Para lograr esto, he propuesto ya un marco de analisis que comporta cuatro partes estrechamente ligadas entre si y que presento bajo la forma de un rombo.Luego de haber presentado cada uno de los cuatro elementos de base – las practicas, los metodos, los valores y los principios generales – mostre como se podia utilizar el rombo para reconstituirla estructura intima de una actividad concreta o de una conducta.A medida que progresaba mi investigacion sobre un marco de analisis que me permitiera comprender y decodificar las experiencias o los hechos concretos vividos en el marco de mitrabajo administrativo, una segunda estructura comenzo a revelarse progresivamente como un telon de fondo, a la cual le llame trilogia administrativa. Globalmente, se trata de tres grandes funciones de base que toda persona y toda sociedad deben realizar para sobrevivir ydesarrollarse.

Advertising and Pricing at Multiple-Output Firms: Evidence From U.S. Thrift Institutions

Abstract: We derive five hypotheses regarding market competition, price, and advertising from a theoretical model of a profit maximizing depository institution, and test these conjectures in a simultaneous system of deposit interest rates and advertising expenditures for a data panel of 1,867 thrift institutions that offer 13 different deposit products in 666 local markets in the U.S. between 1994 and 2000. We find some support for each of our hypotheses - branding, information, Dorfman-Steiner, structure-advertising, and structure-price - with the strength of the results often depending on the attributes of the deposit products or the characteristics of the thrifts.

PLS Regression and PLS Path Modeling for Multiple Table Analysis

Abstract: A situation where J blocks of variables are observed on the same set of individuals is considered in this paper. A factor analysis logic is applied to tables instead of individuals. The latent variables of each block should well explain their own block and in the same time the latent variables of same rank should be as positively correlated as possible. In the first part of the paper we describe the hierarchical PLS path model and remind that it allows to recover the usual multiple table analysis methods. In the second part we suppose that the number of latent variables can be different from one block to another and that these latent variables are orthogonal. PLS regression and PLS path modeling are used for this situation. This approach is illustrated by an example from sensory analysis.

Spreadsheet-Based Professional Modelling

Abstract: This paper describes, with reference to several professional models developed by the author, how the use of Excel often allows for a much higher efficiency to cost ratio than more traditional approaches such as specialized packages or the use of development languages. Used efficiently, and with the assistance of add-ins, Excel may help build models which most people are convinced would demand more sophisticated software. Of course, this often implies the use of elaborate techniques which reduce the negative impact of Excel's natural limits in terms of number of columns, calculation time, bugs, and so on. There are many other reasons why Excel models are so interesting for business: the interactivity of these models, their reduced development time and cost, their user-friendliness, the positive user/client attitude the model is not a black box, and the rich graphic possibilities when the model does not limit itself to standard Excel graphs.

Les marques face au hard discount : Quelles stratégies ?

Abstract: La montee inexorable de la distribution de type hard discount en Europe est actuellement le premier sujet de preoccupation des etats-majors de tous les secteurs. En effet, grâce a leur business model tres specifique et bien rode, les ecarts de prix avec les grandes marques mais aussi les marques de distributeurs sont considerables et desequilibrent les perceptions de valeur patiemment construites jusqu'alors par les marques. Quelles strategies mener face a cette distribution croissante qui ne vend pas de marques?

Rule-Based and Case-Based Reasoning in Housing Prices

Abstract: People reason about real-estate prices both in terms of general rules and in terms of analogies to similar cases. We propose to empirically test which mode of reasoning fits the data better. To this end, we develop the statistical techniques required for the estimation of the case-based model. It is hypothesized that case-based reasoning will have relatively more explanatory power in databases of rental apartments, whereas rule-based reasoning will have a relative advantage in sales data. We motivate this hypothesis on theoretical grounds, and find empirical support for it by comparing the two statistical techniques (rule-based and case-based) on two databases (rentals and sales).

The Ecology of Risk Taking

Abstract: We analyze the risk level chosen by agents who have private information regarding their quality. We show that even risk-neutral agents will choose risk strategically to enhance their reputation in the market, and that such choices will be influenced by the mix of other agents' types. Assuming that the market has no strong prior about whether the agents are good or bad, good agents will choose low levels of risk, and bad agents high levels. Empirical evidence is gathered on 2462 firms over 24 years. The results support the model: agents of higher quality have less variable performance.