Erasmus Research Institute of Management - ERIM Events

Does a Broken Heart Lead to an Empty Wallet? The Effects of Social Exclusion on Personal Spending and Consumption

Mon, 23 Nov 2009 11:00:00 GMT

Humans are thoroughly social beings, making social exclusion deeply aversive. How does exclusion affect spending and consumption? The literature suggests several possibilities, but we predicted and found that exclusion prompted people to spend and consume in ways that fostered affiliation. Specifically, exclusion increased likelihood of buying a product that would demonstrate group loyalty to a new peer (Experiment 1), caused people to shift their spending preferences to match those of a peer (Experiment 2), and increased willingness to spend on an unpleasant product (chicken feet), but only when it enhanced chance of affiliation (Experiment 3). Socially excluded people were even willing to consume illicit drugs, but only when the act of consumption was public and would lead to inclusion (Experiment 4). Overall, social exclusion caused people to spend and consume in an affiliative manner, rather than in a self-indulgent or impulsive fashion.

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Dr. S. Puntoni

Are Stars Opinions Worth More? The Relation Between Analyst Reputation and Recommendation Values

Tue, 24 Nov 2009 14:30:00 GMT

We examine the relation between analyst reputation and their recommendation values. We measure personal reputation using the Institutional Investor All-American (AA) awards. Daily rebalanced portfolios of AA analysts’ recommendations yield significantly better risk-adjusted performance than those of non-AA analysts. AAs’ alphas are concentrated in the top-ranked (1stand 2nd-place) AAs; the lower-ranked (3rd-place and runner-up) AAs do not perform better than non-AAs. Alphas for all analyst groups fall as investors’ access to recommendation information is delayed. But the assessed performance differential between the top-ranked AAs and other analysts is only marginally larger for investors who have private, pre-release access to recommendations than for public investors. The top-ranked AAs are also more experienced and have longer tenure as AAs than the lower-ranked AAs. Our results hold for both tech and non-tech sectors, are moderately strengthened by trading-cost adjustments, and are robust to alternative portfolio construction methods. We conclude that the top-ranked AAs are more skilled and produce more valuable information than other analysts. While the institution-granted AA status is a noisy indicator of analyst skill overall, the top two ranks of this award are useful signals from which public investors can benefit.

Lily Fang joined INSEAD as an Assistant Professor of Finance in 2003. She holds an MA and PhD in Finance from the Wharton School, University of Pennsylvania. Prior to studying finance, she studied mathematics, actuarial science and management science at Simon Fraser University, Vancouver, Canada.
Professor Fang's research interest includes financial intermediation - the role of banks, investment banks, and stock analysts, and the relation between information environment and stock returns. Her work has examined issues such as the relation between investment bank reputation and the price and quality of underwriting service, and the effect of reputation - both personal reputation of individual analysts, and institutional reputation of investment banks - on the conflict of interest problem in Wall Street research. Professor Fang's work has appeared in prestigious journals such as the Journal of Finance and Financial Times.
At INSEAD, Professor Fang teaches Financial Markets and Valuation, a core MBA finance course, and Private Equity Finance, an elective course in Finance. She is a co-director of the Mastering Alternative Investments program, an open-enrollment executive program.

The Erasmus Finance Seminar is jointly sponsored by ERIM and the Tinbergen Institute.

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Viorel Roscovan

Corporate Social Responsibility and the Legitimacy of the Shareholder Primacy Norm: A Rawlsian Analysis

Wed, 25 Nov 2009 14:00:00 GMT

The shareholder primacy norm (SPN) is considered a major impediment to corporate social responsibility. We argue that although the SPN is not legally enforceable, it is a powerful social norm among managers. Applying Rawls’ social contract theory, we evaluate the legitimacy of the SPN, concluding that it would endorse a principle of governance in line with shareholder primacy rather than stakeholder theory. Nonetheless, we also argue that justice considerations of Rawls’ theory impose exogenous constraints on shareholder primacy, primarily through legislation.

David Ronnegard is a post-doctoral fellow at the INSEAD Centre for Executive Education and Research in Abu Dhabi.

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Yolanda Jahier

I want to be a Data DJ!

Wed, 25 Nov 2009 15:00:00 GMT

This talk provides an overview of my work towards enabling Data DJs. That is enabling users to create, remix, record, and share their data analyses as easily as DJs make and share mixes. The talk touches on a variety of topics including linked data, scientific workflows, provenance, enterprise mashups and Facebook. It draws these topics into a unified research framework and discusses future research directions.

Paul Groth is a postdoctoral researcher in the Knowledege Representation and Reasoning Group in the Artificial Intelligence Department at the Vrije Universiteit Amsterdam. His research focuses on provenance, knowledge sharing, and multi-institutional distributed systems in the context of e-Science. Paul has previously done research in the Information Sciences Institute at the University of Southern California, the Fraunhofer Institute for Manufacturing Engineering and Automation and the Florida Institute for Human and Machine Cognition. He holds a PhD in computer science from the University of Southampton.

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Wolf Ketter

Individually Adapted Sequential Conjoint-Choice Designs in the Presence of Consumer Heterogeneity

Thu, 26 Nov 2009 11:00:00 GMT

Modeling discrete choices from a heterogeneous group of respondents is usually done via the panel mixed logit model. A precise estimation of that model requires high-quality data. We propose an efficient individually adapted sequential approach for constructing conjoint choice experiments that guarantees the highest possible data quality for a given experimental budget. The approach uses Bayesian updating, a Bayesian analysis and a Bayesian design criterion for generating a conjoint-choice design for each individual respondent based on previous answers of that particular respondent. The proposed design approach is compared with two non-adaptive design approaches, the aggregate-customization design and the (nearly) orthogonal design approaches, under various degrees of response accuracy and consumer heterogeneity. A simulation study shows that the individually adapted sequential Bayesian conjoint-choice designs perform better than the benchmark approaches in a variety of scenarios. In the presence of high consumer heterogeneity, the improvements achieved by the new method in terms of precision of estimation and accuracy of prediction are impressive. A key result of our simulations is that the new sequential approach to conjoint-choice design yields substantially better information about individual-level preferences than existing approaches. The new method also performs well when the response accuracy is low, in contrast with the recently proposed adaptive polyhedral choice-based question design approach.

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Dr. S. Puntoni

Power Battles and the Emergence of New Industries: The Case of Mobile Payment Services

Mon, 30 Nov 2009 11:00:00 GMT

Market emergence and industry architecture are topics of great interest to organizational researchers. While earlier works assume that markets always existed, recent works have started to explore the process through which new markets come into existence and mature. To answer the question of how firms agree upon a business model in emerging industries, we carried out a multiple-case inductive study of the mobile payment industry, an industry that emerged in late 1999 to enable payments using mobile phones using a new contactless technology (NFC).

We find that while the technology existed since the late 90’s, the commercialization did not take place until today because the interested parties (banks, mobile operators, handset makers, merchants, and software and hardware developers) could not agree on a business model. Specifically, the most powerful players among these, mobile operators and banks, coming from central roles in their respective traditional industries, entered a decade-long battle regarding the most beneficial business model for themselves. We observed that in geographic regions (e.g. Japan, rural Africa or India) where one of the players, either the bank or the mobile operator, was more powerful that the other, commercialization happened much faster compared to regions (e.g. Europe and US) where the players were equally powerful.

Overall, we find that new industry development can stall for long periods due to the negotiation of the players on a business model. The result of this negotiation largely depends on the power balance of the parties where, contrary to prior literature, fewer powerful players advocating the new industry works better than many.

Dr. Pinar Ozcan is Assistant Professor in Strategic Management at IESE Business School in Barcelona, Spain. She specializes in strategy, entrepreneurial growth, and the emergence of new technology markets. Her recent research focuses on how entrepreneurial firms grow by building an effective partner ecosystem (alliance portfolio) leveraging opportunities that are present in nascent markets that are highly dynamic and ambiguous. She finds that entrepreneurial firms with low power and legitimacy go through spiral of growth, as their alliance portfolio coevolves with the firm's overall performance. This phenomenon helps explain the exponential growth or decline that we observe in nascent markets.

Dr. Ozcan completed her Ph.D. at the Stanford Technology Ventures Program (STVP) at the Stanford University Management Science and Engineering Department, and also holds a Master of Science and dual Bachelors degrees from Stanford. At Stanford, Dr. Ozcan directed the AEA Stanford Executive Institute, a summer executive program for the high tech industry for three consecutive years. She also organized the Stanford Entrepreneurship Thought Leaders Seminar for young entrepreneurs, and helped create the STVP Entrepreneurship Educators Project for entrepreneurship educators worldwide. Dr. Ozcan serves as full faculty at the National Arts Strategies Executive Program on Creative Alliances since 2004.

Dr. Ozcan's work experience includes management consulting at Siemens Corporation in Munich, Germany, and strategy consulting with technology ventures and venture capital firms in the Silicon Valley.

Dr. Ozcan is from Istanbul, Turkey. She is fluent in English, German, and Turkish, and also speaks Spanish and French.

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Mahmut Ozdemir

The Business Case for Corporate Social Responsibility: Recognizing Cognitive Constraints and Curvilinear Relationships

Wed, 02 Dec 2009 14:00:00 GMT

In this seminar, I discuss and interweave two papers I have in progress on the business case for CSR -- one theoretical and one empirical – in hopes of advancing a more nuanced understanding of the complicated relationship between social and financial performance. The theoretical paper brings to the fore cognitive constraints that limit which corporate good deeds and misdeeds stakeholders notice and so helps identify boundary conditions on the effectiveness of market mechanisms in effecting social control of firms. The empirical paper measures financial returns to various levels of CSR and finds a curvilinear relationship wherein firms that do the most good achieve the highest returns. This curvilinear relationship helps explain prior mixed findings that have muddled together various levels of CSR and suggests the need for a more contingent perspective on when CSR may and may not pay. It also suggests that to truly distinguish oneself as a socially responsible firm, and catch limited stakeholder attention, you must be really good.

Mike Barnett serves as Professor of Strategy in the Strategy, Entrepreneurship, and International Business Group. He is also Research Director of the Oxford University Centre for Corporate Reputation. In addition, he is Fellow in Strategy at St. Anne’s College.
Prior to coming to Oxford, Mike was Associate Professor of Strategy and Exide Professor of Sustainable Enterprise in the Department of Management and Organization at the University of South Florida’s College of Business. He was also Research Fellow of the University of South Florida’s Kiran C. Patel Center for Global Solutions and served as Secretary of the Faculty Senate. Prior to entering academia, Mike’s primary management experience was as a commissioned officer in the US Air Force. He served as Squadron Section Commander and Executive Officer at McConnell AFB in Wichita, Kansas.
Mike holds a PhD and MPhil in Strategic Management from New York University’s Stern School of Business, an M.B.A. from Webster University, and a BS in Business Administration (Banking & Finance; Economics) from the University of Missouri.

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Luciana Ferreira

Corporate Social Performance: From Output Measurement to Impact Measurement

Wed, 02 Dec 2009 14:30:00 GMT

All organisations have social, environmental and economic impacts that effect people, their communities and the natural environment. Impacts include intended as well as unintended effects and negative as well as positive effects. Current practice in performance measurement tends to focus on measuring only a part of the total impact that organisations have on society. The research about what impact, as distinct from output and outcomes, organisational actions have upon the society remains largely unexplored in existing management and business & society research. Therefore, the objectives of this dissertation are to increase the understanding of social impact of organisations, and to propose a framework and methodology that facilitates social impact measurement. The social impact of different organizational activities is studied throughout this dissertation. The first study focuses on the social impact of Corporate Social Responsibility (CSR). The second study focuses on Strategic Philanthropy while the third study focuses on the social impact of an individual foundation, the Netherlands Heart Foundation. This variety of organisational activities is chosen to show that impact measurement is relevant in the profit sector as well as in the non-profit sector and is relevant for all kinds of organisational activities. Next to this, in a fourth study, different existing social impact measurement methods are collected, analysed and classified. The studies in this dissertation add to the existing body of research that focuses on corporate social performance and social impact measurement. It also informs management about the possibilities and limitations of social impact measurement.

Download PhD thesis (available after PhD defense)

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Olga Novikova

to be announced

Thu, 03 Dec 2009 09:30:00 GMT

to be posted

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Myra Lissenberg

Strategies of the Big 4 Auditors to Gain Market Share in a Highly Competitive Setting

Thu, 03 Dec 2009 14:30:00 GMT

In this paper we examine how Big 4 auditors compete for new clients in the private client segment of the Belgian audit market. In this setting the dominance of the Big 4 auditors is much lower than in Anglo-Saxon public client settings. In line with Simunic (1980) we argue that the atomistic segment of small clients is competitive while the oligopolistic segment of large clients is dominated by the Big 4. In contrast to prior studies, our setting is characterized by a large atomistic segment. We argue that Big 4 auditors will use fee discounting to attract new clients in the atomistic segment but that they will only do so in industries where they are also considered as the industry specialists in the oligopolistic segment. This condition not only enables these auditors to offer more value to their clients in the atomistic segment but it also facilitates fee discounting. Furthermore, we argue that these auditors strategically target those clients that value their services and hence have a higher likelihood of renewing the audit engagement after the initial mandate. Our results suggest that Big 4 industry specialists offer fee discounts to new clients in the industries of the atomistic segment where they are also specialists. However, consistent with our hypothesis we find that these discounts are only granted to those clients that are more likely to demand the services of a Big 4 industry specialist in the near future.

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Paolo Perego