Publication records

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.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

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.

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.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

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.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

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.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

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

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.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

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.

 

View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).

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.

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.