[su_pullquote align=”right”]By Lambert JERMAN and Alaric BOURGOIN [/su_pullquote]
At a time when many professions are questioning their own deep meaning, torn between economic constraints and impending automization, the auditor for the Big Four accounting firms has provided a useful insight into what makes work meaningful for today’s service professionals.
From the empowering stature of the expert to difficulties on the ground
On the ground, auditors face a series of difficulties which tend to nuance the idealised vision of the numerate professional. In practice, auditing demands that the practitioner resist and sometimes transgress their company rules, while adjusting continually to the constraints of their missions according to their own subjective logic. Refractory clients with packed schedules or accounting papers in chaos 1 means auditors grapple with a permanent sense of anxiety about their ability to accomplish their missions. The fear of doing damage is omnipresent, since an undetected error in the financial statements can have serious legal and financial consequences. All these facets of the work of the auditor suggest that the construction of his identity does not always bring a sense of worth, reassurance, or inner harmony. It is also linked to an intense relationship between an individual and his or her weaknesses, where the exercise of his professional activity confronts him with the limits of his expertise, his failures, his mistakes.
This is why we tried to understand the practices and the discourses that the auditor uses to construct the image of a “good” professional. How do difficulties on the ground determine the auditor’s ability to match up to his own expectations as a professional? To answer this question, we carried out an ethnographic enquiry over six months in a big international audit firm.
Negative identity: constructing an identity as a “good” professional through experiencing, confessing and managing one’s weaknesses
Our results show that the construction of professional identity takes place under conditions of stress, when an individual is driven to examine himself objectively in the hope of embodying an idealised professional image in public. Our study of the auditor allowed us to pinpoint the notion of “negative identity” which lies at the heart of our argument. Negative identity equates to the practices and discourses by which the auditor constructs him or herself as a “good professional” in intense and continuous relationship to his or her weaknesses. Specifically, these practices and discourses revolve around (1) experiencing, (2) confessing and (3) managing the auditor’s own weaknesses.
By experiencing his weaknesses, the auditor engages in a practical investigation which enables him to become aware of the distance which exists between his image of himself as a numerate professional and the reality in the field. Ambiguous situations, equivocal subject matter, the constant pressure of error-avoidance and clients, mean he can’t rely solely on the company rules to regulate his behaviour. This dawning awareness brings anxiety and forces him to question his areas of vulnerability, to take risks, to put himself in a “lower position” in response to the demands and limitations of clients. This attitude echoes observations made in other service professions like consultancy 2, where professionals have to contend with anxiety linked to the proliferation of short-term contracts, new environments and contact with demanding clients.
By confessing his weaknesses, the auditor operates a convergence of his vulnerable position and the more empowering image of the numerate professional. This practice maintains the tension between the individual’s negative self-perception and the more laudatory discourse carried by the firm. Confession is in the first instance linked to an exercise in humility, where the auditor again confronts himself in a reflexive endeavour. He must learn to “self-assess as bad”, ie, externalise and verbalise his weaknesses on a voluntary basis in the firm’s appraisal system. These systems then encourage the definition of “progress axes” which operate a fundamental reversal. The detailed factoring-in of the individual’s weak points leads to the stabilisation of a professional profile appreciated at its proper value. However, this transformation is never completely achieved because confession safeguards the imperfectability at the heart of professionalism.
Finally, by managing his weaknesses, the auditor rationalises the key issues of the job and discovers interpersonal and official support which allows him to contend with the challenges of the field. Since the reversal operated by the confession is largely rhetorical and confined within the walls of the company, it isn’t sufficient to enable the individual to contend with his weaknesses in a lasting way. The overall vision of the missions and the client’s issues, team solidarity and official concerns, allow him to make a virtue of necessity, and assimilate the constraints and vagueness of the job, on an intellectual as well as a practical level. The auditor, characterised by doubt due to the challenges on the ground, is thus repositioned within the prestigious social identity of the professional, creating in the individual a temporary equilibrium which must be forever created and recreated between these two poles.
The “good” professional, Sisyphus of imperfection
By taking the auditor’s weaknesses and on-the-ground challenges seriously, “negative identity” reintroduces personal identity behind the well-delineated and high-status image of the expert affixing a final judgement on the correctness of the accounts. We can discern a vulnerable auditor, as invasive with himself as he is with his client. Faced with the ambiguity of the situations in which he has to intervene, the auditor feeds his professionalism with his ability to doubt himself and with an anxious view of his ability to bring his missions to a successful conclusion. A veritable Sisyphus of imperfection, he presents as an individual in tension between a sometimes painful experience of the job and the positive image carried by the firms.
Our observations show how the construction of identity also takes place in and through challenges, placing the individual in an introspective position, maintaining constant doubt 3 about his own value. Beyond the threat of economic circumstances or of the coming automization of verification operations, our study suggests that the auditor owes his success as a professional to the adaptable nature of a practice fed by constructive questioning of his own value.
[su_spoiler title=”Methodology”]The first author worked as an auditor himself and logged his observations (in his firm and when on mission) in a working journal. This ethnographic method let researchers get close to the issues on the ground and acquire insider knowledge of observed phenomena. This method is relevant in analysing the construction of identity, which is experienced intimately by the players and therefore difficult to verbalise during interviews. The rôle of the second author was crucial in order to check immersion bias and find a proper balance between professional distance and the personal involvement that is indispensable to ethnographic research. Reference for the complete article: JERMAN, L., & BOURGOIN, A. (2018). L’identité négative de l’auditeur. Comptabilité – Contrôle – Audit, 24 (1), 113-142. doi:10.3917/cca.241.0113.[/su_spoiler]
To establish an innovative business model, disruptive start-ups use a strategy resting on two complementary processes: building a discourse which will engage clients and partners in the new ecosystem, also known as framing, and continuous adaptation of their business model in response to the needs of clients. This will be illustrated by the case of Salesforce versus Siebel in the business software industry at the start of the 2000s.
Cases of successful disruptive innovation, where a start-up manages to radically transform the functioning of an industry, remain exceptional. Among the best-known are Amazon with the distribution and sale of books or Netflix which revolutionised the film distribution industry in the United States. They have resulted in the creation of a new business model which shifts the industrial ecosystem’s centre of gravity away from the historic leader and towards the start-up, and ends up creating a new ecosystem around the start-up. Business
model innovation is characterised by new sources of value creation, the arrival of new clients and partners and the implementation of a new kind of organisation, which rivals the business model of the historic leader and gradually replaces it.
Revealing one’s intentions from the outset
Up until now, studies of disruptive innovation have been more interested in the reaction of existing businesses, and much less in the manner in which the start-up succeeded in establishing its business model. Hence, the importance of understanding the processes set
in motion by the disruptor, which starts off with slender means with which to attract clients, partners, the media and analysts, and ends up taking the lead over an established and much more powerful competitor, and in some cases, making it disappear.
This is the process that we call the disruptor strategy, whose aim is to reduce uncertainty in order to engage consumers and partners as players in the creation of the new ecosystem: from the outset, in order to get their attention and support, the start-up reveals its
intentions and ambitions through framing, ie, the construction of an effective discourse and presentation. At the same time, it must adapt its business model and its product to achieve the best possible offer for its clients and partners. The combination of these two actions
creates a virtuous circle and puts the historic leader on the horns of a dilemma: retaliate at the risk of legitimising the new business model, or do nothing and risk being overtaken.
Salesforce and the emergence of the cloud
The study of the emergence of Salesforce between 1999 and 2006 against Siebel in the management and client relation (CRM) software sector illustrates the concept of disruptor strategy. Originally, software publishers (Siebel, SAP) sold their clients CRM software and
costly products associated with maintenance and consulting services. Salesforce’s innovation consisted of coming up with a much less expensive business model, based on cloud computing, with SaaS services available by subscription. In the first instance, this product was aimed at consumers who were not part of the Siebel ecosystem.
Before Salesforce had even launched, it was already addressing the ecosystem with a discourse emphasising its unique affinity with the “no software” revolution, and then its leadership, via press releases, interviews and dramatic stunts. This framing found an echo with start-ups and small-to-medium-sized businesses lacking the means to invest in a heavy system; with partners interested in the new ecosystem; and with the media and analysts who relayed and amplified Salesforce’s discourse and took up a more critical position in relation to Siebel. At the same time as new consumers were starting to get interested in the product, Salesforce was continually improving it to reach the standards expected by the majority of existing consumers. By combining these two framing processes and adapting the business model, the start-up had started to seduce Siebel’s clients and partners within two or three years.
In the face of Salesforce’s offensive, Siebel didn’t react at first. The firm stayed with its old model without taking account of the new needs created by a competitor which it didn’t yet perceive as such. It only launched into the cloud in 2003, three years late. A vicious circle, symmetrical with Salesforce’s virtuous circle, falls into place: poor responses, mounting criticism in the media and from analysts, mass exodus of clients and partners to the new ecosystem. Finally, in 2006, Salesforce became the leading supplier of CRM services, while Siebel was bought by Oracle.
A situation that was hard to predict
The Salesforce-Siebel case is a prime example of the establishment of a new business model. It highlights the importance of these two complementary processes of framing and adaptation in the disruptor’s strategy. This is, of course, an individual case, but it shares elements with other cases of successful disruption like Amazon and Netflix. For businesses, there are a number of lessons to be learned from these results. For the disruptors, it’s about the importance of pulling on both levers at the same time, given that the temporal window is limited. That means they have to find a way to reveal themselves clearly, but without being too precise, so as not to limit their scope for adaptation. In its framing, Salesforce presented itself as the leader by stating that it was offering a better value product and that its service was cheaper, but without going into the key points of the new business model.
For the leader, it’s hard to know how to react. Siebel had logical reasons for not responding to Salesforce in a market sector in which – at first at least – it had no interest. It’s very tricky to predict whether a start-up will be successfully disruptive or not. The problem is that Salesforce gained a competitive advantage by learning faster than Siebel. Siebel didn’t ask itself the right questions for several years, and the needs of Salesforce’s start-up clients were ahead of the needs of its own clients. When the firm did finally take action, its cloud didn’t function as well as Salesforce’s one, despite an R&D budget and far greater human resources.
To avoid this, existing businesses must therefore develop a strategic vision, an understanding of what is happening in their environment, in order to try to learn more quickly than the start-ups and be attentive to the market of tomorrow. But it’s very difficult for a firm to say that in 10 years’ time its clients will want products that are completely different from those it has on offer today.
Methodology
This article is a synthesis of the publication “An Ecosystem-Level Process Model of Business Model Disruption: The Disruptor’s Gambit”, published in the Journal of Management Studies. It presents the results of a longitudinal study carried out by Yuliya Snihur (Toulouse Business School), Llewellyn D.W. Thomas (Imperial College London, Universitat Ramon Llull) and Robert A. Burgelman (Stanford School of Graduate Business), from the case study of Salesforce and Siebel, combining a theoretical approach and the analysis of a documentary base of historic data.
[su_pullquote align=”right”]By Michaël Laviolette[/su_pullquote]
It seems that every day, the media is full of examples of entrepreneurs and their success stories. They are often presented as heroic characters whose prowess leads most often to successful outcomes, and rarely to unsuccessful ones.
These entrepreneurs are therefore held up as exemplary rôle models according to a concept developed by Albert Bandura, social psychologist and expert in the theory of social learning.
In entrepreneurship, the impact of rôle models is significant because they offer examples which impact on the potential and the intention to engage in entrepreneurship. Many of today’s business people say they took their first steps in entrepreneurship after observing or being influenced by a rôle model. Often, it was someone in their close circle (friend, relative, etc). These are real-life rôle models. But what about symbolic rôle models? By this, we mean people we never actually meet, but whose stories we can identify with. For students, it might be the testimony of Mark Zuckerberg, a Harvard graduate, that they saw in a newspaper, or a former student of a ‘grande école’ turned entrepreneur they hear at a conference. How do these symbolic models influence our own students’ intention to engage in entrepreneurship, depending on whether their stories are of success or failure? What impact do they have relative to certain characteristics (sex, previous experience, etc) of the people exposed to their stories?
We will look at these issues in the educational context because teachers use a lot of these rôle models in the form of testimonies, quotes or case studies. At a time when experiential learning is the order of the day in business schools, these models are being used prescriptively to show the path to follow or not follow when engaging in entrepreneurship. Are these professors’ persuasive tactics effective? What is their impact on student self-efficacy and their intention to be entrepreneurial? In other words, let’s focus on those who are looking at the model, rather than the model itself.
A number of experiments were carried out involving 276 students in a French business school. Some students had been exposed earlier to success or failure stories of former students turned businesspeople. Other groups heard the stories along with a message of encouragement from their tutors. In keeping with the literature, we tested several main and secondary hypotheses of this causal chain which begins with student attitudes to the rôle models’ messages and ends with their intention to engage in entrepreneurship.
Our results were published in three articles in the Journal of Entrepreneurial Behaviour and Research, in the Revue Internationale PME and in the Journal of Enterprising Culture. The first article 2 reveals that symbolic entrepreneur models, whether of success of failure, had a significant impact on students’ intentions to engage in entrepreneurship. The more positive the students’ attitude to the message, the more they were affected or moved by these stories. This “emotional awakening” reinforces their perception of their capacity to be entrepreneurs (‘entrepreneurial self-efficacy’) and, ultimately, their intention to engage in entrepreneurship. We can therefore validate the central hypothesis of the impact of these symbolic models. Positive messages increase the intention to engage, while negative messages reduce it.
However, these effects change depending on the sex of the person receiving the message. Men are more influenced by models of success than women are. The latter are more influenced by negative models. This difference is explained by social norms which exemplify entrepreneurship as an eminently masculine activity. Indeed, men identify more easily with models of success. This upward and positive comparison comes easier to them. Women, on the other hand, have more difficulty identifying with female entrepreneurs and they are more affected by stories of failure. The downward and negative comparison unfortunately comes more easily to them.
The fact that the impact of the messages varies according to the recipient leads us to envisage two persuasive communication tactics in class. It’s important to expose students to both success and failure stories in order to avoid idealising entrepreneurship. It’s also important to emphasise positive models at the expense of negative ones. For the sake of realism, the latter are not to be banned but the lecturer should play a moderating rôle to ensure that the failure models are not too discouraging.
The second article 3 focuses more on the rôle of teacher encouragement when students receive these testimonies of success or failure, As well as the entrepreneurs’ messages, we exposed our students to a second message of encouragement from the teacher, reformulating the messages in order to reinforce their effects.
We thought that this persuasive tactic would strengthen the impact of the initial message if it was positive and weaken it if it was negative. However, the results show that the encouragement discourages rather than encourages when its content is identical whether the receivers are men or women. A finer analysis of the results nonetheless shows interesting differences according to the sex of the students receiving the message.
Although a distraction effect can’t be ruled out with the second message, the principal explanation can be found in Brehm’s reactance theory. When a student is exposed to the message of an individual with whom s/he identifies (a former student), s/he is free to attribute any value s/he wishes to it. On the other hand, when a lecturer intervenes to try to convince or persuade, s/he reduces his or her freedom of interpretation. Indeed, students can re-establish their autonomy by resisting the lecturer’s remarks.
However, reactance is stronger among men than women. This difference can also be explained by social norms which construct entrepreneurship as a fundamentally masculine activity. Encouraged by these norms, men are likely to express an opinion contrary to that of the lecturer to express their free will even if they really think the same thing. For women, the lecturer’s encouragement is sought in order to confirm their opinion and to gain social approval. Indeed, our research shows that lecturer encouragement is more beneficial when female students are exposed to female rôle models.
Our articles also show that in order to understand the impact of rôle models, the characteristics of the recipients (sex, in this case) are important. Thus, our third article 4 focuses on the moderating effects of the characteristics of the recipients, notably self-esteem, locus of control, and previous experience. The locus of control is our feeling that events are within our control or not. Previous experience is students’ past experience of entrepreneurship.
Our results show that the better the students’ self-esteem, locus of internal control and previous experience, the less the recipient is impacted by the message. Indeed, students with high self-esteem and a belief in their capacity to control what happens to them, are naturally less influenced by external models. In other words, they rely more on their own resources in order to believe in their capacity to engage in enterprise, and ultimately, to decide to create.
In contrast, students with weak self-esteem, a weak locus of internal control and weak experience are more influenced by external models. Indeed, these students have a greater need to look for external validation to compensate for the weakness of their own belief in their own capacity for enterprise. These results round off our analyses by showing that it’s just as important to analyse the profile of the recipients if we want to understand the impact of the messages.
What conclusions should be drawn from our studies of the relationship between rôle models and the intention to engage in entrepreneurship in the educational context? First of all, they validate the importance of these models for students’ capacity and intention to engage in entrepreneurship, even if they are only symbolic. They also underline that a variety of models of both failure and success is crucial to offering more credible representations to a student audience. Nonetheless, these rôle models do not impact men and women in the same way.
In view of the predominance of masculine models of entrepreneurship, it is important to temper the impact of these models using lecturer encouragement tactics, particularly for female students. Nonetheless, it should be noted that this encouragement is not effective for men who are often more confident in their own capacity for enterprise. Finally, on the whole, these models have a greater impact on students who doubt their capacity for enterprise due to their weak self-esteem, weak locus of internal control and weak experience.
In conclusion, this research confirms that a single model of entrepreneurial success is not the most effective method for every audience. A plurality of models is needed to convince a diverse audience. Beauty is in the eye of the beholder, as Oscar Wilde reminded us. Look at the model but above all, look at the person who is observing it.
[su_spoiler title=”Approach”]This article synthesizes our work on the influence of role models on students’ intention to engage in entrepreneurship. The work was undertaken jointly with Olivier Brunel, Senior Lecturer in Marketing at the Lyon School of Management (IAE de Lyon) and Miruna Radu-Lefebvre, Professor of Entrepreneurship and chair of Family Business and Society (Entreprise Familiale et Société) at Audiencia Business School, Nantes.[/su_spoiler]
[su_pullquote align=”right”]By Gregory Voss and Kimberly Houser[/su_pullquote]
What the Cambridge Analytica debacle and the resulting U.S. Senate hearing revealed in no uncertain terms is that the U.S. does not have adequate data privacy laws. Despite the grandstanding by Senators, they demonstrated a lack of understanding of not only the workings of the data economy, but also of the laws of their own country.
When the EU General Data Protection Regulation (GDPR) became applicable on May 25, 2018, the disparity between the laws in the U.S and those in the EU became very apparent. In our working paper, GDPR: The End of Google and Facebook or a New Paradigm in Data Privacy?, slated for the fall edition of the Richmond Journal of Law and Technology, we explore these differences in terms of ideology, enforcement actions, and the laws themselves.
The American tech business model is to provide services free of charge in exchange for a user’s personal data. This comports with the data protection law in the U.S., which is sector specific, meaning only certain types of data, such as medical and financial data, are protected but only to the extent provided in the applicable statute. There is no omnibus U.S. federal data privacy law relating to the private sector. While the Federal Trade Commission (FTC) is the de facto privacy authority in the U.S., its history of enforcement actions against U.S. tech companies is quite limited. Historically, it has only been when a company provides a privacy policy and then fails to comply with it that the FTC has taken action against it under Art. 5 of the FTC Act regarding ‘deceptive and unfair practices’.
The European model of data privacy is based on a human rights foundation, with both privacy and data protection being fundamental. Under the predecessor to the GDPR (the 1995 Directive), numerous actions were brought against U.S. technology companies for violations of EU member state laws. Despite this long history of successful enforcement actions, these U.S. tech companies have not significantly changed their business model with respect to data obtained from the EU due to the low maximum fines under the member states’ laws (eg, a €150,000 fine in France for a company valued at €500 billion).
The American ideology behind data privacy is the balancing of an entity’s ability to monetize data that it collects (thus encouraging innovation) with a user’s expectation of privacy (with those expectations apparently being quite low in the U.S.). In the EU, the focus is on protecting a users’ privacy. A great example of this dichotomy is the Google Spain case. A Spanish citizen sought to have certain information removed from a Google search as permitted under EU law. Google objected to this in court. On the one hand was freedom of speech (paramount in the U.S.) and the public right to know asserted by Google, and on the other, the European’s right to privacy and to be forgotten argued by the European plaintiff. The European Court of Justice ruled that the balancing of interests tipped in favor of privacy for the Spaniard.
As we explain in our paper, U.S. federal laws are sector-specific with the primary areas being covered in the Health Insurance Portability and Accountability Act (health care information), the Gramm-Leach-Bliley Act (financial information) the Fair Credit Reporting Act (credit information) and the Children’s Online Privacy Protection Act (children’s information). In addition, states have also enacted varying data security laws aimed at requiring data breach notifications.
The European approach, on the other hand, has always been more overarching. The 1995 Directive, for example, required each EU member state to adopt comprehensive privacy protection laws meeting the objectives of the Directive. While the adoption of a directive allowed flexibility in each member state’s creation of its own privacy laws, in 2012, the European Commission determined that the law needed to be updated. The GDPR was enacted to: provide harmonization of the member states’ laws, incorporate advances in technology, eliminate administrative filing burdens for companies, and, as we posit in our paper, level the playing field for technology companies using the personal data of those located in Europe.
Because U.S. companies have been able to monetize their data with very few restrictions or consequences, they were able to become behemoths in the tech field with an 80% market share for Facebook and 90% market share for Google. The rules, however, have now been updated with respect to EU data. The GDPR requires, among other things, verifiable consent prior to using a user’s data and consent for each secondary use. There is no corresponding requirement in the U.S.; companies operating under U.S. law primarily rely on an opt out mechanism and are not required to disclose secondary uses of your data. The GDPR also provides a right to be forgotten, a right to data portability, the ability to opt out of automated machine decisions (profiling), and requires a lawful basis for processing data. None of these rights are afforded to U.S. citizens under U.S. federal law.
Because the GDPR is extraterritorial in scope, the law will apply regardless of where a company is located if it collects or processes the personal data of those located in Europe, where processing relates to the offering of goods or services (either for pay or “free”) to such “data subjects,” or to the monitoring of their behaviour, to the extent such behaviour takes place in the EU. This leaves us with the question: will the GDPR be the end of Google and Facebook or present a new paradigm in privacy protection? This remains to be seen. However, given that fines may now be assessed in the billion-euro range under the GDPR rather than the thousand-euro range of the past, it does seem likely that the U.S. business model (data for service) will need to adapt, at least with respect to data from the EU.
This article originally appeared on the Oxford Business Law Blog.
[su_pullquote align=”right”]By Camilla BARBAROSSA[/su_pullquote]
In recent years, international environmental policy debates have increasingly identified household consumption in industrial countries as one of the main causes of environmental problems. In most countries, household consumption over the lifecycle of products accounts for more than 60% of all environmental impacts of consumption.
In this context, the role of purchasing eco-friendly products to reduce consumers’ environmental footprint has recently been addressed, especially for products that are purchased on a regular basis, such as eco-friendly tissue paper products, biodegradable detergents, and substitutes of over-packaged and plastic products.
Policy makers and non-governmental organizations have developed policies (e.g., EU’s Action Plan) and pro-environmental behavior campaigns (e.g., WWF’s ‘Don’t Flush Tiger Forests’) to promote the purchasing of eco-friendly alternatives in the market. However, the current market shares of eco-friendly products are still fairly low.
To enhance the effectiveness of policies and social marketing campaigns and to stimulate the diffusion of eco-friendly products in the market, the achievement of two specific goals is needed: first, to better understand the factors that stimulate and prevent consumers from purchasing eco-friendly goods; and, second, to assess whether these factors may vary across different consumer segments. This knowledge is essential to develop more effective policies and marketing strategies tailored for different population segments that vary according to specific characteristics (e.g., environmental commitment).
The study
A recent research that I have conducted with Patrick De Pelsmacker from University of Antwerp addresses these issues. First, we developed a model that determines what stimulates and prevents consumers from purchasing eco-friendly products while grocery shopping. Second, we compared this model between two different consumer segments: ‘green’ consumers (that is, consumers who already engage in pro-environmental behaviors – such as recycling, reducing household waste – for environmental reasons) versus ‘non-green’ consumers (that is, consumers who are honestly unengaged in pro-environmental behaviors).
The study involved 926 adult respondents responsible for grocery shopping in the household. Specifically, the sample was composed of 453 ‘green’ consumers and 473 ‘non-green’ consumers. All the respondents answered a questionnaire including a series of questions assessing the extent to which a number of factors may positively or negatively influence their decision of purchasing eco-friendly goods while grocery shopping. The respondents also answered questions about their intentions to buy eco-friendly products and their eco-friendly products actual purchase behavior.
Results and implications
The results of our survey revealed remarkable differences in the willingness to buy eco-friendly products between ‘green’ and ‘non-green’ consumers. As expected, ‘green’ consumers are more willing to purchase eco-friendly products than ‘non-green’ consumers. Additionally, our results indicated that the two consumer groups are influenced by different factors in purchasing eco-friendly alternatives. For example, ‘green’ consumers may be willing to purchase eco-friendly products because they want to project a desired, favorable impression of themselves on relevant others. This is not the case for ‘non-green’ consumers.
‘Green’ consumers seem to be concerned about the impact of their consumption choices on the natural environment. This environmental concern drives them to opt for eco-friendly alternatives. Conversely, ‘non-green’ consumer are less prone to take the footprint of their individual actions into account when grocery shopping.
Both ‘green’ and ‘non-green’ consumers think that consuming responsibly is still a time-consuming, economically disadvantageous and stressful activity. However, the negative perception of any personal inconvenience related with purchasing eco-friendly products plays a different role between the two consumer groups. On the one hand, it contributes to reinforce ‘non-green’ consumers’ unwillingness to try eco-friendly alternatives. On the other hand, it mainly occurs for ‘green’ consumers inside the point of sale (e.g., eco-friendly products are not always available or they come in a narrow range), thus explaining why these consumers often show an inconsistency between their stated (green) intentions and their actual (not always green) purchase behavior.
Marketers, policy makers, and organizations may use the results of our study to foster eco-friendly product consumption, by developing communication programs that are specifically tailored toward ‘green’ and ‘non-green’ consumers. For example, the concern for the environmental consequences of purchasing and consuming products is relevant only for ‘green’ consumers, whereas this argument should be ignored when addressing ‘non-green’ consumers. When addressing ‘green’ consumers, companies may develop co-branded partnerships with pro-environmental organizations (as Kimberly Clark and WWF did) to address active green members with tailored marketing campaigns. The content of this communication should focus on the amount of natural resources that consumers may save by purchasing eco-friendly alternatives. For instance, Small Steps has developed a ‘Tree Calculator’ Tool to calculate the specific number of trees and amount of CO2 and water an individual or a family may save by purchasing one or more packs of eco-friendly tissue paper products.
Furthermore, consumers’ perceptions of the personal inconvenience of purchasing eco-friendly products reduces both ‘green’ and ‘non-green’ consumers’ eco-friendly products purchase intention and behavior. Unless market failures are corrected, both ‘green’ and ‘non-green’ consumers will not be able to buy responsibly. Hence, one class of public policy initiatives should focus on ‘economic policies’, such as ‘getting the prices right’ or using tax instruments to adjust for environmental impacts and other externalities not reflected in market prices. Additionally, and more importantly, when addressing ‘non-green’ consumers, marketers should seek to increase ‘non-green’ consumers’ intention to buy eco-friendly products through reducing their perceptions of eco-friendly products as ineffective substitutes of conventional goods. Conversely, when addressing ‘green’ consumers, companies should enhance consumers’ perception of eco-friendly products accessibility and awareness inside the store. In this regard, smart phone technology (e.g., GoodGuide app) may provide ‘green’ consumers with real-time information about the presence of eco-friendly products inside the store while they are shopping.
In conclusion, the diffusion of eco-friendly products in the market strongly depends on consumers acceptance of these products. Different consumer segments may be motivated to opt for eco-friendly alternatives for different reasons. Our research aimed at developing knowledge about the differences in these motivations across two consumer segments: ‘green’ and ‘non-green’ consumers. This knowledge is essential to build tailored versus standardized communication strategies when addressing one specific consumer group or different groups simultaneously.
This article was originally published in the Journal of Business Ethics (2016).
[su_pullquote align=”right”]By Victor DOS SANTOS PAULINO and Najoua TAHRI[/su_pullquote]
Innovation as the key driver of economic growth is nothing new. However, France, with the rest of Europe, continues to face significant challenges in stimulating innovation in its economy and maintaining its competitive edge.
In a study investigating what discourages French firms from innovating, we find that the biggest barriers to innovation are financial or market-related, and not technological. Financial constraints, lack of competent personnel and a perceived pointlessness of innovating are some of the main culprits behind this lag in innovation. Surprisingly, very few firms cited technological barriers, and similar results have been observed in other parts of the world.
The right skill-mix
Taking a closer look, we observe that many of the obstacles can be traced back to a shortage of managers with the relevant skill set. Various innovation studies point out that innovation success requires the effective combination of different expertise, both technical and commercial. However, managers with both attributes are rare, especially in France. And the absence of versatile managers can result in conflicting viewpoints between technical managers who tend to be preoccupied with technological performances and commercial managers who tend to be focused on market concerns. This in turn can lead to a communication breakdown and cooperation failure, impeding the innovation process.
Add to this, the prevalent culture of “technology push” innovation in France, where by innovation processes are spearheaded by R&D in new technologies but are plagued by a poor understanding of the market. This not only reinforces market barriers to innovation but also leads to financial constraints. Substantial resources end up being pumped into and prolonging the R&D phase, blurring the distinction between inventing something, innovation and achieving innovation success. The development of the Concorde is a good illustration of this. To date there are ongoing debates on whether the supersonic airliner was an innovation success or not. For some, the technological breakthroughs overshadow the fact that only 14 units were sold to two clients. In short, firms are discouraged from innovating because innovation, from their perspective, necessitates considerable resources to cover the excessive costs of invention.
Impact of government support
In Europe and notably in France, public authorities are wrapped up with technological progress leaving little room for commercial expertise in the innovation process. Inventions and discontinuous technologies are favored, often out of sync with market dynamics, and very costly. Too often public funding programs, for instance in the aerospace sector, push firms to undertake projects that are not always economically viable. Thus, firms tend to orientate their strategies on technological advances, to the detriment of market objectives, essential for anticipating returns on investment.
Contextual factors
Breaking down the obstacles by industry, the aerospace industry faces the highest obstacles, followed by the manufacturing and service industries. This is expected as aerospace companies are more likely to be innovative, face high productions costs and heavily rely on public investment. In contrast, firms in the service industry experience the fewest obstacles. The development of new-to-world products is rare in the service industry, where the intangibility of products allows for easy imitation by rival firms and thus raises a serious problem in convincing investors to fund new ventures. Service orientated firms therefore tend to adopt a market pull strategy with focus on continuous innovations, marginally enhancing or upgrading the service offering, and at a much lower cost. It is therefore not surprising that firms in this sector face the lowest financial barriers to innovation.
Overcoming barriers to innovation
As a starting point, firms should accommodate market research in their innovation processes. This is easier said than done as technical managers sometimes first need to move away from the idea that if you don’t know how to make a product, you won’t know how to sell it. Technical managers need to recognize the importance of bringing in the market perspective on board the innovation process. To combat the shortage of managers with both technical and business skills, firms could offer on-the-job training to develop deficient competencies (e.g. granting MBA opportunities to technical managers). Moreover, to tackle the root of the problem, higher learning institutions offering scientific degrees should integrate a strong element of social sciences in their programs. This would not only ensure a commercial dimension in the innovation process but may also go a long way to solving communication issues between technical and commercial teams, and add legitimacy to marketing insights.
However, this is not a substitute for involving commercial managers directly in the innovation process. Ideally, firms should go a step further and create a business intelligence unit to provide information on the market, to work side by side and complement the work of the technological team. The weight accorded to commercial competencies in the innovation process will vary according to the characteristics of the activity sector.
A fundamental change will also have to come from the public authorities who need to redirect their funding to support successful innovations rather than novel technologies, and allow firms to focus on continuous innovation – the natural course for most. By prioritizing downstream innovation processes, such as innovation commercialization, firms will face lower market barriers and innovation costs. To this end, public authorities need to make more room for firms in defining the strategic orientation of public support policies.
Innovation is a powerful means by which to ensure long-term survival. Without innovation, it is extremely difficult to adapt to a changing environment. Although new product failure is high, innovation without any failure is impossible. In a nutshell, successful innovation requires not only a change in the mindset and innovation culture of firms but also shifts in the public institutional framework to be more in favor of continuous innovation. Firms, government agencies, higher education institutions all have a role to play in overcoming barriers to innovation and creating an enabling environment for innovation.
This article is based on the study entitled, “Les obstacles à l’innovation en France : analyse et recommandations ”, co-authored by Victor Dos Santos Paulino and Najoua Tahri, published in Management & Avenir, 2014/3, no. 69, p. 70 – 88, available here
[su_spoiler title=”Méthodologie”]The study, conducted in 2014, is based on the results from the 4th Community Innovation Survey (CIS 4) carried out in France between 2002 and 2004 and published by Eurostat. 175,533 firms in France participated in the survey, indicating if they have experienced any of 11 obstacles to innovation. For the purposes of our study, we then divided the obstacles into four categories: knowledge, market, financial and external obstacles, and analyzed the obstacles by nature of the firm and by sector (manufacturing, services and aerospace, the latter being a key industry in France). [/su_spoiler]
[su_pullquote align=”right”]By David LE BRIS[/su_pullquote]
Despite the importance of the phenomenon, there is no clear definition of what is a market crash. Arguably, market crashes should be related to important news but it is frequently difficult to effectively match historical events with market reactions.
When WWI started in July 1914, the French stock index decreased by a modest 7.14 %; a monthly drop ranked only the 105th in the French stock market history. But, a given fall in percent has a stronger impact on a stable market than it does upon a highly volatile one. A crash is not solely a given percentage decrease but represents a significant discrepancy compared to what has been previously observed.
Thus, crashes need to be identified after having taken into account the prior financial context. I propose a simple new tool to identify market crashes by measuring price variations in numbers of standard deviations of the preceding period rather than in percent. French stock market was used to a low volatility before 1914, thus the modest decrease of 7.14 % represents a fall of 6.09 standard deviations, which is the second worst case in French history. This ranking is much more consistent with history.
In a paper in Economic History Review, this method is applied to long term series of US and French stock prices and UK state bonds. This new tool offers a renewed story of the financial shocks. A better match between crashes and historical events is achieved than with pure price variations. Events that were financially insignificant when measured in percent become important crashes after adjustment for volatility. This improved matching brings new insights to several historical debates.
Consistent with other historical sources pointing out the severity of the 1847 crisis, this episode appears to be in the top ten crashes of the UK bond market whereas it ranks 102th in pure price variations. The start of the American Civil War caused a significant crash, supporting the cost side in the cost/advantage debate about this conflict. The Berlin conference dividing up Africa caused a considerable fall in UK bonds, as if the market took account of the future cost of African colonization for UK public finances. Pre-1914 wars (Franco-Prussian, Russo-Ottoman, Boxer Rebellion in China, Boer War, etc.) led to many crashes on both the French stock and UK bond markets, supporting the traditional narrative of the importance of these confrontations despite the weak price changes they caused in this era of low volatility.
Turning to the 20th century, the outbreak of WWI caused major crashes in both French stock and UK bond markets, mitigating the view of sleepwalking to disaster. It is not possible to distinguish more crashes before than after the creation of the Fed in 1913, whose role in stabilizing financial markets is still being questioned. Two crashes in France during the 1920s caused by monetary issues support analysis of French monetary policy as an important factor in the interwar troubles. Hot episodes of the cold war caused crashes on the US and French stock markets, which is consistent with narratives of the risk of disasters incurred at this time. There was no crash on the French stock and UK bond markets in 1929, supporting the views of a transmission of the Great Depression to Europe through other channels than financial markets. The 2008 crisis differs on this point because both French and US stock markets fell strongly. Maybe, our understanding of financial mechanisms could be enriched thanks to this new tool.
[su_pullquote align=”right”]By Sylvie BORAU[/su_pullquote]
The negative effects of exposure to advertising female models on women’s self-esteem and body satisfaction are now well known. But a new negative effect of advertising female models has been uncovered: they can be perceived as real sexual competitors by female consumers and trigger indirect aggression.
Female advertising models are highly physically attractive as well as ultra-thin, digitally-edited, and portrayed in a sexually provocative manner (for example, with pouting lips and arching hips). As a result, they represent formidable competitors. Of course, women know that they are very unlikely to meet these unreal threatening competitors in real life. But this knowledge does not stop them from considering these virtual models like real sexual competitors. Recent research I conducted with Jean-François Bonnefon from Toulouse School of Economics, investigated the consequences of this imaginary competition.
In a first series of studies, we asked 452 female respondents to answer online questionnaires. Female respondents were first exposed to the picture of either an ideal model (highly physically attractive, very thin, and adopting a sexually provocative attitude) or a non-ideal model (moderately attractive, average size, and with a non-provocative attitude). Then respondents answered some questions related to their reactions to the model. Results showed that women exposed to the ideal model expressed more mate-guarding jealousy (e.g., they were worried that their mate would leave them for a woman like this model), they expressed more derogatory comments (such as bullying, fat-shaming, or slut-shaming), and they expressed more social exclusion of their imaginary rival (e.g., they wouldn’t be friends with a woman like this model). In sum, female viewers engage in an imaginary intrasexual competition against ideal advertising models, targeting them with the same aggressive strategies they would use toward real-life rivals.
We then ran an additional study to identify which physical characteristic triggers indirect aggression. Does the provocative attitude of the models or their thin body size activate these aggressive strategies? To answer that question, we cross-manipulated the body size of the model and her provocative attitude. That is, female respondents were either exposed to a thin and provocative, a thin and non-provocative, an average size and provocative, or an average size and non-provocative female model. We found that the provocative attitude of the models, and not their thin body size, was the characteristic that triggered viewers to engage in indirect aggression. This is an important result, given the attention that the media put on the models’ body size, rather than on her provocative posture.
But why is the provocative posture of the models more likely to trigger intrasexual competition and indirect aggression than their thin body size? This is surprising considering the current obsession of women and the media for thinness. Further analyses suggested that female viewers engage in these aggressive strategies because the provocative attitude of the model – and not her thin body size – communicates an intention to seduce men, an intention to elicit men’s sexual desire, and, potentially, an intention to poach men. As in daily life, a sexually provocative attitude communicates confidence about one’s sex appeal, as well as flirtatiousness, sexual availability, and promiscuity. No wonder women feel threatened by provocative female models: they represent a menace to their current or prospective romantic relationships.
In daily life, when facing a menace to their romantic relationships, women usually experience jealousy. Jealousy is an emotion that warns the individual that an action must be taken to protect their current or prospective mate from a potential rival. And indirect aggression is women’s main action against female rivals and mate poachers. It involves the use of derogation and social exclusion. Our research shows indeed that women engage in indirect aggression when they are exposed to provocative female models, and do so regardless of the body size of the model displaying the attitude.
So, when advertisers feature a sexually provocative female model in their advertisements, they insidiously promote a culture of female bullying based on slut-shaming and social exclusion. Indeed, we have seen that the mere exposure to a sexually charged and provocative model is enough to activate Intrasexual competition and indirect aggression, as if female viewers were exposed to real-life rivals. We can imagine then that repeated media exposure to such imaginary rivals surely reinforces patterns of indirect aggression way beyond what would be expected from daily interactions with actual women, for at least two reasons: First, the use of sexually provocative models in advertising is pervasive. Second, the level of sexual provocativeness of models in advertising far exceeds the level of flirtatiousness performed by women in daily life.
To sum up, our research suggests that the use of sexually provocative models needlessly reinforces and fosters a culture of indirect aggression among women, fueling the alarming trends of Intrasexual bullying and slut shaming. Considering the unrealistic number of sexually provocative models in the media, women might be frequently subjected to these bouts of Intrasexual competition.
To curb the detrimental impact of sexual provocativeness in advertising, it would be wise to contain its pervasiveness and to avoid the most vulnerable consumers to be overly exposed to such ads. Because exposure is inevitable though, we recommend educating young audiences about these unintended effects – as young audiences are both more targeted by sexual appeals and more vulnerable. We do not recommend eradicating sexual provocativeness from advertising though, as banning these advertisements would be tantamount to giving a politically correct and archaic representation of women. However, consumer-advocate organizations, media watchdogs, and concerned citizens have a large role to play, both for raising public awareness and for incentivizing companies to maintain responsible practices.
This article was originally published in Brand Quarterly Magazine (January 2018).
[su_pullquote align=”right”]By Jean-Marc Décaudin and Denis Lacoste[/su_pullquote]
Selling services requires a very different approach to selling products. Services are intangible, and they are often produced and consumed simultaneously. Services cannot be stocked. It’s very difficult to maintain consistent quality and the customer is involved in the production of the service, which isn’t the case for tangible goods.
Marketing specialists started to consider these differences in the 1980s. Two French researchers, Pierre Eiglier and Eric Langeard, created the concept of “Servuction”, a neologism created from the words Service and Production, and which underlines the need for a specific approach to managing non-material goods. Since then, much work has been done in the field of services marketing, echoing their growing role in wealth- and job-creation. The goal of the research is to help managers in the banking, air transport, rental, health and wellbeing and other sectors, to consider the specifics of consumption and production that are driven by the characteristics of the different services.
Research focussed in particular on the field of advertising communications. There are many questions to be put to marketers, the main one being: how do you communicate something that can’t be seen, touched, smelled, heard, or tasted? Advertisers also had to work out how to communicate an experience which is perceived differently by different customers and whose quality can’t be guaranteed to be identical in all places and at all times. Coming up with communication axes which rest on objective technical characteristics – for cars, computers, TVs – is relatively easy. It’s a lot harder to communicate the type of experience on offer in an amusement park, on a dating site, or even in a university.
So the issue facing advertisers is how to successfully express what a service is, to represent it to a potential client in a manner powerful enough to make him or her notice the brand, become interested, and want to try out the service. Specialists have identified five key strategies. Businesses are advised to communicate:
• About the consumer benefits (price and performance)
• About the customer (testimonies drawn from customer reviews)
• About the customer-facing staff (focus on skills, the quality of customer relations)
• About the hardware associated with the service (the quality of the planes for air transport, equipment and supplies for a diving club or a ski resort)
• About its corporate image with a focus on the company’s values and commitments
How well the strategies work has been very little investigated, and most studies have focussed on only one communication strategy, so their usefulness to advertisers is limited.
That’s why our research aimed to test the effectiveness of each of the various communication axes by exposing customers to a series of adverts, each using a different axis. The results show that the effectiveness of the advert is hugely dependent on the dominant axis.
In the two sectors under study (banking and tourism), the most effective adverts are those that emphasise the customer. It could be a laughing child riding the Mine Train in Disneyland, a family eating out together at McDonald’s or a happy couple moving into their first home thanks to a mortgage agreement. The presence of a customer in the advertising reassures the consumer because it causes them to identify with someone who appreciates the service. We know that customer reassurance is fundamental in the service sectors, where risk is perceived as being high. In both the sectors, emphasising the physical dimension of the service also seems to be a very effective strategy (although a little less so than the first). The three other advertising axes under study are of far more limited effect, either on one of the two sectors, or on a single effectiveness variable.
The results of this research are useful for businesses in the service sector as well as to advertisers, because they give them specific elements with which to create new campaigns. Care is nonetheless called for because the results could be different in a different cultural context, in a different advertising format, or in other sectors.
[su_spoiler title=”Methodology”]The study looked at 50 press adverts in two markedly different sectors: banking (25 adverts) and tourism (25 adverts). Each ad chosen uses one of the communication axes (competitive advantage, contact staff, customers, physical dimension, brand image). In each of the two sectors, 5 different adverts using the same axis were used in order to limit the influence of creativity on the interviewees’ assessment of the product. The sample was made up of 249 respondents who were questioned online. Each respondent evaluated 25 adverts. 1245 evaluations are therefore available: 620 for banking and 625 for tourism. For each advert, a series of 22 questions were asked to measure attention level, how interesting the ad was, understanding the message, the level of curiosity sparked, attitude to the advert and the brand, and finally the impact of the ad on purchasing intentions.[/su_spoiler]
This research was published in the Journal of Marketing communications (2016) under the title “Services advertising: Showcase the Customer!” ».
[su_pullquote align=”right”]By Louise Curran[/su_pullquote]
In this paper, written with Michael Thorpe of Curtin University in Australia, we explore the recent evolution of Chinese investment in the wine industries in the Bordeaux region of France and compare them with investments in the same sector in Western Australia (WA).
We found that investments are not as widespread as often implied by the media, although the speed of growth in Bordeaux has been impressive. Several difficulties with the investments, as well as potential synergies, were identified.
Varied situation in France and Australia
We chose to look at France and Australia as they were, respectively, the first and second wine exporters to the Chinese market in 2013. We looked at two regions with rather similar market positioning: both Bordeaux and WA focus on the higher end of the market and specialize in red wine. The phenomenon of Chinese investment in the sector is rather recent in both contexts, although Chinese investment in the wider Australian economy has a longer history. The objective of our study was to explore the extent of investment and highlight any difficulties experienced.
We found that the extent of Chinese investment in both regions was rather low, even if the number of investments in Bordeaux (about 80) was impressive, as was their very rapid growth. Still, less than 1% of Bordeaux vineyards are owned by Chinese investors and many of these vineyards are very small, thus the actual acreage covered by investments was low. The number of investments is even lower in WA (7 vineyards), but the large size of some acquisitions makes their coverage higher (6% of vineyard land area). Indeed the large size of Australian vineyards was a clear advantage for Chinese investors, who favoured large scale production structures which could better cater for the Chinese market.
Difficulties for investors, but also potential advantages
We found evidence of all of the classic difficulties faced by foreign investors which have been identified in other studies, but the most significant was their lack of familiarity with the local context. This was considered to be a particular problem in France, where there is little history of Chinese investment and no significant Chinese diaspora. The usual problems of understanding a foreign culture were compounded by the fact that most Chinese investors come from sectors – including jewelry, metals and petroleum – which were unrelated to wine, or even agro-food. The specificity of the wine sector thus caused them further difficulties. In Australia, we found much less evidence of such problems, mainly because the investors most often had existing business relationships in Australia prior to investing in wine and tended to make their investments in partnership with a local business person, rather than alone. Although most Chinese investors in Bordeaux did not invest together with local partners, they usually retained the existing management to continue the day to day running of the vineyard. There was recognition of the need to build on this local expertise, if their investment was to flourish.
The local institutions in both WA and Bordeaux recognized that there was need to provide support to Chinese investors in order to ensure the success of their endeavors. The Bordeaux Chamber of Commerce and Industry organizes regular seminars on Bordeaux and Hong Kong to ensure that investors are aware of the potential, but also the pitfalls, of such investment. The WA Department of Agriculture organized a similar seminar for Chinese investors interested in the whole agricultural sector in 2014.
Finally, Chinese investors in both regions brought two key advantages. The first was financial capacity. Many of the acquired vineyards were in a poor state of repair and in several cases significant sums have been invested in upgrading facilities and increasing productivity. The other key advantage was their knowledge of the home market and capacity to leverage their business networks to develop that market. China has become a key world market for wine, especially red wine in the last few years. Although exports have fallen from their peak, in 2014 their wine imports were worth $1,4bn. Especially for smaller, lower quality vineyards, the capacity of their Chinese owners to provide support for their evolution on this important market was a key factor in enabling their development.
The future – consolidation rather than expansion
In terms of the future, most people interviewed agreed that the peak in investments had passed and that we were entering a stage of consolidation. There have been far less investments in Bordeaux in 2015 than in 2014 and especially 2013-2. Partly this reflects the fact that the Chinese wine market is maturing and growth rates are now less attractive. Several of those interviewed pointed out that China is not, and indeed never has been, an ‘el Dorado’ for wine merchants, but is rather a challenging and difficult market. The recent fall in investments also an anti-corruption drive in China which has resulted in a significant fall in wine sales linked to gift giving (formerly a key motivation for high end wine sales) and official banqueting (which has been extensively reduced). There was also reported to be concern amongst wealthy individuals that high profile investments in luxury products like wine, could attract unwanted attention from the authorities.
[su_spoiler title=”Methodology”]Our research involved twenty interviews in the two regions studied with institutional agents, consultants and other service providers working with investors, as well as with local company personnel in three companies owned (wholly or in part) by Chinese investors and two Chinese investors, one based in China and one the manager of an Australian investment. The interviews took place over the period December 2013 to October 2014. We also used press reports to identify pertinent investments. [/su_spoiler]
[su_box title=”Managerial implications” style=”soft” box_color=”#f8f8f8″ title_color=”#111111″]Our research indicates that the most successful investors in the two contexts we studied were those that partnered with local business people. It seems that in cases like this, where there are large differences in the institutional and cultural environments between the home country and the country of investment, working together with a local business person provides an important bridge to reduce unfamiliarity. Investors who acquired vineyards without local partners more often experienced difficulties, although many retained local staff and took a rather ‘hands-off’ approach to the production side of the business, which seems prudent given that they frequently lacked knowledge of wine. The most important asset which Chinese investors brought was their expertise and linkages to their home market, so the potential for synergy was significant, provided that understanding and trust was present.
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By Louise Curran, Chinese FDI in the French and Australian Wine Industries: Liabilities of Foreignness and Country of Origin Effects. Co-authored by Michael Thorpe, Economics Department, Curtin University Western Australia. Appeared in Frontiers of Business Research in China, Volume 9, issue 3 in 2015. This research was supported by a Research Fellowship awarded to Louise Curran by Curtin University in 2013.