The research topics proposed below lie at the cross-roads of environmental economics, international economics, international management and organizational theory. Their main (but not sole) theme remains the incentive theory.
Overview and analysis of globalization
In order to fulfill its mission, the Chair will obviously have to maintain a comprehension and analysis component of the micro-economic aspects of the current international context. Incidentally, demand for this activity seems very keen, not only on campus but also amongst our customers and partners, both at home and abroad.
The output of this component will nurture the issues and analyzes described below, the courses and teaching material developed by the Chairholder, as well as the liaison and transfer activities of the Chair.
Governance of global “public assets”
A number of globalization critics refer to the inability of existing institutions and organizations to effectively manage certain basic common assets such as the sea, atmosphere, climatic balance, gene pool, etc. The difficulty in accomplishing more in this field is that, left to itself, the market would lead to overexploitation or even destruction of these assets, but it does not seem likely that a global government capable of preventing misuse will be created for that matter in the foreseeable future.
New information technologies and certain legal innovations in the field of preventing major industrial risks do however make it possible now to bank on the direct mobilization of the parties concerned. This new avenue is made possible by the ever-increasing legal or moral obligation of companies to publicly disclose the nature of the risks and damage that they inflict, as well as the measures they implement to reduce them. This veritable “Regulation by information”, as it is called, is currently experiencing a fair amount of hype, especially in France, following the explosion at the AZF factory in Toulouse in September 2001, and even in developing countries such as Indonesia, where it managed to push back the most recalcitrant polluters on its own.
Governance and corporate social responsibility
Interest in the issues of corporate social responsibility dates back to the nineteenth century, when the first public limited companies with share capital were created. This is currently a very popular topic, given the flourishing liberalism and considerable importance of certain transnational companies that are outside the control of the States.
The study of governance mechanisms in matters of corporate social responsibility can be situated in the context of the agency theory paradigm. In fact, a great deal can be derived from common agency models with multiple tasks, models in which an officer (the CEO of a firm), under the control of several leading players (shareholders and other stakeholders in the firm), must actually discreetly divide his efforts between tasks that are purely financial and others that are non-financial in nature. The most widely quoted conclusion is that, in such a context, it usually becomes very difficult to control and properly motivate the officer.
However, some recent articles do help to qualify this result and optimistically foresee the possibility of effective governance of corporate social responsibility. The implementation of the proposed method should now be examined in the specific and crucial context of transnational corporations. This raises major challenges in areas such as the design of credible social audit procedures, mechanisms for engagement of stakeholders (especially when the latter are governments of developing countries), and understanding the purely managerial components (transfer pricing, investment strategies, etc.) of cross-border activity.
Criteria and experimental protocols of good governance
In recent years, experimental analysis has developed considerably in economic sciences, so much so that one of its founders, Professor Vernon Smith of George Mason University, received the Nobel Prize this autumn. From the viewpoint of typically prescriptive research being conducted in business schools, experimental economics can now, thanks to the controlled testing and calibration of real prototypes of companies, markets or institutions, greatly reduce the imponderables, arbitrariness and costly mistakes that normally impede the transition of researchers’ theories towards the reality of organizations.
Some governance protocols, based among other things on my articles, are currently being studied at CIRANO’s Experimental Economics Laboratory. Several experiments are scheduled in the coming months/years. In addition to producing various scientific articles, the purpose is to develop a systematic method for governance reform and training of the parties concerned.