Research

Publications: 

NGOs and the Creation of Value in Supply Chains (Strategic Management Journal, 2019)

Co-authors: Olivier Chatain (HEC Paris)
Abstract:  Firms and NGOs often collaborate to establish new supply chains. With a formal model, we analyze how NGOs can alleviate market failures and improve supplier economic inclusion while strategically interacting with firms. We account for the specific goals of the NGO and the need to induce collaboration between firms and their suppliers. The analysis reveals a “valley of frustration”, when NGO efforts benefit all actors but only marginally the firm. We also show that more powerful firms might prefer to internalize NGO functions, while firms with lower bargaining power and higher investment requirements are better off collaborating with NGOs. Finally, we study NGOs-firms matching patterns and find that firms with higher bargaining power match with NGOs holding stronger capabilities. 

Media coverage: 

Work in progress: 

The Devil is in the Details: Development Incentive Alignment in Ecosystems and Three Types of Complementarities (with Olivier Chatain)

Available at SSRN
Abstract: When are the incentives of a business ecosystem's participants aligned with its growth? How is the technology of value creation affecting this alignment? To answer these questions we formally model how value creation determines value capture in a business ecosystem. We find that alignment is typically imperfect compared to an integrated benchmark, highlighting an “ecosystem penalty” whereby participants' returns to value creation are lower than that of the ecosystem. The occurrence of this penalty depends on whether the technology is loosely coupled (value additive in inputs), exhibits bottlenecks (value constrained by the weaker input), or is strongly supermodular (value multiplicative in inputs). Contrary to conventional wisdom, we find it can be severe for the participants who are constraining the system the most.

Ecosystem Evolution and Bottleneck Shifts: Evidence from the Evolution of the Anti-HIV Drug Ecosystem (with Olivier Chatain)


Abstract: How do bottlenecks - the loci of value creation and value capture in business ecosystems - evolve over time? How can firms shape this evolution? To answer these questions, we trace the evolution of the anti-HIV drug industry, in which the standard treatment is a combination of multiple drugs belonging to two distinct components, between 1997 and 2017.  We examine firms' strategies in terms of the direction of innovative effort, developing exclusive complements, and attempts to challenge the existing bottlenecks by offering an alternative pathway to value creation. Using a hand-coded dataset of clinical trials of anti-HIV drugs, we find that  firms with inferior offerings attempt to  solve a value-constraining bottleneck, while stronger firms seek to reduce competition and to make their offerings a value-capture bottleneck, by strategically timing innovation and using exclusive complements. Once the value-capture bottleneck emerges, its owners develop bundles with exclusive complements, which allows them to create inter-temporal property rights over the bottleneck. However, these strategies may backfire as losing firms in the focal component switch their innovative effort to the complementary component and try to shift the bottleneck to the latter by making the original bottleneck component irrelevant. These findings augment ecosystems literature by suggesting endogenous drivers of bottleneck evolution and highlighting heterogeneity in firms' strategies towards bottlenecks. 

How Nonprofit Actors Shape Business Ecosystems: Nonprofit vs. Industry-Sponsored Clinical Trials 

Abstract: In this paper I explore how nonprofit actors actively shape a business ecosystem by comparing industry-sponsored and nonprofit-sponsored clinical trials on anti-HIV drugs. Because of the fundamental differences in incentives I hypothesize that nonprofit actors may pursue combinations that would be of lower interest to for-profit actors, such as combinations consisting of less expensive drugs, targeting smaller demographics or featuring fewer drugs. I examine the differences between industry-sponsored and nonprofit-sponsored trials in the choice of complements to be tested and in the use of prior clinical trials. I find that there is a subtle division of labor between firms and nonprofits as the latter tend to test combinations of older drugs to improve the access to treatment in developing countries. Because non-profits do not have vested interest in drugs they also tend to contrast newer and older drugs to confirm the efficacy and safety (which may be less beneficial for firms), and to establish compatibility with a wider range of complements (which can sometimes be beneficial for firms). Furthermore, I find that nonprofits are active in trials on combinations that eschew a certain type of complements in the ecosystem. I speculate that this contributes to shifting the ecosystem bottleneck and affects how the value can be created in the ecosystem. 

Value Capture and Competitive Advantage: An Application to Bio-Pharmaceutical Alliances (with Vlad Mares and Denisa Mindruta)

Platforms and complementors (new project) (with Shiva Agarwal and Cameron Miller)