The latest research from INSEAD faculty explores everything from how individuals build trust across networks to reducing modern-day slavery in supply chains. 

Other findings reveal how labour mobility within banks influence loan rates and why the difficulty of betting against stocks affects their price. In addition, one of the latest INSEAD cases explores the costs and benefits of raising wages for low-paid workers at Michelin.
 

1. Reducing the risks of modern slavery in supply chains

Modern slavery is a hidden problem in global supply chains. New research by Luk Van Wassenhove and co-authors* explores how the interaction of people and technology in supply chains can inadvertently create or perpetuate this issue. 

The researchers show that to tackle modern slavery, we need to understand how the different parts of a system connect, specifically the interplay of the social, technical and work systems. The key lies in collaborative efforts, where different stakeholders work together to combine strategy with innovative technological solutions.

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* Sajad Fayezi, University of South Australia; Robert Klassen, Ivey Business School; Stefan Gold, University of Kassel; and Amy Benstead, University of Manchester.

2. How the costs of short sales affect asset pricing

A stock's price isn't just a reflection of the company’s earnings; it factors in the extra income that can be earned by lending it out. But how is the price of the stock affected when it’s difficult and expensive to bet against them or "short" them? 

New research by INSEAD’s Rodolfo Prieto and Julien Hugonnier from École Polytechnique Fédérale de Lausanne shows that when a stock is difficult to short, its price actually gets a boost. This is because people who want to bet against them are willing to pay extra just to borrow the shares. Therefore, the price of an asset is derived by the risk-adjusted present value of its future cash flows, which include both dividends and an endogenous lending yield. The findings explain why some stocks perform differently in the market even if they promise identical cash flows.

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3. Building trust within networks

While most research around trust has focused on direct, one-on-one interactions, how trust develops and spreads within larger groups or online communities has been less examined. Michael Park and his co-authors studied over 28,000 online traders on an online social trading platform and found that traders with higher status in the network and those who communicated more positively gained greater trust from others. 

The research suggests that networks act like a special lens, revealing who is truly trustworthy. People gain more trust not just from their position or influence within a group, but also from how they behave. Because they factors are mutually reinforcing, when both a person's standing in the group and their positive behaviour are present, trust builds up even faster.

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* Giuseppe Soda, Bocconi University; Aks Zaheer and Mani Subramani, Carlson School of Management; Bill McEvily, University of Toronto.
 

4. When talent walks

In a study on the effects of skilled labour mobility on bank behaviour, Massimo Massa and his co-authors* found that skilled labour mobility induces higher labour turnover, raises the bargaining power of skilled labour, and translates into higher costs for the banks. The researchers used the United States state courts’ staggered rejections of the inevitable disclosure doctrine (IDD) as a natural experiment to show the effects of such a shock.

In response, banks pass the rising operational costs by increasing loan rates and selective loan offerings. This effect is more pronounced in affected banks whose clients have limited options, where banks possess greater market power, and whose ex-ante employee turnover risk is higher. Importantly, these adjustments occur even when overall credit risk remain unchanged. Our findings suggest that neither banks nor customers gain from greater labour mobility; rather, the economic rents are largely appropriated by skilled employees through higher compensation

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* Ruinan Liu and Yan Wang, McMaster University
 

5. Case Focus: A Living Wage at Michelin

In 2024, Michelin adopted a living wage for all employees worldwide, paying what was deemed necessary to live decently, taking into account their family configuration and where they worked. This new case by Maria Guadalupe describes how the company went about it as the basis for discussion on the costs and benefits of raising wages for low-paid workers, as well as the role of firms in reducing inequality. It compares the introduction of a living wage (by firms) with the imposition of a statutory minimum wage by the state.

Read more here