This fresh collection of research from INSEAD faculty explores everything from the politics around leadership successions in Korean family businesses, to the real-world impact that bank exits can have on carbon emissions. 

Topics covered include how financial constraints are limiting the ability of Black households to secure property in high-opportunity areas, and whether making AI more human could actually make us trust it less. Further challenging assumptions is our final featured study, which questions whether environmental taxes are always good for the environment. 

How political slack influences successions in family firms

Xiaowei Rose Luo and Ji-Yub (Jay) Kim, with Jaemin Lee from Korea University, introduce the concept of “political slack” to explain how founding families and other dominant coalitions manage their firms’ strategic responses and key leadership appointments, often overriding conventional performance feedback. 

Looking at family-controlled firms in South Korea, the researchers define political slack as the freedom dominant groups gain from a history of strong collective value creation. This slack allows them to retain an incumbent family CEO despite below-par results, or bypass a high-performing incumbent to appoint a preferred next-generation family member.

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The impact of bank exit policies

Banks withdrawing financing from specific industries can help steer economies towards lower-carbon futures. That’s according to research by Boris Vallee and co-author Daniel Green from Harvard University, who examined the impact of banks restricting financing for coal plants. 

Challenging established economic theory that firms can easily substitute one source of capital for another, the study found that coal power plants owned by firms exposed to these exit policies are more likely to be retired early. In fact, the researchers estimated this strategy has reduced carbon dioxide equivalent emissions by approximately 0.62 gigatons. 

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Financial constraints and the racial housing gap

Financial constraints continue to limit the ability of Black households to secure property in high-opportunity areas a study by Pierre Mabille and his co-authors* finds. These geographical restrictions have long-term consequences, directly contributing to severe racial disparities by curtailing opportunities for long term prosperity. 

The researchers stress that promoting home ownership is not enough and argue for new policies focused on improving mortgage access and dramatically increasing the supply of housing within high-opportunity localities.

*Arpit Gupta, New York University, and Christopher Hansman, Emory University

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Competitive industry’s response to environmental taxation

Environmental taxes do not consistently benefit firms that utilise “green”, low-cost technologies and do not always lead to a reduction in pollution levels, according to new research by Anton Ovchinnikov and his co-author, Dmitry Krass from the University of Toronto. 

The authors analysed how companies producing commodity goods with polluting by-products react to environmental taxes. They found that such by-products can erode a firm’s natural advantage in operational efficiency, and in some cases may even lead to an increase in total emissions. The authors emphasise that these effects can differ significantly based on the specific market context and hence, these conditions need to be studied when reviewing the effectiveness of climate policy. 

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Artificial intelligence, trust and perceptions of agency

Research shows that human trust in AI is complicated by the system's perceived “agency”, i.e. its ability to act autonomously. While a more agentic AI is initially seen as more capable and thus more trustworthy, this positive effect is countered by a critical psychological factor: betrayal aversion. 

As the AI appears more human, the anticipated emotional cost of its failure increases sharply. Phanish Puranam and co-author Bart Vanneste from University College London argue that this conflict means efforts to give AI technology greater apparent autonomy and more “humanity” could paradoxically lead to a significant drop in user trust. Ultimately, the context of the interaction dictates whether high agency can help or hinder our relationship with the technology.

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