Monthly Archives: February 2016

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    CEO pay should factor in market risk, regardless of its effect on their performance

CEO pay should factor in market risk, regardless of its effect on their performance

Writing effective managerial contracts is far from easy. Compensation committees must allocate incentives where they are most needed, while simultaneously being careful not to induce behaviours that would be detrimental to shareholders or imposing an inordinate amount of risk on managers. In a recent paper, I specifically focus on this second problem, that of reducing the risk borne by […]

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    Politically correct norms encourage creativity among mixed-sex work groups

Politically correct norms encourage creativity among mixed-sex work groups

People may associate political correctness with conformity but our research finds it also correlates with creativity in work settings. Imposing a PC norm into a work environment — a norm that sets clear expectations of how women and men should interact with each other — unexpectedly encourages creativity among mixed-sex work groups by reducing uncertainty in relationships.

The study highlights […]

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    A new tool uses the observations of patients to assess the culture of hospitals

A new tool uses the observations of patients to assess the culture of hospitals

Organisational culture feeds into every aspect of organisational performance: for example the innovation of new products, competitiveness, and customer service. Yet, assessing the culture of an organisation remains a methodological challenge.

Typically, researchers have relied on employee self-report measures (interviews, surveys), yet responses to such methods are often a product of the culture itself. For example, research indicates that ‘risk-taking’ […]

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    Volunteer work can sometimes threaten the jobs of paid employees in non-profits

Volunteer work can sometimes threaten the jobs of paid employees in non-profits

Economic literature suggests that non-profit organisations have an economic advantage over for-profits because they are able to use volunteers for parts of their activities more easily. In fact, for some non-profit organisations volunteer work can be regarded as a major labour source. The Institute for Volunteering Research estimates that 27 percent of the population 16+ in the UK volunteers […]

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    The Future of the Professions: How Technology Will Transform the Work of Human Experts – Book Review

The Future of the Professions: How Technology Will Transform the Work of Human Experts – Book Review

The Future of the Professions: How Technology Will Transform the Work of Human Experts. Richard Susskind and Daniel Susskind. Oxford University Press. 2015.

We’ve grown accustomed to the decaying hulls of factories and abandoned shopping centres. We’ve begun to see the hollowing out of suburban office parks and we can even envision being transported by fleets of robot taxis. Yet […]

Fostering good incubation in India

In a country that is home to a third of the world’s poor, promoting social enterprise has many potential benefits. It can make essential goods and services like healthcare and energy more affordable, improving well-being and contributing to economic development, particularly in rural areas. Furthermore, through the products and services they sell and the inclusive ways in which they operate, social […]

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    When multinationals choose locations, consumers and competitors matter

When multinationals choose locations, consumers and competitors matter

The field of international business has long adopted the view that multinational enterprises (MNEs) may be represented as networks of activities connected via knowledge and product flows. The major determinants of efficient location choices are considered to be proximity to markets, resources and suppliers.

There are two standard approaches to modelling MNEs’ location choices. The first attempts to minimize total […]

Measuring the business value of IT: simplify with caution

Demonstrating performance and productivity gains to organisations from investments in information technology (IT) continues to be challenging. The notions of the productivity paradox (the main idea in Erik Brynjolfsson ‘s famous 1993 CACM Magazine article discussing the paradox between technological advances and the relatively slow growth of productivity) and IT Doesn’t Matter (Nicholas Carr’s widely-discussed Harvard Business Review article […]

European banking union: should the ‘outs’ join in?

The ultimate rationale of banking union

Banking union was conceived as a reply to one of the root causes of the European debt crisis: the sovereign-bank loop. To break the loop, euro-area leaders decided to move responsibility for banking supervision and resolution to the European level.

Banking union consists of the SSM (Single Supervisory Mechanism) and the SRM (Single Resolution Mechanism). […]

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    If you think ‘country’ when exploring new markets, think again

If you think ‘country’ when exploring new markets, think again

Choosing which markets to compete in is one of the most critical decisions business leaders make. Several studies have demonstrated that more than half of a company’s long-term growth and value creation depend on being in the right markets. It is also a difficult decision and hence could well be a source of strategic advantage.

Committing to one market and […]

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    It’s time for Sub-Saharan Africa to move ahead in competitiveness

It’s time for Sub-Saharan Africa to move ahead in competitiveness

The sub-Saharan Africa region is facing severe shocks associated with the steep decline in commodity prices and tightening global financial conditions. Against this background, it’s a good time to look back at the region’s recent growth experience and examine the relationship between growth rates and competitiveness. The extent to which sub-Saharan African companies are able to compete against their […]

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    Historical predictions that technology would bring calamity have largely failed

Historical predictions that technology would bring calamity have largely failed

Technology is widely considered the main source of economic progress, but it has generated cultural anxiety throughout history. In a recent paper, we place today’s angst about technological change in a historical context. In particular, we study three prominent concerns: (1) Will technological progress cause a substitution of machines for labour and lead to widespread unemployment; (2) Will technology […]

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    The interval training principle could help us deal with our distraction problem at work

The interval training principle could help us deal with our distraction problem at work

No sooner had I sat down to write this article than I felt myself dawdling. First, I checked to make sure I had no new emails. Then, I looked at my phone to see if anyone had sent me a message. Next, I remembered that the office heater was leaking, and decided I needed to call the plumber immediately.

Even […]

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    Counselling is better than outright firing an underperforming employee

Counselling is better than outright firing an underperforming employee

Utilizing new technology, combined with aggressive and innovative marketing, your business has significantly expanded over the last few years. You’ve attracted talented staff who are poised to take the company to even greater heights. You want to give them rein and let them run.

Unfortunately, one of your salesmen (we’ll call him John), who handles several key accounts, doesn’t seem […]

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    Saudi Arabia ponders the risks and opportunities of taking Aramco public

Saudi Arabia ponders the risks and opportunities of taking Aramco public

Ask almost any Saudi citizen which institution works best in his country and the answer will be Saudi Aramco, the state-owned oil giant. Ask international oilmen what is the best-run national oil company in OPEC and the reply will be the same.

Given the company’s exemplary reputation, it is surprising that the Saudi kingdom’s Deputy Crown Prince Mohammad bin Salman mentioned his […]

Better Bankers, Better Banks – Book Review

Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment. Claire A. Hill and Richard W. Painter. University of Chicago Press. 2015.

History is marked by many turning points which we may call critical junctures. The global financial crisis has been one example. The crisis underscored various deficiencies in the financial and banking sectors as well as with the regulatory […]

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    Advice for 20 somethings: don’t go job hopping and explore your education options

Advice for 20 somethings: don’t go job hopping and explore your education options

When we read about youth, titles like Generation X, Generation Me and Arrested Adulthood tend to paint an alarming picture of the younger generation in their 20s as directionless, floundering, and less likely than previous generations to become mature and productive citizens. In contrast, books like The Boomerang Age and Emerging Adulthood argue that more recent socio-demographic trends indicative […]

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    Business-government collaboration may help solve complex social issues

Business-government collaboration may help solve complex social issues

Many proposed policies that could improve social welfare never see the light of day because of intractable debates among critical stakeholders and particularly business opposition. We suggest that collaborative governance approaches involving government and business stakeholders may successfully formulate policies that address complex social issues, and that otherwise lack policy support.

Many businesses are promoting social welfare by voluntarily eradicating […]

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    Evidence suggests that firms set targets to avoid small losses

Evidence suggests that firms set targets to avoid small losses

The first picture shows the distribution of actual earnings in our study on target setting (see the study in brief box below) and replicates a well-established finding that reported earnings exhibit a ‘discontinuity at zero’ (meaning that there are disproportionally fewer firms with small losses compared to small profits), which one might surmise perhaps suggests that firms ‘manage’ earnings […]

Overconfident CEOs prefer short-term debt

Debt maturity represents an important dimension of corporate financing policies. Inferior debt maturity structure can lead to suboptimal liquidation of the firm. The impact of firm characteristics on the choice of debt maturity structure is well understood. More recently, studies have turned to examine how the personal characteristics of corporate executives affect debt maturity decisions. This makes intuitive sense […]