Monthly Archives: December 2024

Phenomenon or Minor Progress?

Between 1960 and 1989, South Korea witnessed an exceptional economic expansion, widely recognised for its real GDP per capita increasing at an impressive annual average of 6.82 per cent. This phenomenal growth has frequently been credited to the nation’s industrial policy, which involves governmental support directed specifically at specific industrial sectors. In this instance, it is commonly believed that such policies were the driving force behind decades of robust economic growth.

However, the actual impact of industrial policy on overall GDP growth is under scrutiny. A pioneering study conducted by four academics, including two economists from MIT, proposes that the contribution of industrial policy to GDP growth is considerably modest. The study uses global trade data to evaluate shifts in industrial capacities across various countries. Findings suggest that, in the most favourable scenarios, the industrial policy could boost long-term GDP by merely 1.08 per cent and, at most, by 4.06 per cent when additional conducive factors are present. These figures starkly contrast with the annual growth rate of 6.82 per cent previously recorded, indicating a much lesser benefit than anticipated.

The significance of this study extends beyond the mere figures; it explores the underlying reasons for these outcomes. It highlights, for example, how local consumer demand can significantly limit the effectiveness of industrial policy. Changes in production output, influenced by government policies, might lead to a different shift in consumer demand for these goods, thus capping the potential growth that can be directed through such policies.

MIT economist Arnaud Costinot, a co-author of the study, remarked on the findings, stating that while the gains from industrial policy are present, they are not monumental. “In most cases, the gains are not going to be enormous,” Costinot explains. He further noted that these gains do not match the full extent of growth seen in South Korea, which is often cited as a quintessential example of successful industrial policy.

The research integrates empirical data with economic theory, particularly assessing conditions deemed ideal for industrial policy according to economic textbooks. Another co-author, Dave Donaldson, also from MIT, suggests that while industrial policy may have played a significant role in the success stories of countries like China, Japan, and even the USA, the textbook arguments only partially account for these successes. “The question is whether the textbook argument for industrial policy fully explains those successes, and our punchline would be, no, we don’t think it can,” Donaldson elaborates.

The study, “The Textbook Case for Industrial Policy: Theory Meets Data,” was published in the Journal of Political Economy. In addition to Costinot and Donaldson, the authors include Dominick Bartlelme, an independent researcher, and Andres Rodriguez-Clare, a professor of Economics at the University of California, Berkeley.

The researchers used global trade statistics to glean insights into changes in sector-specific capacities within countries and other economic metrics to evaluate the broad impacts of industrial policies. If specific industries expand and become more productive, this should be reflected in increased export volumes, thereby indicating productivity gains. This method of reverse engineering offers a unique empirical approach to understanding the scale effects of industrial policies.

The study examined data across 61 countries, encompassing various timeframes over recent decades and including exports from 15 manufacturing sectors. The calculated average long-term GDP gain from industrial policy stood at 1.08 per cent, with individual countries experiencing benefits ranging from 0.59 to 2.06 per cent annually under favourable conditions. Small, trade-open countries might see more considerable proportional benefits.

Additionally, the research points out that while there is potential for redirecting economic activity through industrial policy, the scope for such redirection is limited by relatively fixed demand levels. This implies that even if a sector could expand significantly due to government support, actual growth would eventually stagnate as the market becomes saturated.

In discussing the broader implications of industrial policy, Costinot and Donaldson also touch upon various factors that governments might consider when adopting such policies, including wage distribution, environmental concerns, and geopolitical strategies. In places like the USA, industrial policy has been considered a means to rejuvenate deindustrialised areas and re-skill workers.

Ultimately, the study does not conclude definitively on the efficacy of industrial policy but instead deepens the understanding of its dynamics and potential limitations. While broad gains from such policies may be limited, targeted interventions in specific sectors and regions could yield substantial benefits when conditions are favourable. Policymakers are encouraged to realistically assess the potential growth outcomes of industrial policy, recognising that while significant gains are possible, they may only sometimes align with the theoretical maximums posited in economic textbooks.

More information: Dominick Bartelme et al, The Textbook Case for Industrial Policy: Theory Meets Data, Journal of Political Economy. DOI: 10.1086/734129

Journal information: Journal of Political Economy Provided by Massachusetts Institute of Technology

Global Warming and Creative Routes to a Greener Tomorrow

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As the international climate crisis escalates, there is a pressing need for innovative and scalable interventions. A notable contribution to this discussion appears in a recent publication in Frontiers in Energy, authored by Nobel laureate Dr Steven Chu of Stanford University and Qi Wang from the US-China Green Energy Council. The paper elaborates on crucial technological breakthroughs and advocates for a significant shift in societal perspectives on progress and the definition of “wealth”, providing a strategic framework for mitigating greenhouse gas (GHG) emissions and promoting sustainable growth.

The authors highlight increasing evidence of anthropogenic climate change, drawing attention to the relentless rise in GHG emissions and their extensive repercussions on ecosystems and human societies. Dr Chu starkly characterises the situation with emissions hitting an alarming 52 gigatons of CO2 equivalent by 2023: “We’re not just facing a challenge; we’re in a war against climate change. Immediate, transformative action is necessary to secure a livable planet.”

The discourse identifies key sectors that are significant sources of emissions, such as power generation, transportation, construction, and manufacturing, emphasising the necessity for profound innovation and systemic reforms. Dr Chu contends, “Achieving net-zero emissions means rethinking nearly every aspect of modern society.”

One significant contributor to global emissions is agriculture, primarily through the nitrous oxide emissions from fertilisers. The authors advocate for a “fourth agricultural revolution,” which would harness synthetic biology to create microbes that reduce reliance on fertilisers and improve soil health.

Furthermore, the paper discusses the role of crops as potential carbon sinks. Non-edible plant residues could be processed and stored to capture atmospheric CO2. Another significant area explored is integrating artificial intelligence (AI) in enhancing clean energy systems. AI could optimise energy consumption, forecast demand, and facilitate the development of new materials. Nonetheless, the authors caution about the high energy demand of AI systems, stressing the importance of increasing their efficiency and ensuring renewable energy sources power them.

Beyond technological advancements, Dr Chu and Wang argue for a cultural and value shift from a disposable mindset to one focused on reusability and sustainability. They challenge conventional economic indicators like GDP, proposing a redefinition of “wealth” that values well-being and communal health over mere consumption. Dr. Chu notes, “True prosperity isn’t measured by how much we consume, but by the quality of our lives and the health of our communities.”

In concluding their argument, the authors plead for a collective approach to embracing innovation and fostering collaboration across all sectors of society. The range of solutions mirrors the diversity of challenges from renewable energy implementations to sustainable agricultural practices. However, the effectiveness of these solutions hinges on global collaboration and a unified commitment to transformative change, underscoring the urgency and scale of the climate crisis.

More information: Steven Chu et al, Climate change and innovative paths to a more sustainable future, Frontiers in Energy. DOI: 10.1007/s11708-024-0965-1

Journal information: Frontiers in Energy Provided by Shanghai Jiao Tong University Journal Center

Groundbreaking Research Reveals the Profound Influence of Accelerator Programmes on Global Startups

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A seminal study by Valentina A. Assenova and Raphael Amit from The Wharton School at the University of Pennsylvania unveils significant findings on the positive impact of startup accelerator programmes. Published in the Strategic Management Journal, the research delves into an extensive dataset encompassing more than 8,500 startups from 176 nations. It provides pivotal insights into the influence of accelerator programme construction on startups’ triumphs, marking a critical exploration into these entrepreneurial nurturers.

Startup accelerators are increasingly central in cultivating entrepreneurial ecosystems worldwide. They supply vital resources such as seed funding, mentorship, and structured educational content. The study’s findings indicate that startups engaging with accelerator programmes are more likely to secure venture capital, enhance their revenue streams, and grow their teams than those not participating in these programmes. The research highlights that, on average, involvement in an accelerator leads to an uptick in revenue and the ability to raise capital, as well as an improved capacity to attract leading talent by offering competitive salaries.

Valentina A. Assenova, the study’s principal investigator, emphasised the crucial role of tailored programme design in realising the full potential of accelerator benefits. “Our findings underscore the importance of programme design in maximising the benefits of accelerator participation,” Assenova remarked. She suggested that by customising their services to meet the specific requirements of startups—be it industry-specific needs, stages of development, or the experience levels of founders—accelerators can significantly enhance the success rates of these enterprises.

This research illuminates the substantial advantages for entrepreneurs who engage with accelerators and serves as a valuable resource for policymakers and investors. It advocates for endorsing programmes that furnish customised, high-impact resources, especially in emerging markets where entrepreneurial frameworks are less established and still evolving.

The study utilised Global Accelerator Learning Initiative data, examining applications from 23,364 aspiring participants over six years (2013–2019). Employing stringent methodologies, including comparative analyses of startups that have gone through acceleration versus those that have not, the researchers identified the key elements contributing to the success following programme completion. This comprehensive approach ensures robust validation of the positive outcomes associated with accelerator involvement, confirming these programmes’ critical role in the global startup ecosystem.

More information: Valentina A. Assenova et al, Poised for growth: Exploring the relationship between accelerator program design and startup performance, Strategic Management Journal. DOI: 10.1002/smj.3581

Journal information: Strategic Management Journal Provided by Strategic Management Society

Navigating the Enrichment Economy: Strategies for Luxury Brands

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A team of researchers from ESSEC Business School and the University of Bath have collaborated on a recent study recently published in the Journal of Marketing, which delves into the dynamics of the “enrichment economy.” This concept revolves around consumers purchasing goods not just for their immediate use or enjoyment but to augment their capital. The detailed investigation is set to appear under the title “The Enrichment Economy: Market Dynamics, Brand Strategy, and Ethics,” authored by Delphine Dion, Roman Pavlyuchenko, and Sonja Prokopec.

In their exploration, the authors reveal how specific markets, especially those dealing in luxury items, provide extraordinary opportunities for substantial financial gains. A compelling example is the “Carhartt x Eminem x Air Jordan 4 Retro” sneakers, which were initially given to loyal fans in 2015. Remarkably, these sneakers saw their value escalate to $10,000 per pair within three years and were trading at over $30,000 each by 2024. In a similar vein, approximately 150 “Tiffany Blue” Patek Philippe watches were initially sold to dedicated clients at $50,000 each. Still, their value skyrocketed shortly thereafter, with the first watch being resold for an astonishing $6.5 million. Since then, the price of this watch model hasn’t fallen below $3 million.

This surge in value over time is a characteristic feature of the enrichment economy. It is built on the premise that certain goods retain and increase value, desirability, and status beyond their initial purchase. Classic examples of such goods include artworks, antiques, and specific luxury items like watches and handbags. According to the study, these goods preserve and enhance personal capital, making them highly sought after.

Delphine Dion explains that the enrichment economy operates under a unique logic different from conventional markets. It is characterised by what the researchers call “enrichment privilege”—a form of preferential access to goods that are likely to appreciate, allowing their owners to resell them at a profit later on. The mechanisms through which this privilege operates are multifaceted, involving curation, association, security, and monetisation of access to these goods.

One crucial aspect discussed is how brands curate access to these valuable goods, selecting a small, carefully vetted group of consumers who are often incentivised to wait to resell their acquisitions. This practice helps maintain the scarcity and, thus, the resale value of these items. Moreover, platforms in the secondary market play a critical role in demonstrating the asset worth of these goods, enhancing their liquidity and transparency, which in turn supports significant financial returns for those who hold them.

Additionally, consumers secure access to these enrichment goods by forging strategic relationships with brands, often through personal connections with managers and sales personnel and by demonstrating loyalty through substantial purchases. Those fortunate enough to secure such privileges can reap extensive personal benefits, ranging from membership in exclusive circles of wealthy enthusiasts to significant financial returns through the resale of these goods.

However, the study also highlights the challenges that brands face in managing these opportunities without undermining their revenues or the desirability of their products. The authors advocate for egalitarianism, transparency, and democratisation in implementing enrichment strategies to combat these challenges. They argue for clear and binding allocation and waitlisting procedures to prevent discrimination and bias, thus ensuring a fair and transparent process for all potential buyers.

Moreover, the study warns of the potential ethical pitfalls in such markets. For instance, Rolex faced a substantial fine for preventing its authorised dealers from freely trading specific watch models, which the French Competition Authority ruled as anti-competitive. This example underscores the broader dangers of unethical practices within the enrichment economy.

In conclusion, while the enrichment economy offers significant opportunities for both consumers and brands, it also presents a complex array of strategic, ethical, and management challenges that must be addressed. The researchers call for a balanced view that considers both the potential benefits and the darker implications of market practices in this unique economic space, urging practitioners and academics to consider these factors in future applications and studies. This comprehensive analysis deepens our understanding of a specific economic phenomenon and sheds light on broader market dynamics and consumer behaviour in the luxury goods sector.

More information: Delphine Dion et al, The Enrichment Economy: Market Dynamics, Brand Strategy, and Ethics, Journal of Marketing. DOI: 10.1177/00222429241275014

Journal information: Journal of Marketing Provided by American Marketing Association

Global Corporations Are Falling Short of the World’s Sustainability Objectives

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According to a recent study from the University of Surrey, Multinational Enterprises (MNEs) are not merely falling short of achieving global sustainability targets. Still, they also actively contribute to the problems they purport to solve. The study stresses the urgent need for MNEs to overhaul their innovation strategies to align with the United Nations Sustainable Development Goals (SDGs).

The researchers discovered that many MNEs prioritize profits over sustainable practices. By examining case studies across various countries, including developed and emerging economies, the study points out that MNEs often need to adopt more compliance measures instead of engaging in substantial, sustainable innovations. Despite investments in environmentally friendly initiatives like renewable energy projects, these efforts are frequently employed as marketing tactics rather than sincere commitments to sustainability.

Extensive interviews with industry leaders, analysis of corporate sustainability reports, and scrutiny of innovation practices within various ecosystems revealed that many firms need to harness local stakeholder knowledge or tackle specific regional sustainability challenges to limit their potential impact.

Dr Shasha Zhao, Senior Lecturer in International Business and Innovation at the University of Surrey and the study’s lead author, remarked, “Our findings challenge the assumption that Multinational Enterprises are inherently beneficial for sustainable development. Many are merely ticking boxes rather than genuinely innovating in ways that address the urgent challenges facing local communities.”

The study also revealed many companies’ dissatisfaction with MNEs’ lack of genuine engagement. A local entrepreneur commented, “It feels like they come here to take rather than to give. We need meaningful partnerships that address our unique challenges.”

This discrepancy between MNEs’ declared commitments and their actual practices calls into question corporate accountability and the efficacy of existing sustainability frameworks. The research advocates for a more collaborative approach that includes local communities and stakeholders, which is essential for MNEs to develop innovations that genuinely contribute to addressing social and environmental issues.

Dr. Zhao added, “This is a wake-up call. To truly be part of the solution, MNEs must deeply engage with local contexts and transcend superficial commitments to sustainable innovation. Multinational Enterprises are uniquely positioned to drive positive change. By integrating sustainable practices and fostering innovation ecosystems, these companies can tackle pressing issues like climate change, political instability, and social inequality.”

More information: Shasha Zhao et al, The determinants of multinational enterprises’ sustainable innovations, International Business Review. DOI: 10.1016/j.ibusrev.2024.102318

Journal information: International Business Review Provided by University of Surrey

The Vast Wave: Tsunami Impacts on Worldwide Commerce

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Port disruptions entail substantial costs—the Tohoku tsunami of 2011 damaged ports and vessels, amounting to around $12 billion. Still, the subsequent disruptions in port operations led to a staggering daily loss in seaborne trade valued at approximately $3.4 billion. Given that over 80% of the world’s trade is conducted via shipping, interruptions in the global port network can profoundly impact international commerce. Yet, in the planning and structural design of ports, the threat posed by tsunamis is often overlooked. This neglect is attributed to the rarity of tsunamis and the absence of effective methods for assessing the associated risks.

In light of these challenges, a team of researchers has developed a framework designed to assess the risk of tsunamis to seaports and the broader global port network. This framework predicts the economic losses that may result from disruptions at ports. It examines the broader effects on the worldwide network, including implications for shipping routes and ports that do not suffer direct damage.

The research was spearheaded by Constance Chua, a postdoctoral researcher at the International Research Institute of Disaster Science (IRIDeS) at Tohoku University, with the collaboration of Professor Fumihiko Imamura, Associate Professor Anawat Suppasri, and Professor Adam Switzer from Nanyang Technological University.

“Our analysis focused on a hypothetical tsunami in the South China Sea, triggered by seismic activity along the Manila Trench,” explained Chua. “We also took into account the impact of rising sea levels on tsunami conditions.”

The study extensively evaluated 104 scenarios with contributions from international experts across multiple disciplines. These experts included Dr Tanghua Li, a geophysicist at the Earth Observatory of Singapore who specialises in sea-level rise modelling for Asia; Research Professor Qiang Qiu, an authority on tectonic geodesy at the Chinese Academy of Sciences focusing on the Manila Trench; and Professor Linlin Li, an expert in tsunami modelling from Sun Yat-sen University. Their collective expertise allowed the team to incorporate the most current data and models on various hazard components, crafting scenarios that closely resemble potential real-world events.

The study’s findings revealed that a tsunami from the Manila Trench could affect up to 11 international seaports under sea-level conditions and as many as 15 by the year 2100. Some ports might be closed in the worst-hit areas for over 200 days. However, the duration of port closures did not necessarily correlate with the most significant economic losses. Ports handling larger volumes of cargo annually were more vulnerable to financial detriment. The ports in Hong Kong, Manila, and Kaohsiung suffered the most significant trade losses in all the scenarios considered.

Chua further noted that a tsunami from the Manila Trench could have a more severe impact on global trade than the devastating events of the 2004 Indian Ocean tsunami and the costly 2011 Tohoku tsunami. “As South China is home to some of the busiest ports and sea lanes in the world, the number of shipping routes affected would surpass those in previous tsunami events significantly,” she said. “Given the historical neglect of tsunami impacts in safety planning, our findings are crucial for helping stakeholders better prepare for future disasters.”

More information: Constance Ting Chua et al, An approach to assessing tsunami risk to the global port network under rising sea levels, npj Natural Hazards. DOI: 10.1038/s44304-024-00039-2

Journal information: npj Natural Hazards Provided by Tohoku University

WVU Study Discovers CEO Innovation Linked to Compensation Structures and Analyst Advice

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Research from West Virginia University suggests that the dynamics of the stock market significantly influence the innovative commitments of chief executive officers through mechanisms such as CEO compensation packages and input from financial analysts.

Associate Professor of Marketing at WVU’s John Chambers College of Business and Economics, Xinchun Wang, notes that financial analysts’ feedback, like earnings forecasts, is often perceived as a barrier to innovation due to the pressure it exerts on CEOs. However, Wang clarifies that not all types of feedback hinder innovation. In contrast, stock recommendations encourage exploration and investment in areas such as research and development, which, although risky, may yield positive long-term returns.

In their study published in the Journal of the Academy of Marketing Science, Wang and a colleague explored how feedback from financial analysts affects CEOs’ strategic decisions. They discovered that analysts’ stock recommendations have a two-fold influence on management decisions: indirectly by affecting investor sentiment and stock prices and directly during meetings where analysts interact with management, posing questions or seeking clarifications on company strategies.

Wang highlights the attention management pays to stock recommendations, using the example of Goldman Sachs analysts advising the sale of Imax stock, which has prompted Imax’s CEO to focus on transforming the company’s business model to improve its rating. This emphasis on innovation over traditional models highlights the importance of feedback from financial analysts, who act as intermediaries between firms and investors, providing critical insights into current performance and potential future returns.

Unlike earnings forecasts focusing on short-term financial outcomes, stock recommendations are based on analysts’ long-term evaluations of a firm’s potential future cash flows, necessitating strategic rather than superficial, short-term CEO responses. Wang stresses that such long-term investment in innovation is crucial for a company’s success, exemplified by Adobe under CEO Shantanu Narayen. Despite initial revenue declines following its shift from license sales to a subscription-based model in 2013, Adobe’s revenues had soared by almost 500% by 2022, affirming the value of steadfast commitment to long-term strategic goals.

However, not all CEOs adhere to such long-term perspectives, often influenced by compensation structures that incentivise returns. In another study published in the Journal of Product Innovation Management, Wang examined the link between CEOs’ strategic myopia and their compensation methods, finding that CEOs nearing the exercise of stock options might reduce spending on innovation to boost stock prices temporarily and maximise gains—a practice Wang terms as myopic.

Wang also notes that CEOs who hold significant power, such as board positions, face less pressure to innovate and are more likely to engage in opportunistic strategies to serve their agendas. He cites a survey where a vast majority of corporate executives admitted they would slash spending on research and development, advertising, and maintenance to meet earnings targets, highlighting the adverse effects of compensation plans that reward short-term achievements and excessive executive power.

Nevertheless, Wang believes that a firm’s historical commitment to innovation and its cultural ethos can place its demands on a CEO’s strategies. He argues that boards of directors must alleviate performance pressures by reinforcing the importance of long-term innovative investments to their CEOs. Furthermore, stakeholders should vigilantly monitor a CEO’s actions, especially as they approach the period for stock options exercises, advocating for clear guidelines on the timing and methods of such exercises to curb myopic behaviour. This comprehensive oversight is essential to ensure that CEOs do not sacrifice the future sustainability of their companies for immediate financial gains.

More information: Xinchun Wang et al, The impact of analyst stock recommendations on firms’ relative exploration orientation, Journal of the Academy of Marketing Science. DOI: 10.1007/s11747-024-01070-5

Journal information: Journal of the Academy of Marketing Science Provided by West Virginia University

Study Reveals Positive Impact of Employing Disabled Individuals on Hotel Guest Perceptions

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The recent study conducted by the University of Surrey has brought to light the advantages that hiring people with disabilities (PWD) offers to the hospitality industry, particularly in enhancing guest perceptions and fostering repeat business. This pivotal research, published in the International Journal of Hospitality Management, delves into the direct correlation between the employment of disabled individuals in hotels and the increase in guest recommendations and return visits. The study significantly challenges the entrenched misconceptions surrounding the employment of PWD within the hospitality sector, highlighting that embracing inclusivity not only upholds social responsibility but also bolsters business outcomes.

Dr Bora Kim, the lead researcher and a Senior Lecturer in Hospitality Management at the University of Surrey, emphasised the strategic benefits of inclusive hiring practices. According to Dr. Kim, employing disabled individuals goes beyond ethical employment practices; it represents a progressive business strategy that can catalyse broader corporate success. The research outlined the “positive ripple effects” of inclusivity, with guests more inclined to support and promote hotels committed to diverse hiring practices. This drives business growth and enhances the hotel’s reputation as a socially responsible entity.

The study’s methodology involved two meticulously designed experiments with 1,443 participants across the UK. These participants were split into two groups; one evaluated a hotel employing PWD, while the other reviewed a hotel that did not. The findings revealed that hotels practising inclusive hiring were perceived as more socially responsible, significantly influencing guest behaviour. Guests were not only more likely to recommend these hotels but were also more inclined to revisit them. This increased loyalty stems from recognising the hotel’s ethical practices and the moral obligation guests feel to support such businesses.

Moreover, the research demonstrated that guests’ ethical decision-making significantly mediates the relationship between PWD employment and consumer behavioural intentions. As guests recognise the moral implications of their choices, they feel a heightened responsibility to endorse businesses that support inclusivity, which translates into increased recommendations and repeat visits. Notably, the study found that the positive impact of employing PWD is consistent across various hotel types and star ratings, indicating that the perceived value of inclusive hiring transcends different brands and levels of service.

Dr Erin Chao Ling, a co-author of the study and a Lecturer in Artificial Intelligence and the Future of Work, highlighted the broader implications of their findings. The positive influence of employing disabled individuals on consumer perceptions extends beyond the hospitality industry, urging businesses across all sectors to reconsider their hiring strategies. By fostering a more inclusive workforce, companies can cultivate a loyal customer base that values and supports social responsibility.

The study’s alignment with the United Nations’ Sustainable Development Goals, especially Goal 8, which advocates for inclusive and sustainable economic growth, underscores the importance of inclusive employment practices. Dr. Kim further argued that in the face of ongoing challenges in attracting and retaining talent, integrating disabled individuals into the workforce addresses immediate employment needs and promotes significant economic growth and community impact.

In conclusion, this research not only illuminates the beneficial business impacts of employing people with disabilities in the hospitality industry but also serves as a call to action for all sectors to embrace diversity and inclusivity in their employment practices. This not only ensures a fairer work environment but also enhances business outcomes by aligning company practices with the values of social responsibility and ethical conduct.

More information: Bora Kim et al, Effects of disability employment on guest perceptions and behavioral intentions in the hotel sector, International Journal of Hospitality Management. DOI: 10.1016/j.ijhm.2024.103993

Journal information: International Journal of Hospitality Management Provided by University of Surrey

Recent Research Unveils the Reasons Behind Organisations’ Hesitance to Embrace Blockchain Technology

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According to recent research from the University of Surrey, the slow uptake of blockchain technology can be attributed to overly enthusiastic promises that often cloud the real and multifaceted challenges it presents regarding technology, organisation, and the environment.

Blockchain functions as a secure digital ledger, documenting and confirming transactions across numerous computers in a manner that is difficult to alter. This system operates like a digital notebook accessible to all, displaying all entries openly while ensuring that it cannot be modified once data is recorded. Initially, blockchain was highly celebrated for its potential to facilitate secure, transparent transactions without the need for intermediaries such as banks. Beyond its foundational role in cryptocurrencies like Bitcoin, its application possibilities in finance, healthcare, and supply chains are being actively explored.

The study, spearheaded by PhD candidate Ying Zhang in collaboration with scholars from Surrey Business School and Cardiff Business School, exhaustively analysed 880 factors influencing the adoption of blockchain by organisations in diverse industries.

Dr Mahdi Tavalaei, a Senior Lecturer in Strategy and Digital Transformation at the University of Surrey and co-author of the study, commented on the findings, noting the cautious approach of many organisations. He explained that despite the revolutionary potential attributed to the blockchain, its actual adoption had been stalled by promises that exceed delivery, the lack of tangible business value, and the intricate interplay between the drivers and barriers to adoption.

The research did highlight some positive aspects, identifying blockchain’s unique features, such as improved transparency, security, and operational efficiency, as strong incentives for its adoption. Nevertheless, these driving factors are frequently overshadowed by significant barriers, complicating the adoption process. The study highlighted that regulatory uncertainties and scalability challenges are more pronounced and definitive. In contrast, the advantages of adopting blockchain are conditional and likely to only manifest in the long term. This creates a discrepancy that hampers quick decision-making within organisations regarding adopting this technology.

The study further suggests that more than the technological benefits of blockchain alone are needed for many organisations to justify its adoption. These benefits are intricately linked to internal and external organisational factors, including the beliefs of top management regarding technology, cross-organisational collaboration, and the existing regulatory frameworks. Dr Tavalaei elaborated on these points, stressing that while blockchain holds significant potential, there is a need for a more grounded narrative surrounding its adoption. He pointed out that the interaction between the various drivers and barriers across technological, organisational, and environmental dimensions illustrates the complex and sometimes conflicting dynamics organisations need to navigate. According to him, organisations are not merely reluctant; they make deliberate decisions based on the existing limitations and the often overstated blockchain promises. Through this research, Dr Tavalaei and his team aim to steer the discussion towards setting more realistic and attainable objectives for blockchain technology.

More information: Ying Zhang et al, Evolution or involution? A systematic literature review of organisations’ blockchain adoption factors, Technological Forecasting and Social Change. DOI: 10.1016/j.techfore.2024.123710

Journal information: Technological Forecasting and Social Change Provided by University of Surrey

Presenting a Gift: It’s Better to Be Late Than Never, Research Suggests

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If you’ve ever felt guilty about giving a gift late for Christmas or a birthday, a new study offers some reassuring insights. Researchers have discovered that gift recipients are not as troubled by the delay as the givers often fear. Cory Haltman, the study’s principal investigator and a doctoral candidate in marketing at The Ohio State University’s Fisher College of Business, suggests that sending a belated gift should not be a significant concern as most people are more forgiving than givers anticipate. This revelation was part of a comprehensive study involving six experiments recently published in the Journal of Consumer Psychology, exploring the discrepancies between givers’ and recipients’ perspectives on the punctuality of gift-giving.

The anxiety associated with delivering gifts late is widespread—a survey highlighted that 65% of Americans believe that gifts for specific occasions should be timely. However, Rebecca Reczek, a co-author of the study and professor of marketing at Fisher College, points out that the issue is more nuanced than it appears. In one of the experiments, college students were asked to rate the impact of receiving or giving a birthday gift (a pint of ice cream) either on time or two weeks late on their relationships. Results showed that those imagining themselves as givers felt that late gifts were more likely to harm the relationship than the recipients’ views. This highlights a significant divide in perceptions between givers and receivers, with givers placing more importance on meeting conventional expectations of timeliness.

Another aspect of the study examined the implications of gift content and the effort involved. Participants felt that a personally assembled gift basket could mitigate the negative effects of its lateness compared to a pre-made one. Personal effort in gift preparation can be crucial in perceiving a late gift. Yet, the study also delved into how late it is for a gift to be acceptable. Scenarios ranged from a gift being two days late to two months late. While both givers and recipients agreed that longer delays were more harmful, recipients consistently viewed the delays less critically than givers did.

The research further explored the consequences of not giving a gift at all, which both parties believed would be more detrimental to the relationship than any delay. Haltman emphasizes, “Late is definitely better than never when it comes to giving a gift,” indicating that giving, regardless of timing, holds substantial value in maintaining relationships. This insight challenges the common belief that punctuality in gift-giving is paramount, revealing that the perceived severity of not adhering to this norm is often greater among givers than recipients.

Reczek advises givers who are late with a gift to consider how they would feel receiving a gift late themselves. Based on their findings, adopting the recipient’s perspective might reduce anxiety about the potential damage caused by the lateness of a gift. This empathetic approach could help alleviate undue stress and refocus on the intention behind the gift, which is to express care and maintain relationships.

Overall, the study underscores a fundamental message: the importance of giving a gift transcends its timeliness. While timely gift-giving is ideal, the researchers highlight that givers often overestimate the negative impact of a delay. As such, the key takeaway from their research is to ensure that the gift is given, regardless of timing, reinforcing the idea that giving itself truly matters in nurturing personal connections.

More information: Cory Haltman et al, Better late than never? Gift givers overestimate the relationship harm from giving late gifts, Journal of Consumer Psychology. DOI: 10.1002/jcpy.1446

Journal information: Journal of Consumer Psychology Provided by Ohio State University

Entrepreneurs Funded by Family and Friends Tend to Opt for Less Risky Growth Strategies

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Entrepreneurs often lack the resources and funding to kick-start their ventures, leading them to contact family and friends for initial support. However, this raises a crucial question: Is it beneficial for a startup to be backed by individuals close to the founder, offering them a chance to be part of something potentially groundbreaking?

Recent research by three professors from the Indiana University Kelley School of Business suggests that such close financial ties can influence founders to adopt more cautious growth strategies and be reluctant to take risks. This study explored how accepting funds from personal connections affects an entrepreneur’s inclination towards risk.

Donald F. Kuratko, who holds the Jack M. Gill Chair of Entrepreneurship and serves as the executive and academic director of the Johnson Center for Entrepreneurship and Innovation, stated that the study was designed to assess how these financial contributions impact an entrepreneur’s approach to risk. He highlighted that when the relationship between an entrepreneur and an investor deepens, as it often does with family and friends, the entrepreneur might feel a stronger guilt over business decisions that could lead to failure.

Greg Fisher, a professor of entrepreneurship, added that this sense of guilt could prompt founders to make more conservative decisions regarding their venture’s growth, which might contradict the fundamental entrepreneurial spirit of innovation and risk-taking.

“family and friends” financing is a predominant method of raising initial startup funds. This informal funding route is not only more accessible compared to other forms of investment but also typically comes with more lenient terms. However, there are drawbacks, notably the potential strain on personal relationships if the business fails to meet growth and success expectations. This risk of damaging close personal ties can lead entrepreneurs to opt for safer growth strategies.

The study, titled “Funding-source-induced Bias: How social ties influence entrepreneurs’ anticipated guilt and risk-taking preferences,” is set to be published in the Journal of Business Venturing. It includes contributions from Regan Stevenson, an associate professor of entrepreneurship and management; Emily Neubert, an assistant professor at Texas Christian University; and a Kelley Ph.D. alumna, who spearheaded the project.

By examining a sample of 193 entrepreneurs active in various incubator and accelerator programs, the researchers developed a model to test how the strength of an entrepreneur’s relationship with their investors—mainly when these investors are family or friends—affects their anticipated guilt in making strategic decisions. This guilt, in turn, correlates with a tendency to make less risky growth choices.

The research introduces the term “funding-source-induced bias,” describing a bias in entrepreneurial decision-making that stems from the entrepreneur’s relationship with their investor. This bias leads to guilt when considering risky options. Thus, entrepreneurs who secure funding from close family and friends are more likely to pursue less risky growth strategies to avoid this guilt.

This study highlights the potential downsides of family and friend funding and provides insights into how these financial relationships impact entrepreneurial decision-making. By shedding light on this aspect of the investor-entrepreneur relationship, the research aids entrepreneurs, mentors, and educators understand how investment sources can shape business strategies and decision-making processes.

Emily Neubert commented on the significance of this research, expressing hope that it would inspire further investigations into how different funding sources influence entrepreneurs’ decisions and actions. Exploring the less discussed aspects of the investor-entrepreneur dynamic is crucial for fostering a deeper understanding of the complexities involved in startup financing and its effects on business strategy.

More information: Emily Neubert et al, Funding-source-induced bias: How social ties influence entrepreneurs’ anticipated guilt and risk-taking preferences, Journal of Business Venturing. DOI: 10.1016/j.jbusvent.2024.106453

Journal information: Journal of Business Venturing Provided by Indiana University

Study Uncovers Gender Disparities in Views on Economic Security and Social Safeguards Globally

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Gender disparities in social and economic outcomes are recognized across many nations; however, less is known about the differential perceptions of financial security and social benefits between genders. This gap in understanding forms the crux of a new research initiative published in the prestigious International Social Security Review. The research probes deeper into the nuanced perceptions of women and men regarding their economic stability and the efficacy of social programs designed to provide societal safety nets.

The study gathered survey data from participants in 27 Organisation for Economic Co-operation and Development (OECD) member countries. This organization, an intergovernmental entity founded in 1961, has a long-standing mission to stimulate economic progress and world trade, providing a rich backdrop for such a comprehensive investigation. The OECD’s broad member base offers a diverse spectrum of economic policies and social protection frameworks, making it an ideal setting for examining gender-based perceptions on a global scale.

According to the research findings, women are more concerned about their economic security than their male counterparts. Women consistently needed more confidence in their national social protection systems’ ability to support them adequately. Notably, about half of the female respondents indicated that they found it challenging to access public benefits when needed, a sentiment only shared by 43% of male respondents. This significant difference highlights the gender gap in perceived economic security and the accessibility of social support mechanisms.

The survey suggests that these perceptions of inaccessibility reflect broader issues, such as the complexities and bureaucratic hurdles often encountered in social program applications. Moreover, women typically have lower social security contributions, which could influence their views on the adequacy and accessibility of social protections. This contribution disparity is often linked to broader economic factors, such as wage gaps and employment patterns, which disadvantage women in the workforce.

Dr. Valerie Frey, PhD, MPhil, a senior economist at the OECD based in France and the study’s corresponding author, provided further insights into the findings. “Women were generally less satisfied with the accessibility and adequacy of social programs compared to men,” she explained. “While some of this dissatisfaction can certainly be attributed to the gender gaps in social security contributions, it is also crucial to consider the structural inadequacies of certain social programs. Although these programs are ostensibly designed to foster gender equality, they often inadvertently disadvantage women.”

Dr. Frey emphasized the potential implications of these findings for policy-making. “This study illuminates the critical need for social ministries to apply a gender lens more rigorously in their program design and reform processes,” she stated. “By doing so, we can address these disparities and work towards a more equitable distribution of economic security and social benefits across genders.”

The call to action is clear: to bridge the gender gaps in economic security and social program satisfaction, a more nuanced and gender-aware approach in policy design and implementation is essential. This research not only contributes to the academic discourse on gender disparities but also serves as a vital resource for policymakers seeking to enhance the effectiveness and equity of social protection systems globally.

More information: Valerie Frey et al, Gender gaps in perceptions of social protection: Insights from the OECD Risks that Matter Survey, International Social Security Review. DOI: 10.1111/issr.12374

Journal information: International Social Security Review Provided by Wiley