The future of management research

A recent workshop from Birkbeck’s Centre for Innovation Management Research and publisher Wiley saw debate about the new directions that research in entrepreneurship and innovation could take, including the potential future role of Artificial Intelligence.

On Monday 29 October, Birkbeck’s Centre for Innovation Management Research (CIMR) hosted a research workshop in collaboration with Wiley, publishers of the Strategic Change: Briefings in Entrepreneurial Finance Journal. Professor Helen Lawton Smith and Professor Carlo Milana in the Department of Management are editors of the journal.

The aim of the workshop was to stimulate debate on new directions in research in entrepreneurship and innovation, in order to encourage new submissions, reach wider audiences, and highlight opportunities for more dynamic research contributions in the field. The workshop also provided an opportunity for current Management PhD students to discuss their research and progress with the audience, demonstrating the Centre’s diverse and unique research expertise.

Future Directions and Artificial Intelligence Research

Professor Carlo Milana opened the workshop with a discussion of the journal’s “business model” – a thematic approach whereby each issue deals with a particular topic, encouraging a variety of submissions that provide different perspectives on key issues in entrepreneurial finance, sustainable business models, and emerging economies, among other areas of innovation management and entrepreneurship. He also expressed his interest in contributions that will address important questions around the future development of artificial and social intelligence; for example, how will artificial intelligence (AI) engage and impact entrepreneurship? Professor Milana concluded his presentation with a list of practical issues with AI, such as technological unemployment, jobs displacement, security and privacy, and the reliability of automated systems.

Continuing with the theme of artificial intelligence in business and management, Professor Damir Tokic (International University of Monaco) joined the workshop via Skype to discuss his research on the implications of AI for executive decision-makers, asking whether AI can replace human discretion. The world’s largest investment management firm, BlackRock, recently announced the launch of the BlackRock Lab for Artificial Intelligence, suggesting that it intends to “keep tapping into artificial intelligence” to improve the financial wellbeing of its clients. Thus, Professor Tokic asks in his research: “Can AI replace the human discretion in investing?

The answer is yes, technically, because AI programmes can use econometric methods to extrapolate historical data and can interpret and use economic forecasts embedded in financial assets, ultimately ensuring market efficiency. However, legislation, unpredictable geopolitics, and the justice system might prevent the rise of “Robo decision-makers”, meaning that while machines can be fed with all possible human knowledge and available data, as long as human imperfections are preserved, AI-powered machines will not be able to replace human discretion.

Birkbeck PhD candidate Dina Mansour

Open Research, Transparency and Relevance

When we talk about research in the current academic environment, the topic of impact inevitably comes up. In his presentation, Chris Graf, Director of Research Integrity at Wiley, asked what it means for research to be “open”, saying that open science/access is a way of doing research that brings about new opportunities for publishers by: (1) driving forward new models of publishing to emphasise relevance, (2) creating new services for researchers to support their requirements through innovation, and (3) taking a thought leadership position through community engagement. He also discussed issues of reproducibility in research and publication bias, whereby reviewers and editors may be more inclined to accept manuscripts based on the direction of findings, potentially neglecting lesser known research and making some studies seem more significant than they are. His recommendation was to increase the transparency of the research process and products to improve research reproducibility.

Research on Gender and Entrepreneurship

Professor Colette Henry (Dundalk Institute of Technology) provided greater insight into the nature of research on gender and entrepreneurship, noting that in the entrepreneurship literature, “gender typically means ‘women’s entrepreneurship’”, and there is urgent need for new perspectives on the topic, such as: (re-)conceptualising the gender perspective in entrepreneurship, the influence of gender on the entrepreneurial ecosystem, leadership styles, and business model innovation.

She also shared data on women’s participation in entrepreneurship, highlighting that more women are engaged in ‘necessity entrepreneurship’ than opportunity-based entrepreneurship. This means that women across the world are more likely to become entrepreneurs due to gender-specific issues, such as childcare challenges and restrictive workplace policies; and in some cases, some women simply become entrepreneurs to meet basic economic survival needs as they have no other options.

A Publisher’s Perspective: Maximising Research Impact

After a full day of discussing future areas of research in entrepreneurship and innovation, it was only appropriate to end with the publisher’s perspective on how to maximise the reach and impact of publications. Shannon Canney, Senior Editor at Wiley, began by asking the audience which metrics mattered to them. For most people, the answer was citations, which was consistent with Wiley’s research findings: most people think citations are highly important, whereas some think downloads come next, and a smaller percentage believe social media sharing matters.

Joshua Tufts, Editor at Wiley, said that all these metrics matter for research impact, as they contribute to a comprehensive view of a paper’s performance. It is important for researchers to use various channels to publicise their research because search engine optimisation (SEO) is vital in a digital age, and between June 2016 and July 2017, 54% of visits to Wiley Online Library came from search engines (26% had no referrers, 18% came from other websites, and 1% came from social media). Academics and researchers can maximise their impact through SEO in 4 easy steps, including: usage of relevant key words/phrases throughout the article, choosing a smart, descriptive title which incorporates key phrases, writing a good abstract by expressing key points from the article in simple terms, and creating a network of inbound links and citations to one’s article.

Wiley provides a useful self-promotional author toolkit that researchers can utilise to help ensure their work is seen, read, and cited.

It was a very insightful event for researchers in entrepreneurship and innovation, and the organisers would like to give particular thanks to the sponsors, Wiley, and all speakers:

  • Shannon Canney, Senior Editor, Wiley
  • Chris Graf, Director, Research Integrity & Publishing Ethics, Wiley
  • Colette Henry, Adjunct Professor of Entrepreneurship, Dundalk Institute of Technology
  • Carlo Milana, Editor in Chief, Strategic Change: Briefings in Entrepreneurial Finance
  • Damir Tokic, Professor of Finance, International University of Monaco
  • Joshua Tufts, Editor, Wiley

Birkbeck PhD Students

  • Maryam GhorbankhaniExploitation of Public Sector R&D
  • Maximillian Giehrl – Open Innovation Collaborations in German Manufacturing Firms
  • Dina MansourEntrepreneurship and Economic Development in Developing Countries: The Case of Egypt
  • Peter RossTheories of Diffusion of Innovation and Medical Engagement: Successful Adoption and Assimilation of Healthcare Reform

Presentations from the workshop can be downloaded from the CIMR website.

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Driving innovation in the UK through collaboration and the Industrial Strategy

Yossie Olaleye from the School of Business, Economics and Informatics reports on a recent conference at the Birkbeck Centre for Innovation Management Research (CIMR) on the UK’s Industrial Strategy.

Innovation and technological advancement lie at the heart of industrialisation. In November 2017, the Department for Business, Energy & Industrial Strategy (BEIS) published the UK government’s Industrial Strategy White Paper, which presents a ‘modern’ long-term plan to boost productivity across the country through innovation, infrastructure development, and collaboration. The Industrial Strategy focuses on the 5 foundations of productivity – ideas, people, infrastructure, business environment, and places – and the government hopes to encourage collaboration with industry, academia, and civil society to create an economy that works for everyone.

Various questions emerged from the debate around the white paper, including how the government will support science and innovation research, and how to drive growth and local inclusion across the country. These questions formed the basis of the all-day workshop on Innovation and the UK’s Industrial Strategy hosted by Birkbeck’s Centre for Innovation Management Research (CIMR) on 23 March 2018. The event brought together a group of policymakers, including Paul Drabwell, Deputy Director of Science Research & Innovation and Dr Rosa Fernandez, Economic Adviser on Local Business Growth at BEIS, industry experts such as Professor Birgitte Andersen, CEO of Big Innovation Centre, and renowned UK academics who travelled from Kent, Oxford and Sheffield to share their latest research and comparative perspectives on the Industrial Strategy.

The objective of the workshop was to explore the trends that led to the formulation of the Industrial Strategy, and the possible outcomes of implementing the Grand Challenges outlined in the white paper, focusing on innovation, collaboration, and local partnerships. While the workshop dealt with several topics, including the impact of Brexit on achieving the strategy’s outcomes, presented by Birkbeck’s Professor Klaus Nielsen, two key themes stood out: local, regional and national engagement to deliver on economic opportunities, and driving innovation through digital skills development.

Paul Drabwell opened the workshop by emphasising the government’s commitment to increase R&D spending to 2.4% of GDP by 2027. He said that the UK “has world-leading science research, excellent universities, and innovative companies,” and it is these strengths that will drive the implementation of the strategy. Increased R&D funding will enable UK universities to continue to excel in international league tables, collaborate more with industry partners, and encourage innovation across the country, a theme which runs throughout the Industrial Strategy. Despite the UK’s strengths, Paul Drabwell noted that there are issues around local engagement in the country, which means that there is a crucial need to drive productivity and maintain a high level of employment. This is a challenge the government hopes to resolve through the £1.7 billion Transforming Cities Fund to improve intra-city transport links and promote local growth within city regions. Dr Rosa Fernandez expanded on this point with a presentation on the role of place in the Industrial Strategy, highlighting that the UK government intends to build on local strengths to tackle the issue of poor distribution of economic activity across the country.

A key question at the workshop was the role of research and the UK’s academic institutions in delivering the possible outcomes of the Industrial Strategy. We heard from Dr Keith Smith at Imperial College London who discussed the need for multinational collaboration to deal with innovation challenges across different industries, and Birkbeck’s Professor Helen Lawton Smith who presented research on the importance of local enterprise partnerships (LEPs) in addressing the challenge of regional inequality in the country. Professor Jeremy Howells from the University of Kent and Professor Tim Vorley from the University of Sheffield focused their presentations on the potential for business schools to convene and work with other social science schools to create solutions for the challenges of productivity and job creation discussed in the white paper.

The takeaway from this workshop was that collaboration – from government, industry, universities, and local communities – is essential if we are to achieve the ambitious objectives of the Industrial Strategy, as well as greater investment in research and innovation to support skills development.

One notable example of such collaboration is the Institute of Coding (IoC), which was announced by Prime Minister Theresa May at the World Economic Forum 2018. Birkbeck is a partner in a consortium of over 60 universities, businesses such as IBM and Microsoft, and professional bodies, to tackle the digital skills gap in the UK through the IoC. By bringing together such diverse perspectives, the CIMR workshop stimulated debate and provided useful suggestions for how academics can work effectively with business leaders and the government to drive innovation in the UK through research collaboration and meaningful partnerships.

Many thanks to all who participated and attended the workshop.

Organisers: Professor Helen Lawton Smith, Professor Klaus Nielsen, Professor Jeremy Howells, and Dr Rupert Waters.

Further speakers:

  • Professor Sharmistha Bagchi-Sen, State University of New York
  • Professor Åsa Lindholm Dahlstrand, Lund University
  • Dr Alexander Grous, London School of Economics and Political Science
  • Dr Carl Hunter, CEO & Managing Director, Coltraco Ultrasonics Limited
  • Professor Ewart Keep, SKOPE, Oxford University Skills
  • Professor Slavo Radosevic, University College London
  • Professor Roy Sandbach, Northumbria University

Further information:

 

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Recognizing Entrepreneurial Universities in Academic Rankings

This post was contributed by Matthew Jayes of Birkbeck’s School of Business, Economics and Informatics. The article concerns an international education project founded by Birkbeck visiting professor, Henry Etzkowitz – who is also a member of Birkbeck Centre for Innovation Management Research (CIMR)

CIMR logo

Initial results and new projects aimed at crediting academic contribution to economic and social development as well as publication and educational activities in international university ranking systems will be announced at Global Entrepreneurial University Metrics (GEUM) Meet.

On 3-5 June 2016, the International Triple Helix Institute (ITHI) in cooperation with the Triple Helix Association (THA) will host the second GEUM workshop in Palo Alto, Silicon Valley, USA.

The Global Entrepreneurial University Metrics initiative (GEUM) is an international Working Group initiated by the International Triple Helix Institute (ITHI), CWTS Leiden University, and the Psychology in the Public Interest Program, North Carolina State University, under the umbrella of the Triple Helix Association. The scope of the GEUM is to catalyze the development of new metrics including entrepreneurship, gender and diversity and furtherance of the public interest in University ranking systems.

Professor Henry Etzkowitz, of Birkbeck Centre for Innovation Management Research (CIMR), and GEUM project founder, said: “Most global University rankling systems privilege publication activity, with the effect of driving out other academic contributions to the economy and society. The purpose of the GEUM initiative is to broaden input into what is ranked and how ranking is accomplished.”

The initiative, led by Professor Etzkowitz – who is also President of the ITHI/THA – coordinated by Alexander Bikkulov (Co-ordination Manager), and with Dr Chunyan Zhou as Proposal Coordinator, begun with seven country teams from:

  • Austria
  • Brazil
  • China
  • Finland
  • The Netherland
  • Russia
  • The US

It was kicked off during a first workshop held on 22-23 June 2015 in Leiden (the Netherlands) supported by the U.S. National Science Foundation (NSF).

GEUM has already produced some new results since the first research projects from the initiative break through: Brazil, Finland, Austria and Russia have conducted the GEUM studies in their countries and will present the results in the workshop that will move between Dinah’s Garden Hotel, Stanford University and a prototypical Silicon Valley “garage Setting” this week-end.

“First GEUM Workshop was a good kick-off for many research teams involved – including Russian team,” says Alexander Bikkulov, Head of Center for Project Development and Fundraising at ITMO University (Russia).

“We can see this in a number of successful projects started in 4 countries during the year. And we definitely see the positive impact of having strong international contacts – both in strengthening the applications for grants and in real exchange of ideas and expertise.”

The founding country teams (Austria, Brazil, China, Finland, Holland, Russia, U.S.A) will be joined by project teams-in-organization from Japan, Spain and the U.K.

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The Impact of Entrepreneurial Finance, Education and Religion on Entrepreneurship

This post was contributed by Prof Carlo Milana, Prof Helen Lawton Smith and Ning Baines of the Birkbeck Centre for Innovation Management Research (CIMR). The article focuses on a workshop held by the Centre on Friday 15 April titled ‘The Impact of Entrepreneurial Finance, Education and Religion on Entrepreneurship’, sponsored by Wiley

Wiley logoRaising finance is critical for small firms and medium-sized enterprises (SMEs) to survive, innovate and grow. Innovation is typically underfinanced. In this workshop, attention was focused on the influence that entrepreneurial finance and other mitigating cultural factors such as education and religion may exercise on reducing risk in entrepreneurship in the current economic hardship.

Speakers:

  • Jonathan Potter (OECD, Paris) Recent Market and Policy Trends in the Development of Mezzanine Finance and Hybrid Debt-Equity Instruments for SMEs.
  • Victor Martin-Sanchez (King’s College, London) Unemployment and Growth Aspirations: The Moderating Role of Education
  •  Kwame Ohene Djan (University of Agder, Kristiansand, Norway) Does Religious Affiliation Influence the Design of Corporate Governance? Evidence from the Global Microfinance Industry

Chairs:

  • Carlo Milana and Helen Lawton Smith

 

CIMR logo

Mezzanine Finance and Hybrid Debt-Equity Instruments for SMEs

The first speaker Jonathan Potter presented recent and innovative work undertaken by the OECD on the Mezzanine Finance and Hybrid Debt Equity Instruments for SMEs. This is an area of financing that is relatively understudied and is one which is beset by ambiguity in definition. This ambiguity led to a series of challenges to the speaker on the nature and merits of mezzanine finance for SMEs.

Dr Potter explained that the SME sector is characterised by a wider variance of profitability and growth than large enterprises. Survival rate of SMEs is lower. It is difficult to distinguish the financial situation of the firm from its owners. Relations between the firm and its stakeholders are likely to reflect personal relationships to a higher degree than in larger firms. SMEs often obtain funds from informal sources. The problem of asymmetric information between the entrepreneur and the lender is more serious for small firms because of the blurring of the line between the firm and the entrepreneur. Various financial instruments can help overcome the asymmetric information and agency problems. An efficient financial system should have a range of instruments that matches needs of firms. If the right instrument is available for the risk/return profile the market could provide finance for a viable project.

Mezzanine finance is a hybrid instrument – typical mezzanine facility blends several instruments, such as subordinated loan (interest rate above senior loan; principal normally repaid at end as “bullet”), participation in ongoing revenue or profits, or participation in upside share price growth with equity “kicker” (commonly an “equity warrant” allowing purchase of shares at floor price, or equivalent remuneration). It operates in private capital market, in private investment partnerships (with up to about 100 private investors). Funds are supplied by private investors (Limited Partners) – high net worth individuals; family offices; pension funds; other institutions. It has a defined life span (5-10 years) – tend to select investees and do deals in first 3 years, then hold and close fund taking returns at around 8-10 years. At maturity fund, it is liquidated and money returned to investors. Rules are determined by market practice.

However, with uneven presence in OECD countries, commercial mezzanine tends to be focused on larger firms and leveraged buy-outs. It is not generally issued to SMEs with modest returns and which do not want to relinquish control. Public intervention may be needed to stimulate the sector and extend to SMEs, where the private sector does not provide funding. Public intervention mechanisms can be in the form of participation in the market through mandates to private funds; direct provision of funds to SMEs and guarantees/preferential funding of private investment companies.

Mezzanine financing therefore can respond to a market failure in finance for established companies in traditional sectors seeking to grow or effect transformations. It involves features that respond to asymmetric information and agency problems affecting SME finance, allowing higher returns without taking control. It is a relevant niche in the spectrum of finance instruments. Mezzanine finance can fill the gap as the SME owner not required to cede control, can pay the principal at the end, the investor accepts more modest returns but can take a share of the upside. It should lead to more growth in existing SME sector. The public sector can play a role in stimulating this part of the market. Several OECD countries found the instrument valuable, e.g. France, Germany, USA, but in half of OECD countries there was no public mezzanine programme and officials were not familiar with the product.

An issue raised in discussion was about the nature of the UK market and activities of the British Business Bank, particularly given their strong interest in developing this form of finance. It is also clear from the questions asked that there is more research to be done in this field in a number of ways. These include aiding understanding of the extent to which mezzanine can actually impact on earlier stage financing, and how and why it is suitable for firms in some sectors rather than others. And, more evidence was needed on how mezzanine actually operates in some (e.g. European countries) in practical terms and what lessons this might carry forward to future policy.

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Unemployment and Growth Aspirations

Victor Martin-Sanchez’s theme was unemployment, entrepreneurial growth aspirations (EGA) and the moderating role of education. He argued that policies targeting human capital formation and entrepreneurial training contribute not only to enhance opportunity-seeking entrepreneurship, but also to territorial economic performance by enhancing the growth aspirations of entrepreneurs.

His research shows that the characteristics of the individual (founder/entrepreneur) and the environment in which the firm operates can act as drivers of EGA. However, during economic slowdowns, it is not clear how the interaction between entrepreneurs’ background and environmental conditions drives the EGA. The paper aims to investigate how an entrepreneur’s education and training shape the relationship between changes in unemployment rates, a variable that signals the economic and employment conditions, and EGA. Entrepreneurs’ judgmental decisions are actually beliefs or conjectures. The conjectures or beliefs depend on how they think the environment in which their firms operate will evolve. If those beliefs about new products or superior production processes are proved right, the entrepreneurs earn a profit; otherwise, they incur a loss. Through the different education processes, individuals gain knowledge and build mental frames and models used to interpret and make sense of the reality that surrounds them.

Education and entrepreneurship training experiences may enable entrepreneurs to gather and process information more efficiently. Accordingly different levels of education will be expected to moderate differently the way unemployment rate changes influence those entrepreneurs’ growth aspirations. Entrepreneurs with higher education are more likely to readjust accurately their conjectures or beliefs about the potential of their new ventures, in the light of changes in the environment. Individuals can learn opportunity‐seeking processes through the avenue of entrepreneurship training, thereby improving both the number of ideas generated and the innovativeness of those ideas. It has been commonly argued that economic crisis periods may destroy some of the old ways of doing business, while new alternatives for those who are able to identify them and dare to take them. The skills and knowledge gained through training in entrepreneurship help entrepreneurs to identify and pursue better opportunities, even in a difficult economic environment. It is shown that an increase in the unemployment rate reduces EGA. There is a connection between economic conditions and entrepreneurial behavior. The general effect of unemployment rate change is contingent upon the entrepreneurship training of the individual. Knowledge and skills gained by individuals’ opportunity identification and exploitation may vanish the influence of global economic conditions. Opportunity identification is a unique capability that might be developed in parallel with other capabilities.

The implications of the research are that there needs to be improvement in the design of public support policies towards entrepreneurs. A better understanding of the determinants of growth intentions will be relevant for anyone with a stake in growing venture, such as venture capitalist, customers, and suppliers.

Does Religious Affiliation Influence the Design of Corporate Governance?

Kwame Ohene Djan’s take on individual and cultural influences on the availability and use of SME finance was that of the influence of religious affiliation, in particular Christianity, compared to secular lending bodies, on the design of corporate governance. His work is inspired by a previous study that investigated the impact of religion on agency costs finding that religion has a significant negative influence on owner-manager agency costs. He points to the mitigation of regulation of religious affiliated firms by the national banking authorities. He drew on evidence from the global microfinance industry.

Like the other speakers, the importance of temporal context was raised. The context here is the debate which began with Max Weber’s classic work. The Protestant Ethic and Spirit of Capitalism where he claims that the Protestant Ethic which focuses on personal agency and diligence, spurred economic development. Although Weber’s thesis has been disputed the more general idea that certain religious attitudes may have positive implications continues to be discussed and supported. The extensive debate regarding the historical role of religion in the development of modern capitalism sharply contrasts with the meager attentionn that has been devoted to religion in current development research efforts.

The objective of the current research therefore is to investigate how religious affiliation influences the design of corporate governance in social enterprises with evidence from the microfinance industry. By using the random effects model, differences are tested between Christian and secular MFIs along various variables including the regulatory framework, Board Size, Board Meetings per Year the number of Female CEOs and the number of International Directors.

The study used panel data on 403 MFIs based in 73 countries across the countries in the world. Generally, the results indicate that Christian MFIs do not have a slacker governance design. The tests indicate, however, that Christian MFIs are relatively less regulated by national banking authorities.

The speaker was challenged on whether it would be more helpful in aiding understanding of microfinance and region if the results were couched as religious affiliation per se rather than Christianity.

The take away from this workshop is that it is very difficult to get a holistic understanding of financing SMEs in both traditional and high-tech sectors. However, by juxtaposing different cultural perspectives as well as economic provides insights that would not normally be available. Exciting times!

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