If there is social capital, good Mayors are re-elected

Are the public more likely to re-elect a mayor who invests in long-term development? Yes, if there is social capital. The Department of Management’s Dr Luca Andriani shares the results of his latest research in collaboration with colleagues Alberto Batinti and Andrea Filippetti.

If a mayor is good, she should be re-elected. Prior research tells us that what distinguishes a “good” mayor from a “bad” mayor is the adoption of long-term oriented and transparent municipal fiscal policies. “Good” mayors re-allocate the municipal budget more towards capital investments (rather than current expenditures) and towards property tax, which is more transparent than a surcharge income tax. However, “good” mayors are not always re-elected. In this study, we argue that social capital might be a key reason. In a context with low social capital, municipal long-run fiscal strategy might not be rewarded.

Social capital generally refers to elements of cooperation, reciprocity and mutual trust regulating relations among members of a community. It is generally expressed through the presence of civically engaged citizens preferring leaders and governments that show credible commitments in taking good care of public resources, in acting efficiently and fairly and that adopt long- rather than short-run political economic strategies.

In this study, we look at the Italian context, as this is characterised by a pronounced economic regional disparity between the southern regions recording low economic growth and high unemployment and the more economically advanced northern regions. Italy is also a country with a large disparity of social capital endowment across regions and municipalities for several institutional and historical reasons (Putnam 1993).

Since the late 1990s, Italy has implemented two significant reforms aiming to bring local public institutions closer to the citizens’ needs and preferences: an electoral reform to appoint local governments and mayors and a fiscal reform towards a more federalist system. These changes have been pursued by economically wealthy regions seeking greater autonomy. They were also advocated as remedies to stimulate those administrations in regions that are less developed and efficient.

We test whether the probability of “good” mayors being rewarded, i.e. re-elected, is influenced by the level of social capital endowment existing in the municipality. We investigate this empirically in 6,000 Italian municipalities over the period 2003-2012. We consider the structural dimension of social capital as one referring to the individual’s involvement in associational activities and social networks. This dimension captures citizens’ prosocial behaviour and individuals’ attitude towards planning capacity and forward-looking decision making

Our results show that “good” mayors are more likely to be re-elected in contexts with more social capital. One can speculate that social capital may favour the reallocation of the municipal fiscal budget towards public investment vis-à-vis current expenditures and towards property tax vis-à-vis surcharge income tax, thus enhancing the efficiency and transparency of local public policy.

What does this mean for policy makers?

These results raise important reflections on the implementations of public policies promoting decentralization.

Fiscal federalism theory claims that decentralization improves the ability of local institutions to tailor specific policies aiming to meet citizens’ demands (e.g., DiazSerrano and Rodríguez-Pose, 2015). This gets reflected in the citizens’ satisfaction (e.g. Espasa et al., 2017; Filippetti and Sacchi, 2016). This study qualifies these results, showing that decentralization works relatively well in the presence of high levels of social capital. In social contexts where individuals value forward-looking and transparent fiscal policies, decentralization promotes better public policies and benefits public sector financial performance.

However, this study also advocates that decentralization policies should be coupled with initiatives to improve the capacity of local institutions to stimulate the accumulation of social capital. This could be pursued through two complementary strategies. Firstly, by employing programmes that favour the capacity-building of civic associations, including organizations for environmental, human, democratic rights. Secondly, by enabling these associations to be more involved in local governance. This can be achieved by providing local associations access to formal and informal avenues for participation, engagement and closer monitoring of local public decision-making process.

This blog is based on the following research paper:

Batinti, A. Andriani, L and Filippetti, A (2019) Local Government Fiscal Policy, Social Capital and Electoral Payoff: Evidence across Italian Municipalities. Kyklos 72(4): 503-526

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Ethical consumerism in the time of COVID-19 

Has climate change fallen off the public agenda due to the coronavirus pandemic? According to Birkbeck’s Dr Pamela Yeow, it’s more relevant than ever. She explains her latest remote research project exploring ethical consumerism.

Paper coffee cups

Amidst the current coronavirus pandemic that’s engulfing our global consciousness, one may wonder if research to do with the United Nations Sustainable Development Goals (UNSDG) is a tad too irrelevant and insignificant.

After all, coffee chains, which had previously encouraged customers to bring in reusable mugs (and in return benefit from a discount), no longer allow such practices to help tackle the spread of the global virus.

However, it has been shown that during this pandemic, issues surrounding climate change and sustainability have continued to be raised. Global records have demonstrated that carbon emissions have reduced as a result of lockdowns worldwide and many reports suggest an increase in birdsong, brighter and clearer skies, cleaner air and less pollution.

So it is clear that research to do with sustainable consumption should be as relevant as ever  and it would be interesting to see, in a live experiment (given that we are living through it as we write), how consumers behave and react to embedding sustainable consumption patterns.

Just before the lockdown in the UK, my colleagues and I were awarded an Eastern Arc grant to run a pilot workshop on understanding sustainable ethical consumerism from the householder’s perspective. In particular, we were keen to address the UNSDG 12.5 which states “By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse.” 

Previous research that we had conducted concluded that “both individuals and institutions play a significant interaction role in encouraging a sustained behavioural change towards ethical consumerism”. We suggest that embedding behaviour is a gradual process. one with a series of stages and factors that can impede the transformation of attitudes into behaviour.  

This time round, building on that understanding of processes and journeys, we were interested to understand  the householder’s journey toward ethical consumerism and whether there would be any clarity in how they might embed and substantially reduce waste generation through prevention, reduction, recycling and reuse. 

The UNSDG website states that The current crisis is an opportunity for a profound, systemic shift to a more sustainable economy that works for both people and the planet...COVID-19 can be a catalyst for social change. We must build back better and transition our production and consumption patterns towards more sustainable practices.”

Our research project aims to consider how we might begin to embed these practices by understanding where householders are nowAs researchers, we too have had to adapt due to COVID-19: instead of hosting a workshop to answer our questions, we’re asking participants to keep a photo journal of single use plastics in the home to better understand how these items are entering the household and to promote awareness among users of their consumption habits.

This project is still in the early stages, but one thing is clear: more needs to be done to promote sustainability rather than less. We need to continue to understand behaviours and attitudes toward sustainable consumerism so that we can build a better, more sustainable economy and society for us and the future generations.

Dr Pamela Yeow is a Reader in Management at Birkbeck and Course Leader of the Central Saint Martins Birkbeck MBA.

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To trust or not to trust: the role of social media influencers in corporate crisis communications

Dr Benedetta Crisafulli, Lecturer in Marketing, shares the findings from her latest research in collaboration with Professor Jaywant Singh, Dr La Toya Quamina and Dr Melanie Tao Xue.

Zoe Sugg, social media influencer

As anyone with an Instagram account will know, social media influencers (SMIs) play a prominent role in modern day marketing. Over two thirds of multinational brands plan to increase expenditure on influencer marketing within the next few years, with global spending in the area expected to reach $15 billion by 2022. 

Despite the enthusiasm from marketers to partner with SMIs, scholarly evidence on the efficacy of such a practice remains sparse. Is it always wise for brands to employ SMIs to get their message across? What about the role played by SMIs in corporate crisis communications? Our study entitled ‘To trust or not to trust: The impact of social media influencers on the reputation of corporate brands in crisis’ looks into whether brands would be wise to employ SMIs during times of corporate crisis. 

When crisis hits 

Highly negative events such as corporate crises emphasise the ‘bad’ character of big brands, putting their reputation at stake. Whether it’s a potentially harmful ingredient in our make-up, or using our data for profit, crises shake our trust as consumers and can damage our relationship with a brand. 

In this study, we were particularly interested in how a brand’s ingratiation response to the crisis, whereby customers are reminded of the brand’s past goodwillworks in minimising negative responses, and whether the presence of an influencer improves or rather worsens the brand’s efforts. We asked consumers to evaluate a corporate crisis situation and consequent crisis response from the brand alone, or from the brand and an influencer. 

Social media influencers: hindrance or help? 

There is thus far evidence to suggest that SMIs boost consumer engagement with a brand. However, we find that, like salespeople, SMIs can be seen as acting out of their personal financial motives, and solely in the interests of the brand. This is especially the case in the event of corporate crises.  

Far from passively absorbing the marketing content that surrounds them, consumers are often aware of persuasive attempts from brands and actively resist these. From a very young age, consumers develop what is known as persuasion knowledge. Such knowledge allows them to identify and resist persuasive attempts at manipulating their behaviour. Our findings suggest that consumers overwhelmingly interpret the contribution of an influencer in crisis communications as a persuasive tactic of the brand to try and make consumers believe that the crisis is not as bad it seems. Such an attempt iperceived as manipulative, thus rejected. 

What does this mean for influencer marketing?  

Our study suggests that influencer marketing might not be as effective as claimed by previous research and highlights the need to exercise caution in the use of SMIs during crisis communications. Brands, therefore, need to be particularly wary of involving SMIs in any attempts to bolster reputation in crisis communications.  

The study also suggests practical ways in which companies can think of engaging SMIs to support brands during crisesWe find that an effective way for SMIs to support a brand in crisis is by making the genuine, values-driven motives behind the brand-influencer partnership known to consumers. Consumers are more likely to respond positively to messages which are dictated by motives of altruism. 

The citation for this study is Singh, Crisafulli, Quamina & Xue (2020). ‘To trust or not to trust’: The impact of social media influencers on the reputation of corporate brands in crisis. Journal of Business Research (In Press).

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Informal entrepreneurs and formalisation: insights from a role identity transition lens

Dr Manto Gotsi from the Department of Management is exploring the barriers to entrepreneurship in developing economies. She explains her findings from research into the formalisation of waste pickers in Cali, Colombia.Entrepreneurship in Colombia

Entrepreneurial development is viewed as an engine for economic growth in developing economies. However, these same economies are faced with high numbers of informal entrepreneurs: choosing entrepreneurship out of necessity rather than opportunity, these individuals operate on a small scale, are low-skilled and often marginalised.

In many developing economies, informal entrepreneurship, that is, monetary transactions not declared to the state for tax benefit and/or labour law purposes, but which are legal in all other respects, accounts for up to 60% of GDP. Informal entrepreneurs are viewed as unfair competition to formalised entrepreneurs, with the risk of stifling economic growth. These workers also face a lack of protection and are at risk of exploitation, since they are operating outside of the law.

However, despite growing efforts to influence formalisation, informal entrepreneurs are exceptionally persistent. Alongside my colleagues Dr Maria Granados and Dr Ainurul Rosli, I wanted to find out why this is the case.

This missing micro focus

Prior to our research, studies on formalisation have focused predominantly on institutions; aiming to stimulate entrepreneurs to formalise through direct controls on their actions, alongside education and appeals to raise awareness of the benefits for the individual.

Formalisation has typically been conceived of as a destination rather than a journey (Burton, Sørensen and Dobrev, 2016). We took an alternative view, understanding the process as a continuum, whereby an informal entrepreneur undergoes a role identity transition.

For this transition to take place, an individual must adopt new skills, attitudes, behaviour and patterns of interpersonal interactions, while maintaining some sense of self-continuity. They may require external resource and validation from their peers in order to legitimize their position. A successful role identity transition will result in internalization of this new identity; an alternative outcome is role abandonment.

Our research

Our research took us to Cali, Colombia, where informal waste pickers have been carrying out recycling activities for over one hundred years. For the past thirty, they’ve been relying on the Navarro landfill; collecting recyclable materials to transport and sell to intermediary informal warehouses. When Navarro was closed due to environmental concerns, a new law prohibited waste pickers from working in sanitary landfills and from recuperating recyclables from trash bags and transporting them in non-motorized vehicles. Following an intervention from CIVISOL Foundation, the Colombian Constitutional Court recognized the marginalized status of these waste pickers and granted them formal entrepreneur status.

Surprisingly, despite this change in the law, by no means all waste pickers became and stayed formal entrepreneurs. Some became paid workers instead of entrepreneurs, while others chose to continue as renegades outside of the system. There was also evidence of individuals moving back and forth between these options, with many entry and exit points on the road to formal entrepreneurship.

Through our interviews with waste pickers in Cali, we found that those who had successfully transitioned to formal entrepreneurs in what we see as a ‘virtuous cycle’ had in common a high sense of calling that enabled them to adopt the formal entrepreneurial identity. In addition, they were comparatively less concerned about receiving validation from their peers and wider society.

Those who became renegade waste pickers also did not feel a strong need for external recognition, however they didn’t feel the same calling, so didn’t adopt the formal entrepreneur identity. Similarly, although those who became paid workers had access to information and resources, they couldn’t see themselves in the role of formal entrepreneur.

How to encourage virtuous cycles

Our research tells us that granting formal status to marginalized workers is necessary, but not sufficient for sustained formalisation. It is essential to take into consideration the norms, values, beliefs and struggles of informal entrepreneurs, and encourage role identity development through information initiatives and social network support. People who felt a calling and could visualise themselves in the role were more likely to remain in formalised status.

In order to create more external support, there should also be campaigns to motivate local government, local business communities and broader civil society to recognize and support the formalisation journey.

All this needs to take place before, during and after role transition to ensure more people stay in formalised roles.

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