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NHH Bulletin




Scarred by unemployment 8 NHH received record donation 30

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A hypocritical climate policy

30 NHH receives record donation The Kristian Gerhard Jebsen Foundation has donated NOK 24 million to NHH. It is the biggest single donation ever received by a Norwegian business school. Funding for a new high-tech learning centre at NHH, the Kristian Gerhard Jebsen Centre, is thereby ensured.

More and more economists are critical of the prevailing climate policy and believe that Norway must consider leaving its oil where it is. 'This is a very controversial view, because Norway has become so dependent on its oil revenues,' says Professor Gunnar S Eskeland.

42 Criticising European politicians Ill: Willy Skramstad


Aud Jebsen and her son Hans Petter Jebsen recently visited NHH in connection with the signing of the contract related to the NOK 24 million donation. NHH rector Jan I. Haaland to the left. Photo: Hallvard Lyssand

Scarred by unemployment

A new study carried out at NHH finds that unemployment has disturbing long-term negative effects. Young people who have been unemployed are scarred by the experience. The younger they are, the more likely they are to be jobless later in life. Some of them drop out of the labour market for good.

44 No need to worry about Iceland

Political leaders in the EU countries draw sharp criticism from Gernot Peter Doppelhofer, Professor of macroeconomics at NHH. He believes weak decision-makers and poor communication are fuelling the crisis in Southern Europe.

Professor Øivind Anti Nilsen and doctoral candidate Katrine Holm Reiso. Photo : Helge Skodvin

48 Director General of Norad Two years ago, the Norwegian government appointed Villa Kulild Director General of the Norwegian Agency for Development Cooperation (Norad). She was part of the legendary student cohort that started at NHH in 1983.


Knowledge workers' value creation is strongly linked to motivation. Professor Rune Lines has the following advice: 'As a manager, you have to find out what really motivates and demotivates people. Your goal is to create value. That means you must address motivation.’

Ill: Shutterstock

After his MIB studies at NHH, Brynjólfur Eyjólfsson and his family moved home to Iceland in 2006. There have been times when he has regretted that decision. Photo : Helge Skodvin

20 Norwegian Center for Taxation Photo : Siv Dolmen

NHH Bulletin Professor Guttorm Schjelderup at Norwegian Center for Taxation, Minister of Finance Sigbjørn Johnsen, Director General Nina Bjerkedal from Ministry of Finance , Rector Jan I Haaland and Director General of Taxation Svein Kristensen. Photo : Eivind Senneset


NHH Bulletin


NHH Bulletin is a magazine published by NHH (Norwegian School of Economics), SNF (Institute for Research in Economics and Business Administration) and AFF (Administrative Research Institute). NHH Bulletin is a quarterly magazine focusing on research and consulting within the fields of economics and business administration in Norway. In addition to the four Norwegian language editions, NHH also distributes an English version at the start of 2013 with selected articles from 2012. E-mail: 2012

NHH Bulletin


The climate debate

A hypocritical

climate policy More and more economists are critical of the prevailing climate policy and believe that Norway must consider leaving its oil where it is. 'This is a very controversial view, because Norway has become so dependent on its oil revenues,' says Professor Gunnar S Eskeland. Text: Sigrid Folkestad Photo: Eivind Senneset

Climate economist Professor Gunnar S Eskeland has dropped a bombshell into the climate debate. He believes that there is more than a little hypocrisy about Norway's climate policy.

Oil sands in Canada

Linda Nøstbakken, PhD candidate from NHH, agrees. She is one of the speakers at NHH's conference on climate and energy policy (BEEER). 'Norway can't go around the world telling Canada to shut down its oil sands industry when we are pumping up oil and recovering gas ourselves,' Nøstbakken believes. She is associate professor at the Alberta School of Business in Canada. Nøstbakken submitted her PhD thesis 'Essays on the Economics of Fisheries Management' in 2005.

Lives in Alberta

After having lived in Alberta for some years, the area that is at the heart of the world's oil sands debate, she feels provoked by Norway's attitude to the oil sands industry.

'What are we doing in Norway? Our oil sector is subject to enormous taxes, but this is actually money that comes straight from our own oil fund. That is self-defeating. I am not sure that others take us very seriously in this context.'

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Telling off the rest of the world

Nøstbakken is supported by Professor Eskeland from the Department of Finance and Management Science. He believes we would benefit from a debate that challenges the Norwegian distinction between oil policy and climate policy. 'Until now, Norway has managed to shield the development of the offshore sector from its big promises about climate policy, but we might not be able to continue this line in future.'

Nøstbakken disapproves of what she sees as double standards.

He too believes that talk about reducing carbon emissions is hypocritical.

'We Norwegians go around the world telling other nations what to do. But we are doing very little ourselves. The Minister of the Environment recently presented a white paper on Norway's climate efforts. He was asked how they would affect people. We were told that they would benefit us. The measures largely involve reshuffling funds that the state already has. That is the Norwegian way of being more environmentally friendly. We will become even more prosperous. I have a problem with that,' Nøstbakken says.

'Those who own oil or gas in this century risk losing a lot of their wealth if the world stops using fossil fuels before we run out of them. That means that it is becoming more urgent to sell our oil. It seems hypocritical to tell the rest of the world to reduce emissions while we ourselves are selling our oil as fast as we can.'

Dependent on oil revenues

Professor Bård Harstad, one of the guests at the BEEER conference, also argues that we should do something about the supply side rather than the demand side if climate measures are to be effective. The world would then Linda Nøstbakken, associate professor at the Alberta School of Business in Canada.


Professor Gunnar S Eskeland.

actually have to put aside fossil reserves, says Harstad. 'That is a controversial proposal that changes the debate,' says Eskeland, 'because what is happening in Norway is influenced by our dependence on oil revenues.' 'But we are seen as a successful country in terms of how we manage our oil assets,' says Nøstbakken.

An oil nation to the last drop?

'If we believe that owning so much oil is no longer such a good idea, then perhaps we should sell it. While leaving the oil under the sea involves a certain economic risk, Norway as an oil nation should be happy if something different and environmentally friendly could take us forward.’

emissions. We cannot know that at present.'

Energy-intensive residual oil

The biggest Norwegian climate project is the 'moon landing' at Mongstad. The test centre for carbon capture and storage opened in May. The carbon capture plant can be fully operational from 2020. By that time, the cost of the plant will have reached almost NOK 25 billion. Carbon capture is the only solution that can justify continued use of fossil fuel, Eskeland believes. 'It should come as no surprise that big oil nations and coal companies are investing a few billion in such projects, since a solution of this kind could prove very valuable to them. Norway is one of

‘Others believe that we should save the oil because it will be more valuable in future. So there are many different arguments here,' Eskeland believes. 'Well,' Nøstbakken interjects. 'Perhaps, in future, we can use the oil with hardly any

Professor Bård Harstad at the University of Oslo.


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Until now, Norway has managed to shield the development of the offshore sector from its big promises about climate policy, but we might not be able to continue this line in future. Gunnar S Eskeland

very few natural candidates for a project like this.' Many Norwegian oilfields are nearing the end of their lifetime, and extracting what is left is far more energy-intensive. The emissions from oil and gas activities will therefore remain at about the same level until 2020, even though production will gradually decrease. A bigger percentage of production will consist of gas, which requires a great deal of energy whether it is transported in pipelines or frozen for shipping. If the experts are right about future climate changes, the world will need carbon capture, or, at the very least, we need to be absolutely sure that it does not work, Eskeland believes. This journey of discovery is worth a great deal to the world.

Economists say it's better to reduce emissions where it is cheapest to do so? 'Precisely. That is why my view is going against the flow. I'm dropping a bombshell here. This is not an opinion everyone shares. Some wise economists think I'm committing sacrilege here.'

Record interest in

John List More than 60 doctoral students from all over Europe registered when The Choice Lab sent an invitation to a seminar with Professor John List, one of the leading researchers in the world in the field of experimental economics. Text and photo: Hallvard Lyssand

John List is Homer J Livingston Professor of Economics at the University of Chicago, and he is regarded as one of the leading researchers in experimental economics.

Management Science are working on our own experiments, and a lot of List's work has a very direct link to the things we are currently working on,' says Tynes Pedersen.

There was great interest when The Choice Lab, NHH's research group in experimental economics, announced that it was to hold a doctoral course with List in collaboration with the national research school in business economics, among others.

List's first lecture was on Monday, and

he will be lecturing until Friday. In addition to ten lectures on everything from methods to examples of his own experiments as part of the doctoral course, List will also hold a seminar at the Department of Economics on Thursday.

More than 60 doctoral students and post doctoral researchers from all over Europe registered, which is an unusually high figure for this type of event. This meant that the Karl Borch Auditorium was filled to capacity during the lectures. Several members of NHH's academic staff, including Lars Jacob Tynes Pedersen from IRRR, attended the lecture, which Paraplyen was also present at. 'I have tried to attend as much of this seminar as my schedule allows, and would love to have been able to have gone to more of it. List is an influential figure, and he has excellent insights both resulting from his own research and based on other people's work. I and my colleague Trond Døskeland from the Department of Finance and

Ill: Willy Skramstad


The climate economist draws a comparison with the Reformation and Martin Luther.

'We have to stop buying indulgences. It's not OK to commit adultery because you're rich or friends with the Pope. That's just not acceptable. Luther probably believed that rich people should be direct role models.'

'If we were to reduce the oil recovery rate, that would have an immediate effect on the world's carbon emissions. To avoid the disastrous climate changes that are now looking very likely, much of the fossil carbon must be left where it is.'

'Let's say that we're carbon neutral in 2030,' says Eskeland, 'and that the rest of

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the world is wondering how we managed it. If the answer is that we planted a lot of trees in Guatemala, the reaction will be: "You're so stinking rich!" How impressive is that? Prime Minister Stoltenberg may be right when he says that these are the cheapest emission reductions, but what we are doing in this field is perhaps mostly of symbolic value,' Eskeland argues.

'We can achieve cheap reductions by buying them abroad. But it's just a drop in the ocean,' says Nøstbakken.

Cheap carbon credits in developing countries


The Choice Lab

The climate debate

Professor John List gave ten lectures during his visit to NHH.


NHH Bulletin


Effects of unemployment

Scarred by

unemployment A new study carried out at NHH finds that unemployment has disturbing long-term negative effects. Young people who have been unemployed are scarred by the experience. The younger they are, the more likely they are to be jobless later in life. Some of them drop out of the labour market for good. Text: Sigrid Folkestad Photo: Helge Skodvin Illustration: Willy Skramstad

'People's early employment history turns out to be a decisive factor in relation to later success in working life. I believe this finding can be used to justify substantial efforts targeting young people,' says Professor Ă˜ivind Anti Nilsen.

Scarring effects

In the article 'Scarring effects of unemployment', Nilsen and doctoral candidate Katrine Holm Reiso present their research, in which they have studied the long-term effects of having experienced unemployment. Nilsen and Reiso use the term scarring effects. 'I think scarring effects is a good description. It refers to something that


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doesn't just go away, but stays with you for a long time,' says Reiso. Scarring is the long-term effect of unemployment on future opportunities in the employment market.

The study shows that young employees can be badly affected by a period of unemployment. The probability of them experiencing several periods of unemployment or dropping out of the labour market is higher than for people who have never been unemployed. And there are no observable differences between the groups. They have all completed an education and been in employment for at least two years. Simply having experienced unemployment leads to people being scarred for many years. 'When a young person has been

unemployed for a period, this gives a stronger signal about his or her qualifications and abilities than is the case with older people,' says Reiso, 'and if it leads to them permanently leaving the labour market, it is far more serious, because they have their whole career ahead of them.'

Welfare benefits and selection

The Norwegian labour market is interesting for several reasons, according to the two researchers from the Department of Economics, not least because of the low level of unemployment and good welfare benefits. 'That is why it was natural to assume that there could be clear scarring effects,' Nilsen says. 'If you are one of


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Effects of unemployment

The negative effect decreases over time, but the scarring effect is clear even ten years after a period of unemployment. Øivind Anti Nilsen

relatively few unemployed people, an employer might see this as a strong indication of your abilities, compared with a situation in which very many people are unemployed. Moreover, Norway has a welfare system that can result in people being unemployed longer and in negative selection in relation to disability pension.' The researchers believe that these histories of unemployment reveal a certain dependence on the state.

Clear effect after ten years

The sample in the study is based on data from Statistics Norway, comprising several hundred thousand inhabitants of Norway who were in employment during the period from 1990 to 1998. Because the researchers were interested in scarring effects early in people's careers, they limited their sample to individuals who completed their education a few years before the period of unemployment commenced. Everyone had worked for a minimum of two years. They were therefore entitled to unemployment benefit, which meant it was financially advantageous for them to register with the Norwegian Labour and Welfare Service (NAV) when they lost their jobs. A control group that did not experience unemployment in the 1990s, but that was similar in terms of observable factors, such as age, education, income, gender, born in or outside Scandinavia, and that worked in different types of industries, enabled the researchers to form a clear picture of how unemployment can affect people's future status in the employment market. There were 356,000 people in


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the control group, who were not unemployed. The sample consisted of nearly 30,000 people who had experienced a period of unemployment during the years in question. The researchers have compared the two groups every year for ten years after the period of unemployment occurred. They were then either employed, unemployed or outside the labour force.

Individual qualities

Many people still do not have a job a year after a period of unemployment, Reiso explains. After five years, the likelihood of being unemployed is 17.2%. That is considerably higher than for the control group, for whom the likelihood is 7.8%. 'The negative effect decreases over time, but the scarring effect is clear even ten years after a period of unemployment,' says Nilsen. The two economists believe that it is unemployment in itself that scars people who have been unemployed, and that there are several unobservable factors behind this. 'There may be individual qualities at play that lead to people experiencing repeated unemployment. A selection process may take place, and it is probably not just a matter of chance who actually fails to find a job again,' they explain. The researchers discuss this issue in the introduction to their article. Some individuals seem to learn to live with unemployment.

'They've tried it and found out that it is a viable option; it is socially acceptable in some circles, and some people get used to not getting up in the morning. During this learning process, individuals develop different attitudes to being unemployed,' says Nilsen.


'The term scarring means that it is clear that something has happened. This may be due to both individual qualities and the negative signals sent to potential new employers. Both factors play a role. Whatever the reason, it will have personal and social consequences. The cost of a period of unemployment can be very high,' Reiso says. Nilsen believes that certain tendencies indicate that the welfare system in Norway is under pressure. He points to the growth in disability among young people, especially young men. This is often attributed to our modern education system, which is poorly adapted to boys' needs and more suited to feminine values, he believes.

'At the same time, we have a highly developed welfare state with generous compensation arrangements. It should be possible to live off benefits. Most people completely agree with this, but perhaps we're beginning to see that things have gone too far. It is a challenge to the benefits system if living on benefits prevents people from making a big enough effort to actually find paid work.'

A year on benefits

This spring, the Norwegian Broadcasting Corporation carried reports about young people saying that

In the article 'Scarring effects of unemployment', Professor Øivind Anti Nilsen and doctoral candidate Katrine Holm Reiso present their research, in which they have studied the long-term effects of having experienced unemployment.

they wanted to take a year off to live on benefits. Lower and upper secondary school pupils are considering taking a break from school and expect to receive benefits from NAV. This group is not unemployed and is therefore not part of the two NHH researchers' sample, but Nilsen believes that taking a year off to live off benefits can have a negative effect, also in the long term.

applicant spent the year doing and will probably assume that he or she spent the whole morning in bed, played computer games and generally lazed around. In such case, it can prove to be an expensive year off.'

'It can be a dangerous strategy. I would be extremely careful about taking a year off because of the long-term effects. It sends a signal to potential employers. They will ask themselves what an

'When welfare schemes have existed for a certain period, the chances of their being misused tend to increase. These benefits originally targeted specific groups, but it seems that, over time, others also tend to want to take advantage of them. That is a risk when people who are not part of the intended target group also make use of these

Unemployment figures, 1993 and 1998

Young people without an education

While the overall unemployment level in Norway has traditionally been very low, it is much higher among young people. In 1993, when there was an economic downturn, unemployment among men aged between 15 and 24 was 14.4%, while only 5.7% of men between the ages of 25 and 54 were unemployed. Five years later, the Norwegian economy was very strong, and the unemployment figures were 9.1% and 2.2%, respectively.

In a report presented by the Labour and Welfare Director in the newspaper Aftenposten in March, NAV looks at who the young unemployed are and how NAV's staff experience working with them. They are worried by what they have found, according to Aftenposten: Hardly any unemployed people under the age of 20 have completed upper secondary school. Only one out of five unemployed persons in the 20–24

benefits,' Nilsen believes. In conclusion, Reise and Nilsen say that the results clearly show that a person's early employment history is a decisive factor in relation to subsequent success in working life. 'These findings can be used to justify public efforts targeting young people,' Nilsen says.

age group have completed upper secondary school. More and more of them are struggling with health problems, and the percentage that are on or have been on benefits is increasing. Many of them have parents who are also on benefits and who, in some cases, try to sabotage NAV's attempts to get the young people into employment.


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Managing knowledge workers


Ill: Willy Skramstad

'Managing knowledge workers is about how managers, voluntarily or involuntarily, create or destroy value by influencing knowledge workers' motivation.' 'I would advise managers to devote far more resources to understanding what actually motivates employees, and then consider what demotivational factors they can eliminate,' says the Professor Rune Lines.


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NHH Bulletin


Managing knowledge workers

'You must address motivation Knowledge workers' value creation is strongly linked to motivation. Professor Rune Lines has the following advice: 'As a manager, you have to find out what really motivates and demotivates people. Your goal is to create value. That means you must address motivation.’

'Popular notions about knowledge workers often resemble fantasies that fit a few chosen examples, but that do not represent the group in a good way. Not even the idea that knowledge workers are particularly sensitive to changes in relation to their autonomy is well documented through comparative research,' says Professor Rune Lines of the Department of Strategy and Management. He is working on a research project in the FOCUS programme at NHH that aims to map what affects knowledge workers' motivation.

Forms of leadership

'We also want to investigate what forms of leadership are most effective in relation to members of this group.' That is being studied through a series of in-depth interviews with knowledge workers and through a survey. One of the managers Rune Lines interviewed as part of his research on knowledge workers and how motivation affects productivity and value creation said the following: 'I was thrown in at the deep end as an expert, so I used my experience as a scout leader.' 'I would advise managers to devote far more resources to understanding what actually motivates employees, and then consider what demotivational factors they can eliminate,' says the researcher, before giving us some terrible examples of misunderstood attempts to motivate employees.

'You don't take a devout Christian from Western Norway on a pub crawl, but it does actually happen. People use introspection and projection. They use themselves as models for what employees like, and that's the same as asking a blues enthusiast to compete in the Birken skiing race.'

and demotivates knowledge workers.' Knowledge workers create value through the competent execution of tasks and through innovation, the


In this context, Lines believes, motivation is about the degree to which a knowledge worker chooses to become involved in an activity, and the effort, determination and perseverance he or she puts into that activity.

'Motivation is far more important in relation to productivity in knowledge work than it is in manufacturing enterprises or the service sector, because value creation takes place through innovation, self-development, the sharing of knowledge and helping others,' Rune Lines says. Ill: Shutterstock

organisational researcher tells us. Competent execution means that work processes are based on knowledge acquired through higher education. 'Managing knowledge workers is about how managers, voluntarily or involuntarily, create or destroy value by influencing knowledge workers' motivation.' According to Lines, a lot of value is destroyed through poor management. Knowledge workers are motivated by meritocracy and fairness in the distribution of rewards, and if they find that these values are breached, they react very negatively, among other things by reducing their commitment to the organisation and increasing their intention to resign.

'But a knowledge worker is not a constantly hypermotivated person who just wants to be left alone. Recent research indicates otherwise, which has consequences for the role as manager. As a manager, your goal is to create value. A manager has to find out what motivates

information and knowledge, and with how to recruit candidates with special abilities. Far less has been written about which factors motivate knowledge workers and what inspires some of them to invest a tremendous amount of time and energy in their work and, at times, achieve extraordinary results.' A lot of what has been written in this field is based on the assumption that knowledge workers are by nature extremely enthusiastic about their work and that their interest in their job motivates them to maintain a very high level of activity. Lines uses the term chronically hyper-motivated.

Innovation and self-development

The research literature on strategy, organisation and management has mainly focused on the part of the performance equation that concerns ability, according to Lines.

'I think that as a general description of this group, this is wrong. There is good reason to believe that motivation varies as strongly in this group as in other occupational groups. Some are only occasionally hyper-motivated, and some during certain periods of their career, while others are chronically hypermotivated. I think it is more correct to regard the distribution as being almost normal.'

'Researchers have been very concerned with how managers and other decision makers can structure organisations to achieve the best possible flow of

'The variation in motivation is as high in this group as it is among other workers, for example at a shipyard or workshop or whoever you want to

compare them with,' Lines says. 'But there is another factor at play here, namely that motivation is far more important in relation to productivity in knowledge work than it is in manufacturing enterprises or the service sector, because value creation takes place through innovation, selfdevelopment, the sharing of knowledge and helping others.'

Similar to other people

This work is not easy to register through procedures. According to Lines, it is difficult to measure, control and reward. It is behaviour that requires motivation, and knowledge workers can stop displaying such behaviour without the management imposing sanctions on them. 'Our data indicate that knowledge workers respond quite positively to active management. What we see is that the notion that people must be "left alone" is imprecise. People want to be managed, they are motivated by having a good reputation and autonomy in their work – as if they were ordinary people,' Lines says. What do you mean by 'as if they were ordinary people?'

Professor Rune Lines of the Department of Strategy and Management. Photo: Helge Skodvin


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NHH Bulletin


Managing knowledge workers

Many managers have avoided traditional leadership tasks because they see this as 'interfering', something that carries a risk of destroying value and that only creates value in exceptional cases. 'I am far from sure that that is the case.'

Positive attitude to management

The prevailing idea is that knowledge workers respond negatively to management because autonomy is so important to them. They want complete freedom, and any intervention from a manager is traditionally seen as reducing their freedom. 'This is a very common idea among both theorists and practitioners. That means that you eliminate the role of manager and the idea that value is created through management. It equates with an absence of leadership. You hire someone and give him or her complete freedom.‘ ‘Our results seem to challenge this notion,' Lines believes. So far, the empirical data indicate that this is incorrect. Knowledge workers respond very positively and very negatively to management.

'When led by what they define as good managers, it's surprising how positive their reaction is. If they are exposed to poor management, it's equally surprising to see how negative their response is.' Lines believes that this can be explained by higher education, during which people acquire clear ideas about what work methods and organisation are correct, and – for business economists in particular – what constitutes correct management and process design. 'When employees see managers deviating from these norms, they see it as undermining their professional values. That can trigger strong reactions. In addition, managers are often self-aware and critical. Managers' behaviour is subject to both scrutiny and discussion. They can choose to say "this is poor management" because they have their own professional standards.'

Transformational leadership

Alexander Madsen Sandvik, associate professor at the Department of Strategy and Management, defines knowledge work as a set of job characteristics. It is not the amount of education you have that determines whether you are a knowledge worker, Sandvik believes. People doing knowledge work score higher in relation to these qualities than people working in, for example, agriculture, fishing or building and construction:

1) 2) 3) 4) 5)

Autonomy Job complexity Information processing Problem-solving Diversity of skills

The degree to which work consists of independent, demanding or new tasks helps to distinguish knowledge work from non-knowledge work. 'The way managers perform their roles has a big impact on knowledge workers' performance, and thereby on how enterprises and their financial situation develop.' In his doctoral thesis, Sandvik studied the effect of transformational leadership on knowledge workers. 'Transformational leadership means that you communicate visions and goals for the future to employees. Inspiring employees is a key element in transformational leadership. Using various methods, an inspiring management style will affect knowledge workers' motivation.' The transformational leader, Sandvik explains, inspires employees to contribute more than their self-interest requires by making them more aware of and inspiring a desire to work towards the common goals and visions of the enterprise.

Increasing performance

‘We see that transformational leadership is an effective means of managing knowledge workers. We have conducted studies that show that the more transformational a manager is, the more willing knowledge workers are to be leaders themselves. That also increases performance.' Transformational leadership is characterised by four factors: idealised influence, inspirational motivation, intellectual stimulation and individualised attention. However, the researcher says, it is not just one leadership style. People are inspired by different things, and many knowledge workers have interests that differ from those of the management of their organisation.

'Creating a vision is easy,' says Sandvik, ' but communicating it is a bit more challenging and realising it is very difficult .'

An active form of leadership

'Transformational leadership is an active form of leadership. You give the employee autonomy. Many misinterpret the autonomy aspect and think that it means that a manager can just sit back and let the employees lead themselves.' It is not quite as simple as that, according to Sandvik. A knowledge worker often has strong interests and professional values, and it is by no means certain that they coincide with the organisation's interests. A knowledge worker's solutions are often not consistent with the organisation's wishes and solutions. It is important to understand that autonomy is about setting goals and working towards them, but that it is nevertheless important to give people freedom in their work. 'You have to realise that managing a knowledge worker requires more leadership, not less. It's not just a matter of having built-in checks and procedures. It's about inspiring people and appealing to their inner motivation. You may have to pursue ideas you disagree with. Being inspiring can be demanding. People are inspired by different things. Using yourself as a role model is also difficult for many people. Many managers spend a lot of time managing, because a lot of things have to be solved through dialogue,' says Sandvik. Are managers good at transformational leadership? 'Yes, I would definitely say so, and this has been confirmed in interviews with managers. Everyone has an element of transformational leadership in them, but the style can be developed to a greater or lesser extent. You can become more aware of transformational leadership styles and use them actively.' Empirical studies show that a transformational leadership style has an effect.

'You develop your employee. It's about caring about the employee and taking time to build relations, but also about providing intellectual stimulation by facilitating the acquisition of new knowledge. It's hard to create knowledge, but easy to copy it.' Not all managers find it easy to be charismatic or open. 'But what we do know about managing knowledge workers is that there is a lot to be gained by inspiring and motivating them rather than imposing sanctions,' Sandvik concludes. If knowledge workers have a manager they trust, they appreciate the manager stating clearly what he or she prioritises and informing them about – but not necessarily involving them in – decision-making processes. Many people hate endless participation processes because it steals time from what they really want to work on, according to Professor Rune Lines. The desire for freedom and autonomy has to do with the performance of the job itself. Employees want peace and freedom to do their jobs in a way that develops their competence, which often exceeds their manager's competence. Lines says that this is why it is not possible to interfere with how things are done to the same extent as in other sectors.

that leads to them being motivated by other things and whether they need a different type of management style. That is a key question in the research.'

Characteristics of the group

As for sector and organisation types, most organisations have groups of knowledge workers, and the number is growing. How will this influence management and motivation: do you think it will reduce motivation? 'The percentage of people with higher education is increasing. That is one of the reasons why we are working in this field, because this has a strong effect in the workplace. Part of the problem is related to existing management theory and the fact that little work has been done on what the characteristics of this group mean in practice.' Existing leadership theory and leadership norms do not take sufficient account of this change in the labour force. 'The concepts are not necessarily adapted to these changes. If there is one thing we do know from the management field, it is that the effect of a given leadership style is strongly dependent on who is being managed.'

‘What we see in our studies is that motivation is probably an important productivity driver at the individual level, departmental level and organisational level. The other thing we look at is what motivates knowledge workers in contrast to other workers.' The key to understanding knowledge workers' motivation is to study the importance of higher education.

Ill: Willy Skramstad

'Knowledge workers are similar to other people: They are motivated by money, reputation and freedom – very similar to the factors proven to motivate other employees. A number of things indicate that we are not as different from each other as many have claimed.'

'The question is whether higher education influences knowledge workers in a way

Alexander Madsen Sandvik, post doc at the Department of Strategy and Management. Photo: Siv Dolmen


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NHH Bulletin


Rejects crisis criticism


crisis criticism 'Every time there's a crisis, everyone knows that the economists will take a hiding,' says NHH professor Erik Ø Sørensen. But the fact that crises cannot be predicted is not particularly worrying, Sørensen believes, because it is in the nature of financial crises that they come as a surprise. Text: Sigrid Folkestad

authors were the first all-Norwegian social science research group to be published in this journal. Sørensen believes that economists themselves do not worry much about being unable to predict financial crises, exchange rates, house prices and other phenomena that concern many people. 'Some people probably believe that the field should engage in some soulsearching after the recent crises, but most economists are happy with the situation.' Professor Erik Ø Sørensen.

Past crises are a small, but legitimate research field, but even specialists do not see it as particularly worrying that crises cannot be predicted, Professor Erik Ø Sørensen at the Department of Economics believes. 'On the contrary, it is almost seen as a victory for the field, because we believe that it is in the nature of financial crises that they come as a surprise,' Sørensen says.

Satisfied with the situation

Sørensen is one of the co-authors of the article 'Fairness and the Development of Inequality Acceptance', which was published in Science (2010). The


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Do you think this can provoke people?

question how anyone could have been this wrong.' 'Some economists are more present in the media than they are in journals and research environments.' The professor is a researcher at The Choice Lab centre at NHH, where he and his colleagues study how people make financial and moral choices, and the ways in which authorities, companies and organisations can utilise knowledge from this research to better understand and improve their own decision-making.

crises now than in the past. What I'm saying is that no one can predict with certainty when a financial crisis will strike. That doesn't mean that it's impossible to prevent some potential crises by implementing competent measures, but few, if anyone, knows these things exactly.'

The worst of the nonsense

'Economists are not happy that unemployment is growing in large parts of the world or that people cannot pay their bills. But we are reasonably satisfied with the condition of economics as a discipline. Most economists do not feel that predicting crises is part of their professional lives.' You are very critical about what you talk to the media about yourself?

Don't economists learn from their mistakes?

'There are economists who think that almost any topic on which we can speculate is better than what incompetent know-it-alls can grab the media's attention for. I think we should have more trust in people's intelligence and their ability to sort out the worst of the nonsense themselves.'

'Yes, I believe they do. People are generally quite bad at learning from their own mistakes, but I don't think economists are worse than anybody else. But very few of them find that they personally have made mistakes in relation to the financial crisis.'

'We would be more worried if it were impossible to predict the outcome of simple situations where it is easy to identify the players and their respective interests,' says Sørensen.

'Every time there's a crisis, everyone knows that the economists will take a hiding. In both national and international debates, "experts" emerge from the shadows propounding strange theories that they can now claim have been strengthened. And every time, the media focus a little bit more on these strange theories.'


The Choice Lab

Why aren't economists more concerned with crises?

'However,' Sørensen says, 'these theories are not normally a topic of discussion at conferences, workshops or in articles in reputable scholarly journals. Just as often as these "experts" make statements to the media, critical newspaper articles are published that

Both national and international debates, "experts" emerge from the shadows propounding strange theories that they can now claim have been strengthened. Erik Ø Sørensen

'Considering how quickly financial markets operate and information flows, I'm not certain that we have actually had more or more frequent financial

people are willing to spend more time looking for good jobs. These are simple, but robust predictions that are closely related to assumptions we make about motivation and rationality.' The researchers at The Choice Lab work on controlled experiments in which they study behaviour in situations where the researchers control the financial incentives. 'They have identified a large number of deviations from the standard model. For example, we now know that people are even willing to share their resources with complete strangers and anonymous people, and that they are concerned with the division of resources being fair in a way that respects relative effort.'

That is why he does not believe that it is correct to say that the field of economics refuses to learn from its mistakes. 'Our fundamental understanding of individual behaviour is changing. This has been found in a number of experiments in economic research in recent years.' Sørensen believes that economists' inability to predict financial crises is largely an issue in public debate rather than a real problem in the field of economics. 'New knowledge about individual motivation is something that will be taken more seriously,' says the researcher.

So there's no cause for alarm?

Deviations from the standard model

Road tolls and unemployment benefit are two of the examples he mentions. 'Road tolls result in less people using the roads. When the authorities pay unemployment benefit, unemployed


NHH Bulletin


Tax research

Millions being invested in

tax research More than NOK 100 million is being invested in updating our knowledge about taxation, tax evasion and compliance when two new tax research centres opened in 2012. Text: Sigrid Folkestad Photo: Eivind Senneset Minister of Finance Sigbjørn Johnsen and Professor Emeritus Agnar Sandmo.

In September 2012, Minister of Finance Sigbjørn Johnsen opened two new tax centres, Oslo Fiscal Studies and the Norwegian Center for Taxation. The first will be established in Oslo, while the latter will be based at the Norwegian School of Economics (NHH). The aim is to develop a strong tax research community in Norway. 'A well-functioning tax system is a precondition for a welfare society like ours. The financial crisis in Europe shows how important it is to have good regulations and an effective tax collection system. The two new centres

represent a significant boost for the tax policy field in Norway, and I expect them to provide us with important knowledge that the Ministry of Finance can use to further develop the tax system,' says Minister of Finance Sigbjørn Johnsen.

Strong cooperation

Oslo Fiscal Studies (OFS) is financed by funds from the Research Council of Norway and own funds from the University of Oslo, in cooperation with the Frisch Centre and Statistics Norway. The Norwegian Center for Taxation (NoCeT) will be established at NHH in cooperation with the Institute for Research in Economics and Business

The two new centres represent a significant boost for the tax policy field in Norway, and I expect them to provide us with important knowledge. Sigbjørn Johnsen

Professor Guttorm Schjelderup at Norwegian Center for Taxation, Minister of Finance Sigbjørn Johnsen, Director General Nina Bjerkedal from Ministry of Finance , Rector Jan I Haaland and Director General of Taxation Svein Kristensen.


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NHH Bulletin


Tax research

It is important to the Norwegian Tax Administration that we both know and understand why people act as they do. Svein Kristensen

Administration (SNF) using funds from the Research Council of Norway, the Norwegian Directorate of Taxes and own funds from NHH. The Research Council's programme for tax policy research has contributed NOK 32 million to the establishment of the two centres. The Department of Economics at the University of Oslo (UiO) has contributed NOK 16 million to its own centre, while the Norwegian Directorate of Taxes is giving NOK 15 million to the centre at NHH, and NHH itself will contribute as much as NOK 41 million. The funding will be spread over a period of five years. In total, this represents a major investment of more than NOK 100 million.

'The Research Council's programme aims to stimulate tax policy research and contribute to recruitment to the field. The investment in the two centres involves channelling funds to research and teaching institutions that are academically strong. This makes the Research Council a strategic partner for the authorities and the research institutions,' says Helge Rynning, Senior Adviser at the Research Council of Norway.

Looking for causes and understanding

In addition to direct funding, the Norwegian Tax Administration will contribute data to the research. 'It is important to the Norwegian Tax Administration that we both know and understand why people act as they do. Previous research has been based on the

economic effects of tax, but if we are to succeed in improving compliance, it is crucial that we know why some people choose to evade taxes, while others do not. This will help us to adapt and work more proactively,' says Director General of Taxation Svein Kristensen. Jan I Haaland, Rector of NHH, is delighted with the establishment of the centre at NHH. 'NHH is especially qualified to host such a centre. Our interdisciplinary environment, which comprises economics, business economics, law, behavioural economics research, and strategy and management, makes us well equipped to revitalise research on tax and public sector economics,' he says.

Bank products in Supreme Court

Historic Supreme Court judgment concerning bank products In February, the Supreme Court will consider the Røeggen case. A few thousand small savers are awaiting the judgment. Professor Thore Johnsen has served as an expert witness in this case. Text: Sigrid Folkestad Photo: Siv Dolmen Illustration: Willy Skramstad

NHH has traditionally had a strong position in research on public finance and tax issues with researchers (from left) Jan Mossin, Terje Hansen, Kåre Petter Hagen and Agnar Sandmo (see previous page). Vestibule of the Supreme Court.


NHH Bulletin



NHH Bulletin


Bank products in Supreme Court

for the bank, to push debt-financing of a product like this.

I don't want to go too far in releasing customers from their responsibility for familiarising themselves with what is involved. Thore Johnsen

If the bank's board of directors had understood this, they would have stopped it sooner,' Johnsen believes. He believes that many DNB employees developed a disliking for the product when they realised what it entailed. 'But they thought it was nice to make money, and it was very profitable for the bank.'

Beyond the bounds of common sense

Could the product have been acceptable if it hadn't been marketed to small savers?

The two cases that will be considered by the Supreme Court are both about rules for good business practice and what constitutes sufficient information from sellers of financial products.

DNB and Fokus Bank

The Røeggen case starts in the Supreme Court on Tuesday 23 October. 'The validity of agreements for so-called structured savings products' is the title of the hearing on the validity of agreements between DNB and Ivar P Røeggen for investments in two equity index-linked bonds. Four days have been set aside for the case. The case against Fokus Bank (a branch of the Danske Bank Group) concerns a claim for cancellation and compensation after the purchase of a financial product. The case begins on 1 November 2012. Five days have been set aside for this case. The cases against Fokus Bank and DNB will be considered jointly by the Supreme Court.

Invested borrowed money

In 2000, Ivar Petter Røeggen invested NOK 500,000 in two savings products that were debt financed, but when the lock-in period had expired six years later, he had lost NOK 230,000 in interest and charges. The investment was financed by a fixed-interest loan at approximately 8% interest.


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Røeggen took DNB to court with the support of the Norwegian Consumer Council, claiming that the bank should pay the costs. Oslo District Court found in favour of Røeggen, but he lost the second round in the Court of Appeal. Around 2,000 complaints against bank products are currently filed with the Norwegian Financial Services Complaints Board. The outcome of the case in the Supreme Court concerns a very important matter of principle, and, if the court finds in favour of Røeggen, it could mean that customers will be awarded millions in compensation.

The most important aspect of the Røeggen case

In 2008, Thore Johnsen submitted an expert report on behalf of the Complaints Board for Consumers in Banking, Finance and Mutual Fund Matters (now the Norwegian Financial Services Complaints Board). DNB contested the original expert report, and Johnsen wrote a new report in which he commented on the bank's objections. This report was also extensive.

had to do with calculations. What was the expected return? What was the risk?' 'That involves calculations. It is important that you use the same models for calculations, or that you agree to disagree, but in such case, this must be clearly stated. Or you'll never reach agreement.' It became clear at a relatively early point that Thore Johnsen and DNB should exchange models. The result was that Johnsen's model was used. It thus immediately became clear what the source of the disagreement was. 'Which brings us to the most important aspect of the Røeggen case, in my opinion. Because the customers aren't professionals – you need to really know what you are doing to understand what this complex product involves – it is easy to include costs without the customers noticing. That is precisely what DNB did.'


'Then the bank raised new objections, but at that time, we were cooperating behind the scenes. This was done openly. I wrote about it, and the bank wrote about it.'

The finance professor's point is that the costs associated with the product were far too high, especially if the investment was debt-financed. At the same time, the debt-financing made the product too risky for ordinary customers.

'The principles involved were one thing,' says Johnsen, 'but the actual facts of the case were something else entirely, and

'I concluded that I thought that it was irresponsible of the bank, or of DNB Markets, which marketed the product

'Well, the "Røeggen product" was introduced relatively early, in 2000. It was an early version of similar products, and they were beyond all common sense. They were junk, to put it simply. It was neither saving nor speculation. It was trickery, and the costs were high. But, in principle, this early product was simple and clear-cut. If it hadn't been for the costs, it would have been a good product.' In your opinion, what responsibility do Røeggen and the other customers who purchased these products at an early stage have? 'I don't want to go too far in releasing customers from their responsibility for familiarising themselves with what is involved. If you don't understand a bank product, you should stay away. The bank shouldn't have to tell you that, you should know that yourself. Former Minister of Finance Kristin Halvorsen put it very aptly: "You mustn't mistake a banker for your grandmother." That's not his job. He's a salesman.' Thore Johnsen draws a parallel with Sweden, where the same products were introduced, but earlier. 'They were just as popular, but there are no court cases there.' Why not? 'Swedish customers are traditionally more critical. It's the same in asset management. Norwegian customers accept 2% in costs for an extremely simple unit trust which should really

'Because the customers aren't professionals – you need to really know what you are doing to understand what this complex product involves – it is easy to include costs without the customers noticing,' Professor Thore Johnsen says. Photo: Helge Skodvin

only cost 1%. They don't even ask. Norwegian customers are very careful when it comes to electricity and shop around for the best price. And as for buying a car? They keep at it for years. It's the same for flat screen TVs and PCs. But making a million kroner investment? Then, they just ask: "Is this good?" "Sure," says the bank. "Then I'm all in!" The Swedes are far more critical. They have more experience of the financial sector and are better at

assessing the advantages and disadvantages,' says Johnsen. This is still the case in the Norwegian financial market, he believes. 'Norway was relatively late to modernise its financial market. To put it bluntly, part of the reason is that Norwegian customers are far too naive and accept almost anything,' Johnsen says.


I don't entirely agree with those who claim that it is just junk. Thore Johnsen

The Røeggen product is not all bad

'I don't entirely agree with those who claim that it is just junk. The problem is that the bank got too greedy. They took out too much and were a bit unfortunate because the cost of the loan proved to be higher than they had actually envisaged.' The professor says that DNB could have chosen to change its mind or compensate customers, but chose not to. 'That is why they can't just claim afterwards that they were simply unlucky because they locked the interest rate on the loans early, before the customers bought into the product,' says Johnsen. What interests you most about your role as an expert witness, the academic aspects or the principles involved? 'I must say that I am a bit annoyed that the bank allowed unsuspecting amateur customers to agree to debt-financing. That was unfortunate. The bank is to blame for that, of course, but the problem is also that the customers don't shop around.'


The Fokus Bank case

Professor of Finance Thore Johnsen at NHH is also an expert witness in the Supreme Court case in which 29 plaintiffs are suing Focus Bank after investing in savings products that did not yield the expected return. A number of limited liability companies, associations and private individuals are among the plaintiffs. NTNU Social Research, in particular, has had a lot of press coverage following its ill-fated transaction with Fokus Bank. The case against Fokus Bank involves much bigger investments in structured credit products, and it is more complicated, Johnsen believes. Basically, he explains, this is the same type of product as Røeggen's DNB product, but understanding credit risk is something even professional investors are unfamiliar with. 'There are several professional investors involved in the action against Fokus Bank, including a former chair of the board of Fokus. He is one of the people who have taken the bank to court.'

The Røeggen case

(now the Norwegian Financial Services

In 2000, Ivar P Røeggen purchases two

The District Court found in favour of the plaintiffs

A unanimous judgement was handed down in the District Court in favour of 12 of 29 investors, including non-profit organisations, research institutions and private individuals. They did not have to meet their commitments provided that they had lodged a complaint before a certain date. The professional investors were not awarded compensation with reference to their being experienced investors. 'In Oslo District Court, the judgement against Fokus Bank was based on matters of principle, and the grounds for it were very well set out by the lay assessors, including Tore Lindholt, the former CEO of Folketrygdfondet. Later, however, the Court of Appeal said that no one, regardless of how stupid you are and almost regardless of how little information the bank has given you, can be released from their responsibility for following up their own investments. The District Court said that, if you're an amateur, the liability and responsibility rests with those who should have understood the matter. The bank, in other words.'

Bank products in Supreme Court

But as I said, several of the early products were good. Too high costs were included, but the construction itself could actually have been of benefit to customers. Thore Johnsen Supreme Court will arrive at?

As in the Røeggen case, the Court of Appeal went in the opposite direction.

'I'm interested in the Supreme Court's judgment, of course. I hope it will be a reasonable judgment, or, in solomonic terms, a wise one.'

'No matter how stupid you are to have let yourself be tricked by the bank, you have to pay,' said the Court of Appeal. 'The Court of Appeal made a very narrow assessment in the Røeggen case. It was probably not as evident as the District Court claimed, that Røeggen was right and the bank wrong, but, in the end, the District Court's conclusions were correct. They gave very careful consideration to several factors.' 'The Fokus case, in particular, shows how important it is to make a nuanced and thorough assessment,' Johnsen believes, 'and that didn't happen in the Court of Appeal's consideration of the Focus case.'

Pay up – no matter what

'It has to do with principles. I think it was the writer Arne Garborg who said:

"Those who do not open their eyes, must open their pockets." And isn't that true? If you don't keep your eyes open, you'll have to pay. That was the principle that the Court of Appeal chose to apply. Regardless of your background or whether you're an amateur, and regardless of what the bank did – you had an independent responsibility and should have checked your purchase. You can't claim that you didn't understand it afterwards just because you failed to do so.'

'The Supreme Court has to consider the application of the law, not the realities behind whether a negative return was expected or not. That is why it's difficult to predict the outcome,' he says. Have any of your students been involved in designing these products? 'Yes, several of them have been involved in these products. But as I said, several of the early products were good. Too high costs were included, but the construction itself could actually have been of benefit to customers. But since it was designed the way it was, it didn't work,' Johnsen concludes.

What conclusion do you think the

they were not informed that the American

in favour of were the Student Welfare

marketing were up to scratch.

Fokus Bank and 'the Note'

Complaints Board) worked on the Røeggen

The Norwegian Consumer Council called

In spring 2007, Fokus Bank (a branch of

loans the investment was linked to were

Organisation in Tromsø, JP Strøm Shipping

equity index-linked bonds at a price of NOK

case from 2007.

the Røeggen judgment 'a crushing victory

the Danske Bank Group) launched the

traded on the market.

AS, Frøyland Idrettslag, Norrøna


In January 2009, the Board requested DNB

for Norwegian small savers'.

product 'Senior Bank Loan Linked Note 1

Fokus argues that the financial crisis must

Barnehage and NTNU Social Research.

To be able to make the investment and pay

NOR to 'reset' the customer's investments

A reversal in the Court of Appeal followed.

2007-2010', called 'the Note'. It is a bearer

be compared with a 'lightning strike' and

(Source: Oslo District Court)

the front-end fees, Røeggen took out a

in two structured savings products. The

In May 2012, it became clear that the

bond issued by the Dutch ING Bank.

that no one, regardless of how expert they

In January this year, Fokus Bank was

fixed-interest loan of more than NOK

bank did not wish to comply with this

historically important Røeggen case would

When the parties met in Oslo District Court

were, could have predicted the

acquitted in the Court of Appeal, but a

520,000 with a nominal interest rate of


be brought before the Supreme Court.

in spring 2010, the plaintiffs' main

developments in the wake of the US

minority believed that there were gross


The Norwegian Consumer Council took DNB

Røeggen is claiming compensation for his

arguments were that 'the note' was not

investment bank Lehman Brothers going

errors and deficiencies in the information

He lost NOK 249,000.

to court and won the case on behalf of

loss of NOK 230,000.

capable of yielding anything but a loss,

bankrupt in 2008.

provided by the bank and that it was very

The Complaints Board for Consumers in

Røeggen in the District Court. The Court

and that they were not given sufficient

The court found in favour of twelve of the

likely that these errors played a decisive

Banking, Finance and Mutual Fund Matters

believed that neither the product nor its

information about the risk involved in

29 plaintiffs, but found that the other 17

role in the customers' decision to

investing in this bond.

complained too late.

purchase 'the Note'. (Source: Borgarting

Many of the plaintiffs have claimed that

Among the plaintiffs that the court found

Court of Appeal)

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NHH Bulletin


Argentum Centre for Private Equity

Research Centre for

Private Equity In February 2012 NHH's Department of Finance and Management Science opened Scandinavia's first research centre focusing on Private Equity, The Argentum Centre for Private Equity. Text: Hallvard Lyssand Photo: Eivind Senneset

The Argentum Centre for Private Equity's mission statement is clear and straightforward: to produce objective and independent research of the highest quality on all topics related to Private Equity. The initiative for the research centre is a joint venture between NHH researchers and practitioners at the asset management firm Argentum, who specializes in Private Equity. 'We have cooperated with Argentum for quite a while. The company's CEO, Joachim Høegh-Krohn inquired about

the possibility of establishing a research centre, and we've developed the idea,' says Associate Professor Carsten Bienz at The Department of Finance and Management Science. 'Professor Karin S. Thorburn, Assistant Professor Tyler J. Hull and I work directly with research concerning Private Equity. In addition there are approximately six other people at NHH who do research in related fields within Corporate Finance. This relatively large group means that we have critical mass for establishing the centre,’ Bienz explains.

Prime PE Data Centre

The Centre's ambition is to become the prime data centre for information about Private Equity activity in the Nordics and run the prime platform for PErelated discussions in Scandinavia. One of the main tasks will be to build a comprehensive database on PE in Norway and the other Nordic countries by combining existing databases. Further aims are to increase number of papers written and published on Private Equity related subjects and to increase public understanding of Private Equity. Bienz also points out that the centre goes together well with the department's ambition to strengthen research concerning Corporate Finance.

Funding from the business

The centre has received funding of 7,5 million NOK over five years from Argentum and other major members of the Norwegian Private Equity Industry, including BA-HR, Energy Ventures, Hitec Vision, Northzone, Norvestor and PWC. Although the industry itself helps funds the centre, Bienz stresses that they will have nothing to do with the research.

Ole Melberg has been working with private equity for several years, and firmly believe that investing in research is useful to society.


NHH Bulletin


CEO of Argentum, Joachim Hoegh-Krohn (left) and Widar Salbuvik from HitecVision Solutions.

'Obviously we must have total academic independence. To ensure this we will establish an advisory board consisting of world-class researchers on Private Equity. Professors Yael Hochberg from Kellogg School of Management, Ulrich Hege from HEC Paris and Morten Sørensen from Columbia Business School will scrutinize applications and choose which projects to fund from a purely scientific point of view,' he explains.

Scandinavia's first

The Argentum Centre is Scandinavia's first research centre focusing on private equity and one of only a few in Europe. 'Compared to the US, Private Equity is fairly new in Europe, and this is reflected in the amount of research that has been done,' says Bienz. 'But these kinds of investments have

become increasingly important and have an increasing impact on society. This in turn raises a whole number of questions that we believe our research at the centre will contribute to answering,' he adds.

Data advantage

A major challenge in PE research worldwide is a severe lack of data. One of the reasons is that PE firms play their cards close to their chests. 'But in Norway data are more readily available than in many other countries. For instance companies are obliged by law to open their books. There are also several unique sources of data that are open to the public and researchers, which is an advantage in our research,' Bienz comments. He also points out that the PE industry has realized the need for objective

research in the field, and that this makes them more willing to give academics access to data that would otherwise be unavailable. 'The fact that NHH has the trust of the business community also makes it easier for us,' he adds. 'But to what extent will research on Norwegian data be relevant for other countries?' 'We don't know yet. But even though every country has their own characteristics, PE is relatively homogenous, and I think findings in Norway may prove to be relevant other places too. And the research will certainly be worthwhile for Norway, where this is a growing industry,' Bienz concludes.


NHH Bulletin


Kristian Gerhard Jebsen Centre

NHH received

record donation The Kristian Gerhard Jebsen Foundation has donated NOK 24 million to NHH. It is the biggest single donation ever received by a Norwegian business school. Funding for a new high-tech learning centre at NHH, the Kristian Gerhard Jebsen Centre, is thereby ensured. The centre will be established by making alterations to the Dag Coward auditorium. It will have a total floor space of approx. 600 sq. metres and will house a specially designed auditorium, group rooms, workplaces and mingling areas - all equipped with state-of-the art, high-tech equipment. The goal of the Kristian Gerhard Jebsen Foundation is to contribute to the realisation of projects of a high international standard. 'We have invested heavily in medical research and are also engaged in sponsoring several important cultural initiatives. We were on the lookout for a project in higher education where we could make a difference,' says Hans Petter Jebsen, chair of the board of the Kristian Gerhard Jebsen Foundation.

The Kristian Gerhard Jebsen Centre will have 642 square metres of floor space divided between three floors. The centre will comprise a specially designed auditorium, group rooms, a library and common areas for learning, group work and receptions. NHH will focus strongly on teaching technology at the centre, which will serve as an arena for experimentation in and the development of new educational methods. The centre will be established by making alterations to existing buildings, and it will be located near the new building. The premises will be used for teaching in experience-based master's degrees (executive MBA), in-house management development courses, researcher seminars targeting the corporate segment and public defences of doctoral theses.


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NHH, on its part, had plans to establish an advanced learning and conference centre, but lacked funding. With this donation, NHH will take an important step towards realising its vision of being a business school of a high international standard. 'We set very high store by this donation. NHH has big ambitions and, if we are to achieve them, we must be at the forefront in all areas. The centre will provide us with physical facilities that put us on a par with the top-flight international institutions,' says Rector Jan I Haaland of NHH.

The total cost is estimated to be NOK 34 million. NOK 4 million from the foundation has been earmarked for investments in state-of-the-art teaching technology. 'We hope that the donation can help to make NHH's research and teaching more international. The goal is that the centre will be a high-tech arena with a virtual lecture hall that will make it easier to attract international researchers, either as guest lecturers or as opponents in connection with public defences of doctoral theses,' Jebsen says.

'Together with the new building that will open in autumn 2013, the centre will help to ensure that NHH has fully satisfactory teaching premises at all educational levels, from bachelor to PhD.'

Building work on the Kristian Gerhard Jebsen Centre will start in January 2013 and it is scheduled for completion in September 2013.

The Kristian Gerhard Jebsen Foundation was established in honour of Kristian Gerhard Jebsen and his contribution to Norwegian and international shipping and business. The foundation was established in 2009 and, at the turn of the year 2011/2012, its capital amounted to NOK 964 million. So far, the foundation has donated funds for a total of NOK 238.7 million. Donations to research have largely been made to large projects in medical research and maritime/marine research. In autumn 2011, the foundation decided on its first cultural investment. The common denominator for the foundation's engagement is the goal of contributing to the realisation of projects of top international standard.

Donations: The donation, which is based on income from Kristian Gerhard Jebsen's international business activities, is part of a longstanding tradition in Bergen. Historically, such donations and initiatives from the business community in Bergen have played a very important role in the development of local higher education institutions. The establishment of NHH in 1936 is a good example of this. Another is the building of the University Library in Bergen, which was based on a donation from JL Mowinckel's shipping company in 1961.

Aud Jebsen and her son Hans Petter Jebsen recently visited NHH in connection with the signing of the contract related to the NOK 24 million donation. NHH rector Jan I. Haaland to the left. Photo: Hallvard Lyssand


NHH Bulletin


Robot trading

Robot trading on stock exchanges

robots will quickly take advantage of it, and greater liquidity are two possible advantages of this type of share trading.

needs to be regulated

'However, much more research is needed before we can fully understand the consequences,' Lensberg emphasises.

Lightning-fast share trading by stock trading robots is increasing strongly on the world's stock exchanges. Now, Professor of Finance Terje Lensberg believes it is time to consider the socio-economic costs of a millisecond. Text: Espen Bolghaug Photo: Helge Skodvin

Because it is all about the milliseconds. High frequency trading, popularly called stock trading robots, is the stock exchange equivalent of Formula 1. Here, it is all about speed and the best technology money can buy. 'Stock trading robots in themselves are nothing new. They have been used for years to carry our routine tasks that machines can do more efficiently than people can. What's new is the speed involved, which has increased hugely in the last few years,' says Terje Lensberg, Professor of Finance at the Norwegian School of Economics. He is conducting research on the evolution of behaviour in financial markets and has himself engaged in algorithmic trading, another term for

robot trading, for the Government Pension Fund of Norway and Storebrand.

Manipulation or a smokescreen?

This spring, the financial press has written a lot about high frequency trading, both about how stock trading robots are 'playing havoc' with Oslo Børs, and how they manipulate the market. 'Obscuring what you are doing is not the same as manipulating the market,' Lensberg comments. Criticism has been raised of the way in which the new type of stock trading robots place buy or sell orders, then retract them so quickly that market players fail to latch on to what is

happening. On an ordinary day's trading, as many as 50% of all orders can be retracted in less than a second, without a single trade having taken place. 'Manipulation can be one motive, but it could just as easily be a strategy to protect oneself against market players who want to exploit attempts at high volume trades. By quickly retracting an order, such players do not have time to exploit the position,' the finance professor explains. He believes that we should accept that investors wish to safeguard themselves against being tricked by the market.

The value of a millisecond

Lensberg believes that the debate is dominated by those who feel that their business model is being threatened by stock trading robots. He calls for a more nuanced debate, and believes that high frequency trading has both advantages and disadvantages. Less incorrect pricing in the stock market, because the stock trading

'Stock trading robots in themselves are nothing new. They have been used for years to carry our routine tasks that machines can do more efficiently than people can. What's new is the speed involved, which has increased hugely in the last few years,' says Terje Lensberg.


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Lightning fast stock trading robots are good business for those who use them, but the effect on the market as a whole is more uncertain. 'The question is how socio-economically profitable it is to spend so much money just to make it possible to trade a fraction of a second faster. Are the advantages great enough to weigh up for the costs this enormous use of resources involves?' Lensberg asks, and adds: 'Intuitively, I think the answer is no. I believe the focus on speed has gone too far.'

A direct line to the market

Important questions about regulation have followed in the wake of the increase in high frequency trading. Because stock trading robots fighting over milliseconds do not have the time to go via the stockbrokers, they have direct lines to the market. This worries the regulators, both in the EU and in Norway. In 2014, the EU will issue new regulations relating to share trading in Europe, which may put a stop to robot trading.

'An important control mechanism is lost because this form of trading does not go via stockbrokers. It makes it difficult to know whether those placing orders have enough equity to actually trade,' Lensberg explains. According to the professor, another problem is that the speed can simply become too high, also for those who control and operate the robots. 'An algorithm cannot change its mind, and if those who look after the robots do not pay close enough attention, both the buyer and the seller can suffer great losses. There is a potential for great instability here,' the NHH professor believes.

One possible measure to avoid such problems is to test the stock trading robots before they are let loose on the market. But testing takes time, and a stock trading robot that is good this week might not be as good next week.

New expertise

After the brokerage houses started to use powerful computers and more technology in share trading, new expertise has also found its way into the world of finance. IT engineers, mathematicians and physicists are now teaming up with economists to develop quicker and smarter algorithms. Combined with deregulation of the financial markets, which has made it possible for the same security to be traded on several stock exchanges, this has created good conditions for high frequency trading. 'Most computer programmes and algorithms have "bugs". Giving them direct access to markets without any form of regulation can therefore be very unfortunate,' the finance professor explains. There is talk of granting licences to individual players who will be permitted to engage in algorithmic trading, but Terje Lensberg is uncertain whether this would be an efficient solution. 'It would still mean that we have to trust those with licences to follow their own control procedures,' says Lensberg.

Regulation desirable, despite different incentives Thomas Garnes and Ole André Knutli are in the process of completing their master's degrees in Financial Economics at NHH. In a joint master's thesis, they look at various market players' attitudes to the new share trading trend.

'We note that there are big differences in how regulators, investors and the stock exchange view the effects of high frequency trading. There is certainly no unison agreement within the industry that stock trading robots are a negative development, as the media would often have you believe, the students tell us.

Professor Lensberg is supervisor for their qualitative study, and they have conducted interviews with Oslo Børs, Nordnet, the Financial Supervisory Authority of Norway, Folketrygdfondet and with some of Norway's top academic experts. 'We have identified many different incentives. Small investors, for instance people who invest in shares through Nordnet, are easily confused by the stock trading robots, while Oslo Børs makes money on all the transactions and therefore has fewer objections to this trend,' they explain. Although it is debated whether this lightning-fast share trading is desirable, there is certain consensus that regulation is needed. 'Several different ways of regulating the robots are being considered. There is talk of stipulating a minimum time for placing and retracting orders and of introducing fines for retracting large orders. The people we have spoken to have little faith in such methods. If anything, granting licences to serious players is what the industry believes most in,' say Knutli and Garnes. They, on the other hand, believe that the proposal for a supranational body that can monitor activity on different stock exchanges would be a good start to the regulation efforts. 'As things stand, no one has a full overview of the situation. The only thing we know for certain is that stock trading robots and high frequency trading are here to stay.'


NHH Bulletin


Corporate Finance

In-depth finance studies

for advance students Case-based teaching, motivated students and two lecturers at the forefront of financial research. The in-depth programme in Corporate Finance is one of the reasons why NHH's Executive Programmes are ranked among the best in the world. Text: Espen Bolghaug Photo: Eivind Senneset

The students learn advanced methods for calculating cash flows, which then have to be valued. After the theory has been presented, they must apply it to a real case.

'I was a bit worried that the course would be very theoretical and focus on a lot of research that can be hard to relate to. Fortunately, that was not the case,' says H책kon Kristiansen, who works for the financial group Ferd. Together with 31 other students who normally work for employers such as the Ministry of Finance, Ernst & Young and Handelsbanken, he is spending one summer week at Solstrand Hotel & Bad outside Bergen to hone his financial skills.

Close to real situations

Fresh research results and case-based teaching are the main ingredients in Professor Karin S Thorburn and Professor Espen Eckbo's tuition. 'This course is both transactionoriented and research-based,' Thorburn explains. 'That means that we are close to real situations and are on a par with the practitioners in relation to the structure and design of transactions, while also bringing in new empirical research findings, often produced by us. It is important that we can relate our

research to what actually takes place in the market.' And the recipe seems to work well. This is the ninth year that they are holding the course together, and every time, there are twice as many applicants as there are places available. The programme has also won international recognition. Earlier this year, the Financial Times ranked NHH's Corporate Finance programme among the best of its kind in the world. NHH and the Administrative Research Institute (AFF) participate in the ranking, together with the Solstrand Programme, the AFF Young Leaders Programme and NHH's in-depth Corporate Finance programme. The ranking puts NHH in 17th place in Europe and 40th in the world in the category for Executive Education programmes.

Tactics and law

For course participant H책kon Kristiansen, Thorburn and Eckbo's course serves as a professional top-up after he started in the finance sector some years into his career.

'I have worked on the valuation and acquisition of companies for a year now. I have a background in consultancy and auditing, so it is important for me to have a more in-depth understanding of finance,' he says. What kind of things do you hope to learn? 'Tactics in bidding processes and the legal framework you have to comply with in connection with the acquisition of enterprises are some of the things I want to be able to benefit from in my job,' he says after three days of teaching and group work.

American teaching method

Before Thorburn came to NHH as a professor of finance, she lectured and conducted research at Tuck School of Business at Dartmouth College together with Espen Eckbo. He is still a professor at the American elite university and was awarded an honorary doctorate at NHH last year in connection with the school's 75th anniversary. The intensive course is structured so that the two professors alternate between theoretical lectures and case

H책kon Kristiansen (left) and Erik Aasland work together in a group with three other students. They are getting ready to present their solution to a case to the other students later in the day.


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NHH Bulletin


Management of multinational companies

Corporate Finance

Norwegian chief executive in the Netherlands Knut Nesse has won promotion to the elite division of international executives as CEO of the Dutch fish and animal feed company Nutreco. In the next few years, the company, which has 10,000 employees, aims to almost double its business. 'That's a big enough ambition for the next five years,' says Nesse. Text: Sigrid Folkestad Photo: Helge Skodvin

This is the ninth time that Professors Karin Thorburn and Espen Eckbo have taught together at NHH's in-depth Corporate Finance programme.

discussions with the whole group. A lot of time is also set aside for group work, to make sure that the cases and the theory form an integral whole.

Wants to understand the economists

The composition of the student group is important, according to Thorburn and Eckbo. The students come from a wide range of industries, and they all bring several years of work experience to the classroom. 'It's essential that the students we accept are of a high standard. They can't come straight from school, but have to have some years' experience so that they can provide relevant input when we discuss cases,' Eckbo believes. Most of the students are economists, but the programme also attracts some students with legal backgrounds. 'That is positive, and makes the case discussions more informative,' says Eckbo. This year, three lawyers are participating in the course. One of them is Erik Aasland. He has studied and


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worked in the USA, on Wall Street among other places, before he started working for the law firm Ræder in Oslo. 'Required rates of return and beta values don't have much to do with my day-to-day work. But as a lawyer specialising in acquisitions and mergers, it is good to know what the economists are actually talking about,' he says.

Aasland believes that economists and lawyers often have very different approaches to financial problems, and that it is therefore constructive for him to learn more about the economic aspects of the contracts he works on. 'Working as a lawyer is about arriving at the good solutions. Sometimes it helps to be able to think like an economist,' he concludes.

The in-depth Corporate Finance programme • The in-depth programme is a collaboration between the Norwegian School of Economics and the Norwegian Society of Financial Analysts. • The primary target group consists of people who work in corporate finance in large companies, banks, brokerage houses and consultancy firms, but the programme will also be relevant to financial analysts, asset managers, corporate lawyers and others who work in fields related to the capital market. • The academic content has been developed by Professors Karin Thorburn and Espen Eckbo on the basis of their joint research and teaching at Dartmouth College in the USA. • The topics include: corporate governance, valuation and the setting of requirements, acquisitions/mergers, leveraged buyouts and private equity, and financial restructuring. • The programme includes two gatherings: one case-based gathering for seven days in August and one concluding two-day gathering with presentations and discussions of assignments in October.

CEO Knut Nesse has an MBA in financial management from the Norwegian School of Economics, and he has been through AFF Solstrand programme.


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Personally, I thought they would go for a Dutch solution. There are not many foreign CEOs here, so I was surprised when they asked me. Knut Nesse

Amersfoort in the Netherlands; location of Nutreco's head quarters, which is managed by CEO Knut Nesse, one of very few Norwegians to be chief executive of a foreignowned multinational company.

'If I was ever going to take on a job like this, this was it, basically. Of course, there were some issues to consider, but I didn't spend more than a weekend making my decision.’

'It's true that there are not many Norwegian top executives of foreign companies. I only know of a few others,' Nesse says.

'The biggest transition,' says Nesse, 'is not living in the Netherlands, but suddenly becoming the person who fronts the company.' He also gets some unexpected attention. Nesse tells the following story as an example:


This summer, Knut Nesse, originally from the Jæren area, took over the responsibility for the multinational animal feed group Nutreco after having worked for several years as managing director of its subsidiary Skretting. Nutreco operates in 30 countries and is expanding fast, thanks to a growing population and a middle class with greater purchasing power and a craving for protein-rich food. Nutreco is a major player in the production of feed for animals and fish– which in turn ends up as food on the tables of the wealthiest section of the population. Last year, the Dutch company's turnover was more than EUR 4.7 billion. In 2016, Nutreco aims to have nearly doubled its business, and Nesse is responsible for achieving this goal. 'That's a big enough ambition for the next five years,' says Nesse. He started his career as a summer temp with Skretting in 1986, while studying economics at BI Norwegian Business School in Haugesund. Except for five years in the steel industry, which included two years in China, Nesse has stuck to fish feed, and has now climbed all the way to the top of Nutreco. This Norwegian has been part of the

company's management team for four years. 'In that sense, it has been a gradual transition, because I know the group and its management. It is a big change, however. You go from being part of the management team to the role of CEO, which means you suddenly get a lot of attention from the media, investors and stakeholders. And the same happens in house. It's a big change. You have to experience it to believe it.'

Expected a Dutch solution

Was it on the cards that you would become the new CEO of Nutreco? 'By no means. The corporate management team, myself included, didn't know exactly when my predecessor was going to retire, but we assumed that it was not very far off. Personally, I thought they would go for a Dutch solution. There are not many foreign CEOs here, so I was surprised when they asked me.' Nesse did not find it a hard decision. He has been part of the organisation for many years and enjoys working in the industry, the business and the company.

'Professor Michael Porter invited me to take part in an introductory programme at Harvard Business School, tailored for new CEOs. Porter picks ten top executives from big international companies every year. When I participated in October, I was the only one from Europe. The others were Americans from various listed companies.'

An international company

Nutreco operates in 30 countries. How does that affect the company culture? 'The company culture is something I'm very concerned with, and it's easy to get lost. People think that running a company like Nutreco is incredibly complicated. I think the code is simpler. When you are doing business in a country, you have to have local managers who understand the culture of the country and the market, so that a Norwegian, for example, doesn't have to make all the mistakes in Japan or China. That's would be too demanding.' These managers, whether a Japanese manager in Japan or a Chinese manager in China, need to think in international terms, Nesse believes. Some of them

Management of multinational companies

People think that running a company like Nutreco is incredibly complicated. I think the code is simpler. Knut Nesse

have been educated in the West or have another connection to Europe that makes them well suited to working for a listed European company.

Strategy and Management.

'We have zero tolerance for corruption or other violations of our ethical standards. They have to realise what it means to manage a Nutreco subsidiary. The company culture also applies internally. The Japanese cannot follow Japanese norms.'

'Take Telenor, for example' says Gooderham. 'They sent a Norwegian to take charge of the company's investment in India.'

The same applies when Nutreco's managers operate in the international arena; they have to comply with the principles of Nutreco's culture. 'But when they operate in their own country, they have to observe that country's culture. It's important to understand these things.'

Ethnocentric and polycentric

'It's interesting that Knut Nesse and Nutreco put so much emphasis on subsidiaries being run by local people, and that they argue that these managers understand the country and the market. I understand their thinking, but that's only one approach,' says Professor Paul N Gooderham of the Department of

Other companies recruit their executives from head office.

There are different strategies for managing multinational companies, depending on the type of industry and company involved, and the company's strategy. Industrial companies usually require different strategies from enterprises engaged in research and development. 'Academically, we distinguish between three different models: the ethnocentric, the polycentric and the geocentric model,' the professor says. Gooderham stresses that this is a rough categorisation, but that companies usually tend towards one of these practices. 'An ethnocentrically oriented company will hire people from their own country. The management's attitude is that managers from head office are better equipped to develop the company's business abroad. The company dispatches its "own" people, which makes it easier to ensure a common company culture. It is also a common approach when a technologically

advanced company invests in a country that is less technologically advanced.' The challenge is to find people who can do well in the country in question. Such 'expatriates' are expensive and do not always function as well in foreign cultures. A polycentric management style, of which Knut Nesse is a supporter, uses local managers with cultural expertise who know the market in their geographical areas of responsibility. Local managers are used in local markets. In line with this perspective, some claim that foreigners are difficult to understand or that it is too demanding for managers from head office to familiarise themselves with local conditions.


'The third approach is to adopt a geocentric form of organisation, which entails recruiting the best candidate, regardless of nationality. This approach is to a certain extent dependent upon technology. But it is fairly unusual.' There aren't many Norwegian chief executives abroad? 'No, and the number has not increased in recent years, either. There are several reasons for this. It is a question of where Norwegian managers want to make a career for themselves. Those who are interested in a career in business come from NHH, BI Norwegian Business School or the Norwegian University of Science and Technology, and they are recruited by Norwegian companies.' Gooderham believes that Nutreco stands out in this context. He reminds us that the Norwegian company Skretting is a very important subsidiary

Professor Paul Gooderham, Department of Strategy and Management.


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NHH Bulletin


Management of multinational companies

Norwegians like to stay close to home, and they have good reason to. The job market abroad is a lot tougher, and you don't have the same safety net when you're living abroad. Atle Jordahl Atle Jordahl, Director of International Relations, AFF.

of Nutreco, which could explain why a Norwegian was chosen as the CEO. 'But, above all, Nesse must be a very capable leader. Secondly, the Netherlands has a certain tradition for geocentric thinking,' the professor says. When the Administrative Research Institute (AFF) carried out the Management Survey in 1999 and 2002, it found that only six per cent of Norwegian executives had been offered a job abroad (from companies other than their current employer) in the past two years. This year, AFF conducted this extensive survey of Norwegian managers for the third time, and the results will shortly be made public. Atle Jordahl, AFF's Director of International Relations, says that Norwegian managers still seem to be most comfortable at home. A total of 3,690 managers responded to the previous survey, and the same managers were contacted again this year. 'The pattern has not changed. There are very few Norwegians in charge of international companies. Norwegian enterprises are expanding internationally, and some Norwegian managers gain international experience by working for their companies abroad. Knut Nesse stands out from the crowd. I know him well from his cooperation


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with AFF and know that he is very capable. His path to the top of Nutreco started with him doing an excellent job in Skretting, which is now a subsidiary of Nutreco.' Some Norwegians follow their company abroad. According to Jordahl, they only stay abroad for three or four years before returning home. 'This means that they don't gain enough experience to build on. They are not recruited by foreign companies.' Why is that? 'Norwegians like to stay close to home, and they have good reason to. The job market abroad is a lot tougher, and you don't have the same safety net when you're living abroad. It's also important to take your family into account. There's more to life than just work,' Jordahl says. And many have found that life as an executive abroad can be tough. 'It comes as a shock for Norwegians to meet people who are far more ambitious than themselves. One of the former executives of IBM said to me: "The other executives will eat you alive".'

Important decisions

Nesse decides all appointments to senior executive positions.

'It is a luxury when you have time and energy to spend a few hours on Sunday to prepare. It's almost mental hygiene,' says CEO Knut Nesse.

'Selecting who is to be in charge of different countries is one of the most important decisions we make. No one is appointed without my approval.'

In such situations, Nesse likes to ask the following question: 'Tell me, what are the three most important things you are going to do next year?'

Management development is one of Nesse's focus areas.

Surprises me

'I'm convinced that if you want to maintain your position as a successful company, you have to invest a lot in the management of the company and develop managers.' As CEO, Nesse has certain 'holy cows'. A strong focus and keeping it simple are two of them. 'It is useful in many contexts; many capable people make long lists of things that need to be done and are overcomplicated in their presentation of strategies. That is meaningless. The strategy is for the organisation. If it's too complicated, the organisation won't understand it, and it will be worthless.' As for focus, Nesse has often experienced the following: 'You're at a meeting listening to impressive lists of all the measures that are going to be implemented in the coming year, but you end up thinking that it's too much. Everything can't possibly be equally important.'

'Many people can't do this. That surprises me. It's fine to have big ambitions, but you must at least be able to say what you need to put right in the coming year. I'm a bit of a fundamentalist when it comes to these issues. Over time, that's a good thing for the organisation. Be crystal clear about what the most important issues over the next few years are. I won't compromise on that.' You are concerned with developing strong management teams, but how do you develop a team that's spread all over the world? 'I've been travelling around for almost ten years and seen many companies in many different countries. What I have observed, and what really surprises me, is that even big companies don't really have effective management teams. They all have management teams on paper, but when I started to ask more detailed questions about how often they meet, whether I could see the agenda for the management meetings or take part in them, I discovered that the reality was completely different. In reality, the

“management team” consisted of the director for the country or area in question talking to managers individually, and not as a team. To me, that is not an example of good management.'

The Solstrand Programme and MBA

Nesse coaches his managers on who to include in their teams, how to create good and healthy values, why they should have regular management meetings and what items to include on the agenda. 'I've worked a great deal with AFF to develop concepts for this, including management coaching. Skretting has used AFF for many years for management training through in-house programmes. We have now also started using AFF at Nutreco level, a process I started a year and a half ago. They are now in their second programme, which fifteen country managers are taking part in.' Nesse took an MBA in strategic management and economics at NHH while working as logistics director for Skretting. 'I found it very useful to combine MBA studies with work. I benefited a lot from that. I was actually able to use some of the theories in practice, for example in

relation to pricing, the supply chain and structural solutions.' After his studies at NHH, Nesse enrolled in the Solstrand programme. 'I really enjoyed that, but I don't know if everyone else did, because I was only 35 years old and perhaps had most to learn. I've included a lot of the things I learned through the Solstrand programme in my role as manager, and I've continued my collaboration with AFF.'

Enormous potential

How big can Nutreco become? 'Ultimately, we are part of a foodstuff chain that sells proteins in the form of fish, eggs, meat and milk. What drives this development is, firstly, a growing population and, secondly, the fact that we no longer produce our own food. We live in cities. Our purchasing power is increasing, and the middle class, which wants protein, has tripled.’ Primary consumers will triple in number in the next 20 years. In addition, each consumer is eating more protein. The fundamental driving forces are developing positively, in Nesse's assessment of future prospects.


NHH Bulletin


European crises

Criticising European politicians Political leaders in the EU countries draw sharp criticism from Gernot Peter Doppelhofer, Professor of macroeconomics at NHH. He believes weak decisionmakers and poor communication are fuelling the crisis in Southern Europe.


Sweden was able to quickly sort out the problems in its banking sector, which in turn led to greater confidence in their financial markets.

Gernot Peter Doppelhofer

Text: Hanna K. Sommerstad

'Europe is in a situation where one crisis follows another. What started as a shock in the American subprime housing market led to a banking crisis, which has now turned into a sovereign debt crisis,' Doppelhofer explained.

Lack of incentives

He believes that ambiguous communication, which leads to people losing confidence in their political leaders, is one of the key explanations for the crisis we are seeing in Europe today. 'Necessary economic and fiscal policy decisions are getting harder and harder to make because politicians don't want to become unpopular with their electorate. Instead, they choose to cloak the message and fail to tell the people how dismal the country's economy actually is,' says Doppelhofer. He also pointed out that the eurozone


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collaboration has led to the worst affected countries being left with no incentives to remedy the situation. 'Countries like Greece, for example, have seen that the other European countries come to their rescue with financial bailout packages. Many sectors in Greece are still protected from competition with Europe, and a common market has yet to be implemented. Instead of opening its markets, Greece sees it can keep doing what it has always done because help is always at hand no matter what,' explained the professor at the NHH conference.

Have to reach agreement

The solution, according to Doppelhofer, is clearer communication and more action on the part of the politicians. This is necessary if they are to win back voters and thereby put an end to selfdefeating expectations that the

countries can't deal with their problems themselves. 'The way things are now, the different players in the EU countries are all talking at cross purposes. There is no clear idea about what direction to take. The politicians have to dare to tell people the truth about the severity of the crisis. Then, the involved parties have to agree on what is to be done, and act quickly,' says the professor of macroeconomics. According to NHH professor Gernot P Doppelhofer, weak decision-makers and poor communication are fuelling the crisis in Southern Europe.

Look to Sweden and Ireland

He used Sweden as an example, and explained that the Swedish Minister for Finance has dared to take the necessary action to stop the poor economic trend. Combined with a credible framework

for fiscal policy, that gave Sweden more flexibility when the crisis broke, Doppelhofer believes. 'Sweden was able to quickly sort out the problems in its banking sector, which in turn led to greater confidence in their financial markets. Sweden's Riksbank established its credibility at an early stage, and the country can now pursue an aggressive monetary policy that helps to stabilise the economy. In addition, Sweden gains from having a flexible exchange rate in relation to its trading partners, including countries in the eurozone,' explained Doppelhofer. He also pointed out that Ireland was extremely hard hit by the financial crisis, but that it has also managed to turn the situation around. 'The whole Irish banking sector was in crisis. But Ireland made some difficult decisions to tackle the crisis early on.

'Europe is in a situation where one crisis follows another,' says Professor Gernot Peter Doppelhofer.

This is now starting to pay off, and the prospects for Ireland look better than, for example, Greece or Spain,' said Doppelhofer.

Wants to see a banking union

Doppelhofer also pointed out that even closer collaboration within the eurozone may also be an important part of the solution if the members want to continue to have a common currency. He believes that the introduction of a common deposit protection system indicates that the EU is moving towards a fiscal policy union, but this is

controversial in many EU countries. 'As the situation is now, several member states are sceptical about closer collaboration because they want to be able to have full control of their own banks. That is not a good solution if they want to put an end to the crisis, however. If a banking union is established, for example, there will be a common body to supervise the banking sector, and it will also be possible to restructure the banks, if necessary,' Doppelhofer concluded.


NHH Bulletin


Icelandic optimism

No need to worry about Iceland In 2006, Brynjólfur Eyjólfsson, NHH graduate and father of three, went home to Iceland with no worries about the future. A year and a half later, his wife lost her job and his job as a consultant had changed over night. His clients couldn't pay what they owed. Text: Sigrid Folkestad

Photo: Helge Skodvin

'Before the collapse, as consultants we were very involved in developing companies and markets. After the collapse, we were just as strongly involved, but this time in the restructuring process. We helped to build up the companies, but we also helped to downsize them.'

Kaupthing and Landsbanki grew at a dramatic pace. Kaupthing was ranked as the world's fastest growing bank. Iceland was called a financial miracle, and Icelanders had few concerns. Today, Icelanders agree that the bank managers were greedy and the politicians incompetent.

Fish are lining people's pockets

'There is no need to worry about Iceland

We are visiting HB Grandi, one of the biggest fisheries companies in Iceland. Brynjólfur Eyjólfsson takes us up to a canteen with a fantastic view of the ocean. After completing the master's programme in International Business (MIB) at NHH and having worked at Møreforsking in Ålesund, Eyjólfsson and his family went home to Iceland. He was lucky. The economy exceeded all expectations. Iceland was a financial success story. The banks Glitnir,

in a long-term perspective, because the country has plenty of resources, with fish, energy, clean water and oil discoveries in Icelandic waters,' says Binni, as he is also known. The nightclub Sodoma, with its infamous toilets, is located a few hundred metres up from the harbour. There, the male guests can (pardon the expression) piss on pictures of the financial barons who helped to lead Iceland into financial and political chaos. Today, foreign capital is finding its way to Iceland - unlike during the heyday of Iceland's economy, when Icelandic companies bought up everything they could abroad. Fish exports are lining Icelanders' pockets. Iceland is back to basics. On the floor below us, people are processing the fish that arrived earlier in the day. Big halls with freshly

After his MIB studies at NHH and after working for a while in Ålesund, Brynjólfur Eyjólfsson and his family moved home to Iceland in 2006. There have been times when he has regretted that decision. The future looks brighter now, however.


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NHH Bulletin


Icelandic optimism

We had a lot of work before the collapse. An awful lot. But suddenly that changed. Brynjólfur Eyjólfsson

slump, while others didn't believe it would happen. Opinion differed.'

Katrín Tinna Gauksdóttir is a trained journalist, but is currently selling traditional Icelandic jumpers. 'The jumpers have become really popular. Everyone uses them, and people are knitting more than ever. It's about national pride.'

scrubbed counters, running water and machines and fans that make a loud, buzzing sound. One of the trawlers came in earlier in the day. It is now late in the afternoon, and the fish is already on its way out into the world, to Germany, the USA or Asia.

In 2008, his family was doing well in their home country. Their fourth child had just been born, their daughter Sandra. His wife worked as a teacher, and he had a lucrative job as a consultant for a company that was later acquired by PwC.

After his MIB studies at NHH and after working for a while in Ålesund, Brynjólfur Eyjólfsson and his family moved home to Iceland in 2006. There have been times when he has regretted that decision. The future looks brighter now, however. Eyjólfsson recently resigned from his job as a consultant for PwC after having received an offer of employment as a market analyst in the company HB Grandi.

'We had a lot of work before the collapse. An awful lot. But suddenly that changed, and we had a lot less to do.'

'Yes, it was dramatic'

We fetch some coffee and find a fairly quiet spot on a sofa outside the canteen. No one turns up their noses at the smell of fish in the corridors. These are good times for the fisheries industry, and Binni has found a new, attractive job in this field. His job is to search for new markets and find out what consumers want. He is on home ground in that respect, with fisheries studies from Iceland and the MIB programme from the Norwegian School of Economics.


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'Did you find that dramatic?' 'Yes, it was dramatic, and it happened so suddenly. The state took over the three banks. That was surprising, and just a week later, all of the three biggest banks had collapsed. In the space of a few weeks, we went from thinking everything was fine to having to acknowledge the collapse. I was in London when the banks finally fell. The currency collapsed, and suddenly my Icelandic krónur were worth much less abroad. The hamburger I bought in London that day was very expensive.' 'Didn't people worry about what would happen to Iceland's economy?' 'In retrospect, everyone can see that something like that was bound happen. Some people warned against a dramatic

In the years before Binni returned home, the stock exchange in Iceland had risen by 400%. Financial institutions acquired foreign companies on a grand scale. The banks were willing partners and granted enormous loans. Towards the end, the banks had receivables worth nine times Iceland's GDP, but what did the Central Bank of Iceland say? That the bubble wouldn't burst.

Blame each other

Today, they all blame each other: the politicians, the Financial Supervisory Authority, the Central Bank, the former bank managers, the auditors and the public. The liquidated bank Landsbanki recently took the auditors from PwC to court. There are many cases under investigation. Binni worked in PwC's advisory department and later as a marketing manager. 'As consultants, you probably profited from both the boom and the collapse?' 'We grew quickly before the collapse, but not afterwards. Instead, business has declined.' 'When the situation was at its worst, how did it affect your job?' 'We had projects that were halffinished. The customers called and said: "You have to stop now. We can pay you for what you have already done, but no more." So there were huge changes in some projects.' Some of his colleagues were dismissed. 'Everyone knows someone who has lost their job,' he says. His wife had a

The family has managed to find some time to spend together on a Thursday afternoon, in between handball and football practice and training for a marathon. Marías Bergsveinn (9), Eyjólfur (14), Pálína (mother), Bjarki (11), Sandra (3) and Brynjólfur (father).

temporary position as a teacher and lost her job shortly after the collapse.

'Do you understand why so many people moved away from Iceland?'

'We probably managed better than many others, but we certainly felt the effect on our mortgage, among other things. Here, mortgages are indexed, so that the mortgage increases in step with inflation.'

'Absolutely. People were not very optimistic about the future. If you had a good job, you could manage. If I had lost my job, we would have had to move. At the same time, many Icelanders move abroad to pursue an education. If you have lived abroad once, it's easier to do so again.'

Understand people who moved away

Prior to the financial crisis, Iceland experienced very high inflation. As a result, many people took up foreign currency loans at considerably higher risk, but with the banks' blessing. Loans in yens or euros became common. When the Icelandic króna collapsed, the loan amounts increased. Households' loans increased every month. In 2009, the family seriously considered moving back to Norway. 'Things did not look good, and we didn't feel we had a future in Iceland. We talked about returning to Norway, but eventually decided to stay. Many Icelanders have moved to Norway.' According to figures from Statistics Iceland, more than 8,400 people emigrated from Iceland between 2008 and 2011, while in the three golden years before the collapse, 14,200 people migrated to Iceland.

'Many Icelanders have moved back now, especially people who work in the building and construction industry. The collapse had a direct and almost immediate effect on many construction workers. It was relatively easy for them to find jobs in Norway. Things are starting to improve now,' says the NHH graduate, 'so some people are returning.'

The politicians are not taking responsibility

'Has Iceland recovered from the financial and political chaos, in your opinion?' 'People in Iceland do not agree on that either. Icelanders feel that that things haven't been properly sorted out. Many cases have still not been settled. People have not been held accountable. If there was corruption prior to the collapse, as many people believe, the wish for more

transparency is a legitimate one, but we don't see it happening. Things are not more transparent, and not everything is being done above board. Many people are dissatisfied with this and feel that no real changes have been made. The politicians are not taking responsibility.' 'The financial collapse, then the 2010 eruption of Eyjafjallajökull, put Iceland on the map, and served as marketing for Iceland,' says the economist. Icelanders have made good use of this. Big marketing campaigns were initiated while parts of the country were practically buried under ash and people moved away in great numbers. 'The tourist industry was seen as a means of rescuing the country from the crisis. Now we have a lot of tourists,' he says. Many Icelanders have been offered help from people abroad. Their situation received a lot of attention in 2008. Many were worried about their 'little brother' and wanted to help. A few weeks after the collapse, Binni received an e-mail from Norway: 'Do you have enough food? Do you need anything, is there anything we can do?' But, as Brynjólfur Eyjólfsson says: 'There's no need to worry about Iceland.'


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Candidate profile

Full-speed Kulild Two years ago, the Norwegian government appointed Villa Kulild Director General of the Norwegian Agency for Development Cooperation (Norad). She was part of the legendary student cohort that started at NHH in 1983. Text: Sigrid Folkestad Photo: Siv Dolmen

Villa Kulild began her studies at NHH in 1983 together with Helge Lund, Yngve Slyngstad and Amund Djuve, among others. When Dagens NĂŚringsliv interviewed Professor Thore Johnsen about the students that began that year, he said: 'And here's Petter Dragesund. There were many brilliant young people that year. The City of Bergen's Director of Finance, Geir Ove Misje, is here. And Villa Kulild'.

Very involved students

What are your thoughts about your time as a student and your fellow students, and the fact that so many of the people in your year are now in prestigious jobs? Did it ever occur to you that so many of your fellow students would end up with such important roles? 'It was a great time, and a wonderful combination of academic development and challenges, and lots of fun and socialising. Thinking back, this was a group of students that was very involved in all sorts of activities in the student association – everything from UKEN, the NHH Symposium, AIESEC, and corporate events to the Economic Winter Games. As far as I can remember, we didn't talk about career plans and job opportunities until the end of our fourth year.' It was the year that Kulild met her husband, the Petter Dragesund mentioned above. She went straight from NHH to the Ministry of Petroleum and Energy, where she started as an executive officer and ended up as acting Secretary General, the most senior civil servant in a ministry. In 2010, she was appointed Director General of Norad,


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after a year as Assistant Director.

The civil service and politicians

It is Friday morning in Norad. Kulild asks us to sit at the meeting table in her corner office in Vika. She has had a busy week. 'I can unwind a bit now,' she says. Her days have been packed with visits, meetings and events. There have been a lot of preparations and a lot to fit in, for example a meeting with the Executive Director of the UN's World Food Programme. She has had meetings with three ministers from Zambia who want to cooperate with Norway on natural resource management and taxation. 'Zambia has one of the biggest copper industries in the world, but ends up with just 1 to 3% of the profits. They do not receive much development assistance from Norway. The country should be rich because of its copper deposits, but it is actually very poor. The natural resources in poor countries must become a blessing, not a curse, as is often the case.' You have had a hectic week? 'And a very interesting one. Yesterday, I gave a talk to civil servants under the auspices of Partnerforum, where Fredrik Sejersted, Professor of EU law, also participated. We discussed the relationship between the civil service and politicians, loyalty and having a professionally independent role in this field.' You are not a member of the Labour Party?

'I am not a member of any political party. I have worked for many ministers in my time, and I don't think any of them know how I vote. It has been important to me to be a loyal civil servant with great professional integrity who can serve as a sounding board for politicians .' When Erik Solheim introduced you as the new Director General of Norad, he described you as a strong leader. Do you agree with that description? 'Erik Solheim knew me from the Ministry of Petroleum and Energy. Naturally, the Ministry of the Environment and the Ministry of Petroleum and Energy deal with many overlapping issues. I think he meant that I have a strong professional profile because we have had many good, but heated, discussions on a number of issues.' So you don't think he meant that you are a strong leader type? 'When you work for a ministry or a directorate, it is essential to have a strong capacity for professional leadership. You have to have that. But a strong leader? That can mean the ability to get things done and to make decisions. In that sense, I can agree with the description.'

A hard decision

When you left the job of Secretary General of the Ministry of Petroleum and Energy in 2008 following a news story about your private investments, it was found that there was no violation of insider trading rules, impartiality or internal regulations in the ministry. 'I knew that.'


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Candidate profile You didn't have to resign? 'No, but I'm absolutely sure that it was the right decision. I was not willing to face a barrage of publicity that might last for weeks. I made the decision mainly because of my children. I have enough experience to know what the press can do to politicians.' What do you think about the press now? 'There's a big difference between being the head of an agency and working for a ministry. Having a press contact is now a natural part of my job.'

Norad for economists

By maintaining a high profile as the Director General of Norad, Kulild also wants to show today's NHH students that there are job opportunities in the field of development assistance and in the directorate. 'I want to inspire them to consider the field of development and aid. A background in economics is relevant if you work for Norad. Economics can be crucial in relation to understanding what it's all about. You have to know about capital flows, financial markets and the financing of the public sector, and, in general, you have to understand the social contract that is involved in paying taxes and claiming benefits as a member of society. All these aspects of aid are important dimensions that are ultimately about the distribution of resources in a society. That's why this career path is a relevant choice for business graduates,' says Kulild. In 1987, at the tender age of 23, Kulild started working for the Ministry of Petroleum and Energy. She was interviewed for two different jobs, for Orkla Finans and the Ministry. Was that a dilemma? 'I was only 23, and didn't put too much effort into analysing my future, but I moved to Oslo. I had to do that much, I thought, but I didn't have a master plan.'

Climbing the ladder

The Norad Director did not have a career strategy, but she must have done something right. She started working as an executive officer, but quickly climbed


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the ladder and became a Principal Officer, Assistant Director, and Director before she was appointed Secretary General. So you didn't have a plan, but what did you want to get from the job? 'For me, working on issues that involved a broad perspective was the most important thing. I had a background in international economics from NHH and wanted to work on what I thought was interesting and important from a socioeconomic perspective. Working in a field that encompasses both economics and politics has been very rewarding.' How much would you say that you have worked? 'I have worked a lot. People who know me would probably agree with that. I don't understand why we should be so afraid of working hard. What's wrong with working a lot? Isn't that a good thing? I like working and I like my job. You can fit a lot into a lifetime, so I hope we can move away from this notion of having to choose between having a career and having a family.'

Sky high

Kulild lived in Washington for two years. 'When I look around me, I can see that Norwegian women are incredibly privileged. We can have it all. The Princeton professor who recently said that "you can't have it all" dismissed the whole gender equality debate. I believe Norwegian women can actually have it all,' says this mother of three. What matters, she says, is having kindergartens and a system that promotes combining family and a career. 'I see that the system works. There's no difference between the women and men Norad recruits. They split parental leave and they spend just as much time at home if their children are ill. Women also have their children in a limited period and don't have more children later on,' Kulild says. Where are you happiest? 'I like being above the tree line. I like

PhD degrees 2012

open skies,' Kulild smiles, and adds:

Investment and managerial incentives

'I'm not joking, I really do feel happiest when I'm in the mountains. So there are really too many trees in Oslo for my liking,' Kulild says with an impeccable Bergen accent. The city of the seven mountains is still her home town. In the football context, she definitely supports Brann rather than Vålerenga.

On Friday 20 January 2012 Cathrine Kleppestø defended her thesis Investment, voluntary disclosure, and managerial incentives for the PhD degree at NHH.

So when Friday afternoon comes around, you head for the mountains? 'Not often enough. But as often as I can.' And Sundays, do you work or go walking? ‘I'm smart when it comes to work. I work when I can, and I work intensively when I have to. If I don't have to, I take breaks. I'm not extreme, but I do work a lot from home. When the children are doing their homework, I read documents or reply to emails. I'm efficient. You learn how to work efficiently. You have to.'

Full-speed Kulild

What else do you have time for? Do you read? 'I read all the time. Many books at the same time. Both non-fiction and fiction.' But I'm guessing you're not a member of a book discussion group? 'No, I don't have time.' You're very hands-on? 'Yes, I am,' she says. 'I finish everything I do very quickly. I don't spend more time than necessary on anything. That wouldn't work.' Because you would end up working around the clock? 'Exactly. It wouldn't work. I'm working in an ambitious political area, and Norad has a key position in Norwegian development assistance policy. It is a very wide field involving big and complex issues, and we provide much of the basis for the policy in the field.' So ideally, you would like others to work as fast as you do? 'I understand that there are other ways of doing things. If you don't, you can't be a leader.'

The topic of the thesis is performance measurement for managers. A manager of a company will typically make many types of decisions; short-term operating decisions and long-term investment decisions, as well as reporting decisions. The thesis focuses on how these decisions influence each other, and in particular how the manager’s reporting decision influences his investment incentives.

Kleppestø analyzes this in a theoretical principal-agent model where a manager can choose to withhold information (voluntary disclosure), but cannot manipulate the content of the report if he discloses. The manager will choose to hide bad outcomes and disclose good outcomes. This protects him from downside risk, but the voluntary disclosure decision also changes his investment incentives. The thesis shows in more detail how the manager’s voluntary disclosure decision influences the investment incentives.

Kleppestø then relates this model to accounting principles, more specifically the use of cash-based versus accrual accounting. When stock price is used as a performance measure, this resembles a fair value accrual, and the thesis shows how accrual accounting creates better long-term investment incentives for the manager than cash accounting.

The thesis shows that owners, if they can choose, may prefer letting the manager decide whether to disclose his information (voluntary disclosure) compared to full disclosure, where the information is always released. In a numerical example, Kleppestø shows how voluntary disclosure can provide more effective investment incentives than full disclosure.

The thesis contributes to the understanding of performance pay. The thesis shows that a manager’s investment incentives and reporting incentives influence each other. This should be taken into account when owners offer the manager an incentive contract. SUPERVISING COMMITTEE: Professor Frøystein Gjesdal, NHH, principal supervisor Professor Trond Olsen, NHH Professor John Christensen, University of Southern Denmark

Fisheries Management On Friday 31 August 2012 Diwakar Poudel defended his thesis Stochastic Analysis in Fisheries Management for the PhD degree at NHH. Ocean fishery constitutes an important part of the food resource and therefore its sustainable management is crucial for livelihood and food security for millions of people worldwide.

Although summits like the one in Rio 1992 and in

Johannesburg 2002 emphasized the need for sustainable management, several fisheries have collapsed in the recent decades due to mismanagement, particularly in the form of excessive harvesting and ignorance of uncertainty in the fish growth.

A sustainable management of marine resource needs an ecosystem based approach, which is a holistic approach for maintaining ecosystem quality and sustaining benefits. The Norwegian government aims to have an ecosystem based approach to fisheries management in order to secure a sustainable harvest. This thesis contributes to this kind of management through development of best management models that aims to maximize value of fishery while taking into account the needs of future generations.

The study particularly focuses on the Barents Sea ecosystem, one of the largest sources of food protein in Norway today and in the future.

The thesis consists of four different thematic papers that analyze various types of uncertainty in fisheries management: fish stock collapse, investment in fisheries, pricing and interactions among different species. It suggests precautionary catch under uncertainty in fish growths and development, fishing investments and economic aspects. It highlights that the risk of collapse of fisheries is high when its stock is small and fishing environment uncertain. Higher uncertainty leads to high risk of collapse. The study also finds that predator-prey interaction among the fish species should be taken into consideration for the long term sustainable optimal management of the fishery. In particular, low value prey species should be conserved for high value predators to increase the profit from the fishing industry. Diawakar Poudel (b. 1970) is from Kapilvastu in Nepal. He has his education from Tribhuvan University, Nepal, University of Life Sciences (UMB) and the University of Oslo. He has been a PhD student at the Department of Finance and Management Science, NHH.

SUPERVISORS: Professor Leif K. Sandal, NHH (principal supervisor) Professor Stein Ivar Steinshamn, NHH

integrates the roundwood SC with the forest biomass SC in an optimization model and studies the impact of the integration on market prices for raw materials. Paper II extends the work by developing a new method that synchronously chooses harvest areas and determines the market prices. Paper III studies the intra-organizational coordination between strategic forest management and tactical industrial production, whereas Paper IV investigates the cross-functional coordination in an oil refinery. Sophisticated methods are proposed to define the appropriate internal prices as coordination mechanism. All the problems are multicommodity flow problems, formulated as either mixed integer programming or quadratic programming models, involving SC activities such as procurement, production, distribution and sales. All the models developed take into account the dynamic relationship between prices and volumes, either on the supply side or on the demand side. Furthermore, they consider divergent supply chains which are known to be very hard to plan and coordinate. These assumptions provide a better understanding of how the price behavior will influence the flows in the entire supply chains. The case studies are based on industrial instances. The first two papers are based on a collaboration with the Forestry Research Institute of Sweden and use data from one of its member companies. The third is based on a Chilean forest company and the fourth paper is written within the context of a Norwegian refinery. The thesis is a good example of the applications of operations research and mathematical programming to analyze, model and solve real-life problems.

SUPERVISING COMMITTEE: Professor, Mikael Rönnqvist, NHH, principal supervisor Dr, Jens Bengtsson, NHH/UMB, Norway Professor, Sophie D’Amours, Université Laval, Québec, Canada

The economics of wind power On Monday 14 May 2012 Johannes Mauritzen defended his thesis Windonomics: empirical essays on the economics of wind power in the Nordic electricity market for the PhD degree at NHH.

Forestry and petroleum industries On Friday 14 December 2012 Jiehong Kong defended her thesis Integration and coordination of supply chain: Case studies in the forestry and petroleum industries for the PhD degree at NHH. The scope of this thesis is modeling large-scale planning problems in the divergent supply chains within forestry and petroleum industries. The objective is to improve the integration between several supply chains and to improve the coordination of decoupled units within a supply chain. The methodology is based on operations research and realworld case studies. Four research papers are included. The first two papers concentrate on the integration of two separate supply chains (SC) in the initial stage of the overall forestry supply chains while the other two papers focus on coordination issues using the notion of internal/transfer pricing. More specifically, Paper I


Wind power is becoming a major source of electricity generation around the world. Integrating large amounts of wind power in a market based electricity system where prices are set based on supply and demand can however introduce challenges since wind power cannot be scheduled like traditional electricity

Most studies that are based on simulation have predicted that large amounts of wind power will increase price variation in electricity markets. Using data from Denmark and the Nordic electricity market, I however show that in the short run, wind power has the effect of reducing daily price variation. I also show that Denmark is dependent on the hydro power of its Nordic neighbors as a backup and storage for its wind power. I find that as much as 40% of wind power is exported and stored in the form of water in Norwegian hydro power magazines. I also find that wind power has a slight but statistically significant negative effect on prices in Norway, likely due to a slackening of hydro power producers supply constraints.


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PhD degrees 2011 In Denmark, government policy and subsidies have played a dominant role in the development of wind power. As the wind power industry matured, the government introduced policies meant to encourage the scrapping of older, poorly placed turbines to make way for newer turbines. Using duration models, I find that while the policies were undoubtedly successful in encouraging the scrapping of old turbines, they tended to have a higher effect on scrapping turbines located on land with good wind conditions. This can be explained by noting an interaction with an opportunity cost that comes from scarce land resources and a high rate of technological change.

SUPERVISING COMMITTEE: Professor Jonas Andersson, NHH Norwegian School of Economics, principal supervisor Professor Jarle Møen, NHH Professor Gunnar Eskeland, NHH Assistant Professor Harrison Fell, Colorado School of Mines

Financial Intermediation On Wednesday 6 June Ove Rein Hetland defended his thesis Essays on Financial Intermediation for the PhD degree at NHH. The thesis studies bank lending to small- and medium sized firms, which is a topic that has been given increased attention following the recent financial crisis. In one of the four thesis papers, we use a survey of Norwegian firms that asks questions about how the firms were affected by the financial crisis of 2008-9, and combine this with information about the firms' financial- and bank accounts. The primary finding is that investments of ex ante financially unconstrained firms are more affected by exogenous changes in credit availability than investments of financially constrained firms. The results question the conventional wisdom that changes in financial constraints during a crisis are monotonically increasing in the level of financial constraints. Our results suggest that the correlation between credit availability and firm investments of the most financially constrained firms may not capture the full dynamics of how the credit channel influences the business cycle. In another paper, we benefit from a detailed data set with all Norwegian firms' bank accounts and financial statements. We ask two questions: (1) Do bank lending decisions to small and medium-sized firms provide information about these firms' future financial performance? (2) Does this predictability vary across different stages of the credit cycle? We find that the answer to both questions is yes. Competing 'outsider' banks lend to firms who subsequently perform worse than other borrowers, and the relationship is primarily present in the expansionary stages of the credit cycle. This is consistent with theories where a firm's current bank lender has private information about its borrowers, while 'outsider' banks face a "winner's curse" when approached by new loan applicants. The finding that this primarily occurs in credit cycle expansions is consistent with theories predicting that banks reduce screening of new borrowers in these periods, leading to lower average credit quality of borrowers when growth in aggregate credit is high.

Ove Rein Hetland (b. 1979) from Sandnes has been a PhD student at the Department of Finance and


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Management Science, NHH. He now works for Ernst & Young.

SUPERVISING COMMITTEE: Associate Professor Jørgen Haug, NHH (principal supervisor) Bent Vale, Norges Bank

Transaction cost economics On Friday 14 December 2012 Roar Jakobsen defended his thesis Public sector service contracting. Transaction cost economics and institutional theory considerations for the PhD degree at NHH. The topic of the thesis is service procurement in the public sector. Jakobsen has examined contracts related to such procurements, in particular how these are followed up by the parties after the contract is signed.

Jakobsen seeks to contribute to the existing research on interorganizational relationships, by testing transaction cost economics predictions in a public procurement context and by adding elements of institutional theory into that framework. He therefore develops a model of relationship governance that highlights efficiency concerns as well as legitimacy concerns.

Building on institutional theory, Jakobsen develops bureaucratic pressure as a new construct for understanding public sector contracting. He argues that such external pressure give rise to formal contract detailing in this context. The hypotheses were empirically tested on a sample of 310 public sector service purchasing relationships in Norway, Sweden and Denmark. The results yielded mixed support to the hypotheses.

As expected, supplier-held investments motivate formal contracting. Similarly, positive interaction effects were found between formal contracts and supplier-held investments on performance. Thus, central hypotheses outlined from transaction cost economics are supported in this context.

However, transaction cost reasoning does not appear to matter on buyer-held investments. No interaction effects were found, yet the analysis showed direct performance effects of such buyer held investments. Jakobsen finds this result interesting, particularly because buyers are represented by government agencies in this study.

Relational norms were also proposed to strengthen the positive relationships between asset specificity and performance outcomes. However, such results were not found. On the contrary, relational norms were found to have a considerable general impact on relationship performance.

As expected, bureaucratic pressure seem to give rise to formal contract detailing. Thus, this study complements previous research that has described the legitimating role of formalization in other areas of administration behavior. Theoretical and managerial implications are drawn in Jakobsen’s thesis. SUPERVISING COMMITTEE: Professor Sven A. Haugland, NHH, principal supervisor Professor Arne Nygaard, BI

Horizontal psychological contracts On Friday 30 November 2012 Therese E. Sverdrup defended her thesis The strength of reciprocity: Exploring horizontal psychological contracts in work groups for the PhD degree at NHH. Employees spend more time with other co-workers than with anyone else at work. However, co-worker relationships have received much less attention in the literature than the hierarchical relationship between an employer and an employee. The purpose of this thesis is to develop a horizontal psychological contract (HPC) perspective that can help inform coworker relationships in organisations and work groups.

In the dissertation Sverdrup explores how psychological contracts between team members can explain why some teams function better than others. The psychological contract concerns the reciprocal obligations and expectations that often are not talked about, but nonetheless influence how we think and act toward each other. In the dissertation Sverdrup develops an understanding for what is typically included in a psychological contract between team members, and further which psychological contract types that influence cooperation, coordination, commitment, team-viability, and performance. The teams that cooperate better, are less dependent on their leader for coordination, are more committed, have higher team-viability, and perform better have developed contracts that are both relational- and task-oriented, flexible, strong, and more explicit compared to the less functional teams. The studies in the dissertation are among the first to provide empirical evidence in support of an HPC perspective. They also show that new insights into group functioning can be gleaned by applying an HPC perspective. Implications for theory and practice are discussed, and avenues for future research are presented. Therese E. Sverdrup (b. 1974) is from Bergen. She received the cand. polit. degree in psychology from NTNU in 1999. Sverdrup has been a PhD student at NHH’s Department of Strategy and management.

SUPERVISING COMMITTEE: Professor William Brochs-Haukedal, NHH, principal supervisor Professor Inger Stensaker, NHH

Management accounting innovations On Tuesday 27 November 2012 Tor-Eirik Olsen defended his thesis Diffusion and adoption of management accounting innovations in the public sector – The case of Norwegian health entities and institutions within higher education for the PhD degree at NHH. The dissertation is centered on the adoption and diffusion of management accounting innovations in Norwegian health entities and institutions within higher education. This includes how and why management accounting innovations are adopted and used in different industries within the public sector. It

also emphasizes the relevance of the critique of contemporary management accounting practices, with a specific focus on Beyond Budgeting.

The public sector can be characterized as being in a state of transition, attributable to the ideas inherent to New Public Management. Thus, the changing nature of the public sector is the starting point for this dissertation. However, traditionally, research on adoption and diffusion has been centered on the private sector leaving aside the importance and applicability of these issues in a public sector setting. Consequently, this thesis questions the private sector bias as it demonstrates that these questions and problems are equally valid and important to address in a public sector setting. In this respect, one prominent example is that health entities and institutions within higher education have a similar view on the critique against budgeting as private banks, an industry that from the outset potentially could benefit from abandoning budgets. Findings show that several factors influence on the use of management accounting innovations. As such, it is interesting to note that CFO characteristics also can help explain the extent to which organizations use the different innovative management accounting tools included in this dissertation. Overall, this dissertation has made adoption and diffusion topical in a public sector setting by providing evidence on the usefulness and importance of addressing these types of questions. Moreover, this has implications for how the management of public sector entities can be understood and has thus helped highlight emerging issues that should be devoted more attention in future research. One example worth mentioning is how different regulatory bodies can be barriers and driving forces in the diffusion processes of management accounting innovations.

The dissertation review previous work on setting prices for the day-ahead electricity market in a power pool auction. In addition, an alternative pricing mechanism is proposed. This mechanism employs a Semi-Lagrangian relaxation technique. This technique provides a price that can be applied in the electricity pool markets. In this type of markets a central system operator decides who produces and how much they should produce.

The proposed pricing approach not only accommodates the non-convexities that the electricity market has, but also provides a price for the day-ahead electricity. At this price, the demand is fulfilled at minimum cost and all generators are covering their fixed costs. The technique is applied to a model without networks constraint, with network constraints and also to obtain capacity prices. Veronica Araoz Castillo (f.1978) was born in Mexico City. She graduated as an accountant from ITAM in Mexico in 1999. In 2005, she received the MSc in Management Science with honours from the University of Southampton in the UK. She has been a PhD student at the Department of Finance and Management Science, NHH.

SUPERVISING COMMITTEE: Professor Kurt Jörnsten, NHH (principal supervisor) Professor Kenneth Fjell, NHH

Fisheries economics and biology On Friday 9 November 2012 Xiaozi Liu defended her thesis Essays on economic optimization: bridging fisheries economics and fisheries biology for the PhD degree at NHH.

SUPERVISING COMMITTEE: Professor Trond Bjørnenak, NHH, principal supervisor Associate professor Kari Nyland, HiST Professor Lars Fallan, HiST

Pricing in Non-Convex Electricity Markets On Wednesday 30 May 2012 Veronica Araoz defended her thesis Pricing in Non-Convex Electricity Markets for the PhD degree at NHH. Deregulation of the electricity markets has brought several interesting topics to the research agenda. Switching from a monopoly based industry to the free market industry has not been straight forward. The competitive segments of the deregulated electricity markets, the wholesale market and the retail market, have evolved in different ways across the globe, and consequently there are different market designs and different pricing mechanisms. In a competitive market, the price is given by the intersection of supply and demand. However, electricity treated as a commodity, open to the market forces, has several characteristics that do not fit into the classic economic model where prices are set by the intersection of supply and demand. This is due to non-convexities. This can be a challenge for the price discovery process, since the supply and demand curves may not intersect; or if they intersect, the price found may not be high enough to cover the total cost of production.


Ocean temperatures are rising due to climate change, e.g., mean annual surface temperatures in the North Sea are predicted to increase by 1.0--2.5°C by 2050. This has a range of impacts, one of which is fish stocks moving northwards. For example, in 2012 northeast Arctic cod was recorded further north than ever

Almost all fish stocks that are commercially important in Norway are currently shared based on semipermanent agreements, which typically assume a static fish distribution. The changing stock distribution may lead to a breach of existing agreements, hence imposes risks of stock depletion.

This thesis composes of four papers on fisheries economics. Liu first elaborates on the strategic behaviours under dynamic stock distribution. This theoretical study suggests that the distributional shift changes the most prominent feature of a noncooperative harvesting game under static distribution, namely that the major player is more conservation oriented than the minor player.

The thesis proceeds with an empirical study focusing on the distribution-dependent sharing rule. The finding confirms that a minor owner behaves more responsibly in a dynamic environment. Unit effort cost is a key parameter in determining how the joint benefits should be allocated, and the degree of cost asymmetry affects positively the stability of the grand coalition.

The other topic this thesis tackles is about the problem of managing multiple species. Effort regulation has been advocated for being more effective than catch quota in managing mixed-species fisheries. By studying the interactions among fishers, fish and the market, Liu concludes that effort regulation alone is not sufficient to save less abundant species.

All papers in the thesis emphasize the importance of spatial heterogeneity; that is accounting for fish schooling behaviours and variation of fish density in different zones. This has enabled the thesis to bring more biological realism into economic decision model.

Xiaozi Liu (b. 1973) is from Zhejiang in China. She has her education from Sun Yat-sen University, China and Lund University, Sweden. She has been a PhD student at The Department of Finance and Management Science, NHH.

SUPERVISING COMMITTEE: Professor, Leif Kristoffer Sandal, NHH (principal supervisor) Professor Stein Ivar Steinshamn, NHH Professor Gunnar Eskeland, NHH

Credit Rationing On Friday 7 September 2012 Xunhua Su defended his thesis Credit Rationing: Theory and Evidence for the PhD degree at NHH. In a perfect market, price equalizes supply and demand at equilibrium. As long as a buyer pays the market price, she can get as much of the good as she wants. The credit market seems not to fit such a model. Some borrowers cannot get the loan they need by increasing the interest rate or the loan price. To get the loan, they have to accept constraints on non-price instruments, e.g. collateral. This phenomenon is called non-price credit rationing, a prevalent phenomenon in practice.

The thesis includes three papers. The first paper reexamines the Stiglitz and Weiss (1981) credit-rationing model, one of the most influential papers in the literature. The second paper, in a unified framework, illustrates how credit rationing can occur due to various agency problems, including risk shifting, money diversion, costly state verification, hidden effort, etc. The third paper provides a new explanation for credit rationing. It is argued that credit rationing is a way to maintain the borrower’s flexibility to prepay freely. Given that prepayments are penalty-free as widely observed in practice, good borrowers will refinance their loans, leaving only bad borrowers in the borrower pool. This “reclassification effect” over time makes it impossible for the lender to recoup her investment by changing only the interest rate, resulting in non-price credit rationing. To mitigate prepayment risk, the lender resorts to nonprice instruments, e.g. collateral or lump-sum fees. The paper predicts that more collateral and/or higher upfront fees are required for borrowers with higher risk and lower refinancing costs. Empirical evidence from a sample of 64,555 term loans to U.S. firms between 1987 and 2011 supports the model predictions.

Xunhua Su (b. 1974) is from Rizhao in China and has his education from the University of Science and Technology of China and BI Norwegian Business School. He has been a PhD student at NHH’s Department of Finance and Management Science.

SUPERVISING COMMITTEE: Professor, Karin Thorburn, NHH, principal supervisor Professor, Trond Olsen, NHH Professor, B. Espen Eckbo, Tuck School of Business at Dartmouth 2012

NHH Bulletin



NHH Publications Jörnsten, K., S. L. Nonås, L. K. Sandal, and J. Ubøe

Transfer of risk in the newsvendor model with discrete demand, OMEGA 2012

Bienz, Carsten Gero; Hirsch, Julia. The Dynamics of Venture Capital Contracts. Review of Finance 2012;Volum 16

Andersson, Jonas og Ubøe, Jan Some aspects of random utility, extreme value theory and multinomial logit models. Stochastics: An International Journal of Probability and Stochastic Processes 2012

Bivand, Roger. After "Raising the Bar'': applied maximum likelihood estimation of families of models in spatial econometrics.. Estadística Española 2012;Volum 54

Bienz, Carsten og Hirsch, Julia The Dynamics of Venture Capital Contracts. Review of Finance 2012

Bivand, Roger; Brunstad, Rolf Jens. Agricultural support as a Pigouvian subsidy for landscape amenity benefits: revisiting European regional convergence.. International Journal of Foresight and Innovation Policy 2012

Aase, Knut K., Bjuland, Terje. Øksendal, Bernt Strategic insider trading equilibrium: a filter theory approach. Review of Finance Miguéis, Vera, Camanho, Ana,Bjørndal Endre, Bjørndal, Mette: Productivity change and innovation in Norwegian electricity distribution companies. Journal of the Operational Research Society Eskeland, Gunnar S., Rive, Nathan A., Mideksa, Torben K. Europe’s climate goals and the electricity sector. Energy Policy Anderson, Simon P., Foros, Øystein, Kind, Hans J., Peitz, Martin Media market concentration, advertising levels, and ad prices. International Journal of Industrial Organization.

Kong, Jiehong; Rönnqvist, Mikael; Frisk, Mikael. Modeling an integrated market for sawlogs, pulpwood, and forest bioenergy. Canadian Journal of Forest Research 2012 ;Volum 42 Kristiansen, Marita. Financial jargon in a general newspaper corpus.I: Exploring Newspaper Language. Using the web to create and investigate a large corpus of modern Norwegian. John Benjamins Publishing Company 2012 Kunze, Astrid; Troske, Kenneth R.. Life-cycle patterns in male/female differences in job search. Labour Economics 2012; Volum 19

Bravo, Rafael; Hem, Leif Egil; Pina, Jose M. From Online to Offline Through Brand Exentensions and Alliances. International Journal of E-Business Research 2012;Volum 8.

Kvaløy, Ola; Olsen, Trond E.. The Rise of Individual Performance Pay. Journal of Economics and Management Strategy 2012;Volum 21

Brekke, Kurt; Cellini, Roberto; Siciliani, Luigi; Straume, Odd Rune. Competition in Regulated Markets with Sluggish Beliefs about Quality. Journal of Economics and Management Strategy 2012;Volum 21

Machin, Stephen; Salvanes, Kjell Gunnar; Pelkonen, Panu. Education and Mobility. Journal of the European Economic Association 2012;Volum 10

Denstadli, Jon Martin; Lines, Rune; Ortuzar, Juande Dios. Information processing in choice-based conjoint experiments A process-tracing study. European Journal of Marketing 2012;Volum 46

Maroto, Jose M.; Moran, Manuel; Sandal, Leif Kristoffer; Steinshamn, Stein Ivar. Potential Collapse in Fisheries with Increasing Returns and Stock-dependent Costs. Marine Resource Economics 2012;Volum 27

Duran, Guillermo, Guajardo, Mario, Wolf-Yadlin, Rodrigo Operations Research Techniques for Scheduling Chile's Second Division Soccer League. Interfaces (Paris)

Fløttum, Kjersti; Dahl, Trine. Different contexts, different ‘stories’? A linguistic comparison of two development reports on climate change. Language & Communication 2012

McArthur, David Philip; Thorsen, Inge; Ubøe, Jan. Labour market effects in assessing the costs and benefits of road pricing. Transportation Research Part A: Policy and Practice 2012;Volum 46

Jörnsten, Kurt, Nonås, Sigrid Lise, Sandal, Leif K., Ubøe, Jan Transfer of risk in the newsvendor model with discrete demand. OMEGA

Foss, Nicolai Juul; Klein, Peter. Organizing Entrepreneurial Judgment. Cambridge University Press 2012

Molnar, Peter. Properties of range-based volatility estimators. International Review of Financial Analysis 2012

Gooderham, Paul N. The Transition from a Multi-domestic Enterprise in an Industry where Local taste Matters.. European Journal of International Management 2012

Norman, Victor Danielsen. A future for Nordic Shipping? I:Global shipping in small nations. Nordic experiences after 1960. Palgrave Macmillan 2012

Foros, Øystein, Kind, Hans J., Schjelderup, Guttorm Ad Pricing by Multi-Channel Platforms: How to Make Viewers and Advertisers Prefer the Same Channel?. Journal of Media Economics

Luigi Siciliani, and Odd Rune Straume "Quality competition with profit constraints". Journal of Economic Behavior & Organization, Vol. 84 Almås, Ingvild. International Income Inequality: Measuring PPP Bias by Estimating Engel Curves for Food. The American Economic Review 2012 ;Volum 102 Almås, Ingvild; Mogstad, Magne. Older or Wealthier? The Impact of Age Adjustment on Wealth Inequality.. The Scandinavian Journal of Economics 2012 ;Volum 114 Andersen, Gisle. A corpus-based study of the adaption of English import words in Norwegian. I: Exploring Newspaper Language. Using the web to create and investigate a large corpus of modern Norwegian.. John Benjamins Publishing Company 2012 Anderson, Simon P.; Foros, Øystein; Kind, Hans Jarle; peitz, martin. Media market concentration, advertising levels, and ad prices. International Journal of Industrial Organization 2012 Andersson, Jonas; Ubøe, Jan. Some aspects of random utility, extreme value theory and multinomial logit models. Stochastics: An International Journal of Probablitiy and Stochastic Processes 2012;Volum 84 Asheim, Geir Bjarne; Mitra, Tapan; Tungodden, Bertil. Sustainable recursive social welfare functions. Economic Theory 2012;Volum 49 Audy, Jean-François; D'Amours, Sophie; Rönnqvist, Mikael. An empirical study on coalition formation and cost/savings allocation. International Journal of Production Economics 2012;Volum 136


Bjorvatn, Kjetil; Coniglio, Nicola D.. Big push or big failure? On the effectiveness of industrialization policies for economic development. Journal of the Japanese and international economies (Print) 2012; Volum 26

Jørnsten, Kurt; Nonås, Sigrid Lise; Sandal, Leif Kristoffer; Ubøe, Jan. Transfer of risk in the newsvendor model with discrete demand. Omega : The International Journal of Management Science 2012;Volum 40

NHH Bulletin


Grytten, Ola Honningdal; Hunnes, Arngrim. A Long Term View on the Short Term Comovement of Output and Prices in a Small Open Economy. International Journal of Economics and Finance 2012;Volum 4 Harlaftis, Gelina; Tenold, Stig; Valdaliso, Jesus M. Epilogue: A Key Industry or an Invisible Industry?. I: The World's Key Industry - History and Economics of International Shipping. Palgrave Macmillan 2012 Hennestad, Bjørn Wessel; Grønhaug, Kjell; Kolltveit, Bjørn Johs.. The board: a change agent?. Baltic Journal of Management 2012 Hægeland, Torbjørn; Raaum, Oddbjørn; Salvanes, Kjell Gunnar. Pennies from heaven? Using exogenous tax variation to identify effects of school resources on pupil achievement.. Economics of Education Review 2012 Iden, Jon. Investigating process management in firms with quality systems: a multi-case study.. Business Process Management Journal 2012;Volum 18 Iden, Jon; Methlie, Leif B.. The drivers of services on next-generation networks. Telematics and informatics 2012; Volum 49 Iden, Jon; Tessem, Bjørnar; Päivärinta, Tero. IS development/IT operations alignment in system development projects: a multi-method research. International Journal of Business Information Systems 2012;Volum 11

Rector Jan I Haaland

Dean, Bachelor Programme Board Kjetil Bjorvatn

Deputy Rector Gunnar E Christensen

Dean, Master Programme Board Kenneth Fjell

Vice Rector Mette H Bjørndal

Dean, Doctoral Programme Board Helge Thorbjørnsen

Managing Director Ole Hope

Dean, Executive Education Programme Board William Brochs-Haukedal

Assistant Director Kurt Petersen

Office of student and academic affairs

Office of Communications Acting director of communication Kristin B. Risvand Mo +47 915 99 661 Adress: Norges Handelshøyskole NHH, Helleveien 30, 5045 Bergen Phone: +47 55 95 90 00 Web site:

Pebesma, Edzer; Nüst, Daniel; Bivand, Roger. The R Software Environment in Reproducible Geoscientific Research. EOS: Transactions 2012;Volum 93 Rönnqvist, Mikael. OR challenges and experiences from solving industrial applications. International Transactions in Operational Research 2012 Sandmo, Agnar. An evasive topic: theorizing about the hidden economy. International Tax and Public Finance 2012 Schindler, Dirk Steffen; Schjelderup, Guttorm. Debt shifting and ownership structure. European Economic Review 2012;Volum 56 Simonnæs, Ingrid. Rechtskommunikation national und international im Spannungsfeld von Hermeneutik, Kognition und Pragmatik. Frank & Timme 2012 Stensaker, Inger G.; Meyer, Christine B.. Change Experience and Employee Reactions: Developing capabilities for change.. Personnel review 2012 Strandenes, Siri P.. Maritime Freight Markets. I: Blackwell Companion to Maritime Economics. Blackwell Publishing 2012 Svendsen, Bjørn; Myhr, Kjell-Morten; Nyland, Harald Inge; Aarseth, Jan Harald. The cost of multiple sclerosis in Norway. European Journal of Health Economics 2012; Volum 13

Still well placed in the 2012 Financial Times' ranking: NHH comes in 44th place among the 80 best business schools in Europe, the same as last year. NHH/AFF's open programmes come in 17th place in Europe in the ranking of Executive Education open programmes - its highest ever ranking. Photo: Hallvard Lyssand

NHH Bulletin Acting director of Office of Communications: Kristin B. Risvand Mo (NHH) Editor: Sigrid Folkestad (NHH)

Published by: NHH Front Page: Ill. Willy Skramstad

Design: Reine Linjer Translation: Douglas Ferguson, Allegro AS


Adress: NHH, Helleveien 30, 5045 Bergen

Jan I Haaland, Rector of NHH, inspects the new building: Work started summer 2011 on a new, 13,000 m2 building, adjacent to the main NHH building. The building is due to open in spring 2013 and will replace rented capacity in a neighbouring building. It will bring all NHH staff and students together in one place, along with the sister organisations AFF and SNF.By gathering all research and teaching activities in one campus location, NHH aims to promote cross-disciplinary cooperation and create a more stimulating, attractive and compact environment for faculty, staff and students. Photo: Helge Skodvin

NHH Norwegian School of Economics was founded in 1936. With its affiliated institutes SNF and AFF, NHH constitutes the oldest and largest centre for research and study in the fields of economics and business administration in Norway. NHH strives to be among the foremost in Europe within its fields, maintaining its long held belief that excellence in research is a prerequisite for excellence in teaching. The school has over 3000 students and around 400 employees. The vast majority of the academic staff holds PhDs, and the faculty includes NHH Alumnus and Nobel Prize

Laureate in Economics, Professor Finn E Kydland. NHH and its faculty member have always had a strong international orientation, with a large number of our faculty member having obtained their PhDs from North American or European universities, and several of our professors are internationally recognised as leading authorities in their fields. Our participation in international research networks, exchange of faculty members, publications in international journals and international student exchange are all very important for us. We host a

number of international workshops and seminars every year and frequently invite guest lecturers from overseas institutions. Accreditation by the European Quality Improvement System (EQUIS) ensures that NHH strives to maintain the highest level of teaching and research. Membership of CEMS – The Global Alliance in Management Education, PIM - Partnership in International Management and bilateral agreements mean that NHH has partnerships with some of the leading institutions for economics and business administration in the world.

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