Issuu

Reach Research Matters

14th

97%

OVER

50%

OUTPUTS FOR RECOGNISED RESEARCH POWER (TOP QUARTILE) WORLDWIDE

SUBMITTED TO REF2014

94%

IMPACT CONSIDERABLE REACH AND SIGNIFICANCE

BREADTH & DEPTH OF RESEARCH

INCREASE IN STAFF

6 Newcastle University Business School knowledge transfer driving increased motor group success Melissa Whipp

2 Outstanding results provide foundations to build Professor Mairi Maclean

Corporations fill the gap left by nation state Professor Roy Suddaby

10 Speaking the unspeakable to deliver smarter public services Dr Toby Lowe

Leading a North East KTP revolution Professor Daniel Zizzo

Storytelling in management practice Dr Stefanie Reissner

Reach | Research at Newcastle University Business School

Welcome Welcome to the third edition of Reach, the research magazine for Newcastle University Business School. As part of Newcastle University, we are a member of the Russell Group, which is the association of the leading research-intensive UK universities. As a School we nourish fresh forms of intellectual enquiry and research by fostering distinct academic research communities. We attract world-leading researchers from across the world and these are individuals who are ready for change and eager for challenge. They want to expand fields of research and academic excellence, and redefine the future of society and business. Our research is world-leading and

the recent Research Excellence Framework (REF) 2014 ranked Newcastle University Business School 14th for Research Power in the UK, with 97% of outputs recognised worldwide. Research is at the heart of everything we do and plays a vital role in how we engage with organisations and regional, national and international policy-makers. It provides the foundation for teaching at all levels, and helps to ensure our students are exposed to knowledge and approaches that reflect latest thinking and are grounded in practice.

In this edition we feature the research that has been conducted within the aviation field and how airline alliances allow greater efficiencies, and how a team from the Business School is helping one of the UK’s largest motor retailers to boost its management capability through a Knowledge Transfer Partnership. Don’t miss ‘Impact’ a pull-out magazine featuring a selection of the School’s leading impact research case studies.

To switch or not to switch? Professor Markus Blut

20 In work but still struggling Dr Jo McBride

14 Making the boot fit the customer Dr Neil Alderman

16 History repeating itself in company and investor relationships Dr Emily Buchnea

Sky high study of competition in the clouds Dr Volodymyr Bilotkach

24 Corporate Corruption Dr Claudia Gabbioneta

26 What flows down must come back up Dr Graeme Heron

28 The changing face of the world of work Professor Alan McKinlay

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Reach | Research at Newcastle University Business School

Outstanding results

provide foundations to build Professor Mairi Maclean and the senior management team at Newcastle University Business School were delighted with their performance in the recent Research Excellence Framework (REF) for UK universities.

rofessor Mairi Maclean P Director of Research

eing acclaimed in the UK’s top 20 Business Schools for research power in the REF – which assessed the quality of research at 154 higher education institutions - was official endorsement of Newcastle’s sharp focus on excellence. But as the Business School’s Director of Research, Mairi knows this is no time for academics to rest on their laurels. “We are building on what was the platform of the last REF where we came 14th in research power out of 101 Business Schools, which we are very pleased about,” said Mairi, a Professor of International Management and Organisation Studies. “One of the things we did particularly well in the REF when we looked at the detail was that 18% of our publications were rated four star, that’s actually a high figure. “A lot of Business Schools are bunched together, it is very competitive but we think we have got a good platform to build on for the future.”

Mairi and the senior management team attach great importance to an inclusive approach to underpin progress at the Business School, submitting examples of research excellence to the REF from across the School’s staff. “We put a lot more staff in, we got a lot more early career researchers in, and were complimented on that,” said Mairi. “Very often Business Schools leave out their junior, early career researchers, but we actually put quite a good number in because we’re aiming at an inclusive strategy. We believe an inclusive strategy helps morale.” The confidence taken from an outstanding REF is underpinning eight key areas of strategic activity for the school as it builds for the future:  Critical accounting  Economics  Finance  HRMWE (Human Resource Management, Work and Employment)  Innovation  Service marketing  Strategy, organisations and society  Sustainability

“We are encouraging cross-disciplinary, interdisciplinary research,” said Mairi. “The Business School is not an island unto itself, it is reaching out to other departments, other parts of the University and also to other universities externally in the region, nationally and internationally. “A lot of that supports and encompasses the University’s societal challenge themes. There are three societal challenge themes established by the Vice-Chancellor as he wants to link the research in the three faculties to make a broader impact on society. “Those three things are social renewal, ageing and sustainability and for us the main one is social renewal, which the Vice-Chancellor gave as a challenge to our faculty.” To meet this challenge, the Business School is focused on improving the number of successful grant applications it makes to fund research and the impact of its research with partners. “We have got our own director of impact,” said Mairi. “We are expanding our research to work with external stakeholders to the University and trying to boost the number of knowledge transfer partnerships that we get.”

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Knowledge Transfer Partnership

Reach: Research at Newcastle University Business School

Leading a North East

KTP revolution

Professor Daniel Zizzo Dean of Research and Innovation

Professor Daniel Zizzo has a clear and sharp focus on delivering a revolution in the relationship between academia at Newcastle University and the regional business community. As the Dean of Research and Innovation in the Faculty of Humanities and Social Sciences and as an acclaimed Professor of Economics in the University’s Business School, he has the remit, perspective and experience needed to set a bold course for greater collaboration. “What I want to engender is a KTP revolution,” said Daniel, whose leadership as head of the School of Economics at the University of East Anglia saw it more than double in size. “Our target is to have five new Knowledge Transfer Partnerships in 2015 and the Business School is certainly one of the parts of the faculty that is committed to help achieve this target.” A Knowledge Transfer Partnership sees universities working with public, private or third sector organisations to embed the latest academic knowledge into firms to boost their performance, while the raw data from the partnership benefits ongoing university research.

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“University experts will be working with the organisation and hiring a KTP associate to be there as their representative who works full-time on the project,” said Daniel. “This will be additional capacity, this will not be a company employee having to be moved into the project, this will actually come from the project. “The reason for organisations to get involved in KTPs is that they can leverage the expertise of the Business School and Newcastle University to achieve the goals they want to achieve. “That might be about improving the efficiency of operations, it might be about improving the efficiency of sales, it might be about perhaps meeting some carbon emission or other environmental targets.” Daniel points to the blossoming KTP between the Business School and Benfield Motor Group under the stewardship of Professor Chris Hicks as a prime example of the success that can be achieved on the ground. But he recognises that funding up to 50% of the partnership is an outlay that can prove off-putting for some firms. “One of the obstacles there has traditionally been for KTPs is that a lot of small companies, especially third sector organisations in the current economic climate, don’t have much money to spare,” he said.

“Knowledge Transfer Partnerships do require quite significant cofunding and support from the external organisation. So what I am doing is creating a fund to actually support the co-funding needs of the external organisation to reduce the extent to which it is a problem. “UItimately, we do want to make a difference and in the current economic climate that does mean help to overcome this type of economic barrier.” As part of the KTP revolution, the faculty has strengthened its business development team and now has two full-time business development managers. In his position as Dean of Research and Innovation, Daniel played a key role for Newcastle in a £3 million N8 HEFCE Catalyst Bid on policing research, with him and his team securing the support of Northumbria Police and Your Homes Newcastle. Newcastle will be in charge of the research co-production strand of the consortium after successfully securing around £500,000 from HEFCE to fund this research.

If you are interested in collaborating on a Knowledge Transfer Partnership, please contact: Fiona McCusker, Business Development Manager Fiona.McCusker@ncl.ac.uk

Reach | Research at Newcastle University Business School

Newcastle University A ground-breaking Knowledge Transfer Partnership (KTP) between the North East’s largest Independent Motor Group, Benfield and Newcastle University Business School, to improve customer satisfaction, business productivity and boost management capabilities, is being hailed a great success.

“We an e l t i l l a c don’t alership, in the de all it we c rt.” a m s k r o W About Innovate UK Innovate UK is the new name for the Technology Strategy Board – we’re the UK’s innovation agency, accelerating economic growth. We know that taking a new idea to market is a challenge. We fund, support and connect innovative businesses through a unique mix of people and programmes to accelerate sustainable growth. For further information visit our website at www.innovateuk.org. Knowledge Transfer Partnerships www.ktponline.org.uk is Europe’s leading programme helping businesses to improve their competitiveness by enabling companies to work with higher education or research and technology organisations to obtain knowledge, technology or skills which they consider to be of strategic importance. The UK-wide programme is overseen by Innovate UK (www.innovateuk.org), the UK’s innovation agency, and supported by 16 other public sector funding organisations.

Business School helps to drive Benfield’s business success The leading UK motor dealer entered into the two-year partnership with the Business School team – headed by Professor of Operations Management Chris Hicks – to achieve a strategic and sustainable transformation of part of its business practices. The KTP is focused on improving competitiveness and efficiency of service and repairs, via funding from Innovate UK and the ESRC. Newcastle University’s Business School has exceptional academic strength in this area and has undertaken a number of significant projects in lean and organisational transformation. Benfield Motor Group is an independently owned family business founded in Newcastle in 1957, and now employs 1,500 staff with 34 franchised dealerships. Strong aftersales performance is key to a successful business model for automotive dealerships. And to maximise returns from these activities and drive up customer satisfaction, Benfield identified the need for a major change programme. They approached Newcastle University Business School to explore ways to develop a more sustained approach to implementing change. Professor Chris Hicks assembled a team of academics with strengths in operations, strategy, human resources and change management, drawing on their wealth of experience working on previous projects in this field. The University team working the project are: Professor Chris Hicks; Dr Adrian Small; Dr Tracy Scurry; Dr Tom McGovern; and Melissa Whipp. Mark Squires, Chief Executive of Benfield Motor Group, said: “We are

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extremely pleased that the University has taken a partnership approach to working with us, focusing not only on the KTP deliverables but also on making wider connections, that I am confident will be of mutual benefit both now and in the future.” KTPs involve appointing a highquality graduate to work in the organisation full-time but with the full support and resources of Newcastle University. Following a competitive recruitment process, Melissa Whipp, a Newcastle University Business School graduate, was appointed to deliver the very latest in lean manufacturing techniques to four dealerships and a vehicle preparation centre across the Benfield Motor Group.

Since her appointment in January 2014, she has developed and implemented a programme of transformational change that looks to develop a sustainable and holistic approach to embedding lean working practices within Benfield. “My project is looking at increasing the throughput, efficiency and profitability of the aftersales department, so that’s the servicing, repair, warranty and internal preparation of cars,” said Melissa. “I’ve been developing training modules for the staff, explaining these principles really simply, using exercises to help apply them in their work environment. “We don’t call it lean in the dealership, we call it Worksmart. We go through all the different wastes such as waiting, excess inventory, over production and get them to think as a cross-section of the dealership - the service advisors,

technicians and parts. “From all these different sources we normally get about 50 items identified as waste. We then translate it into a visual management board, looking at creating staff’s own responsibilities.” The project is helping the Benfield management team develop new insights into the transfer of business improvement practices in a service environment and further enhance their understanding of achieving sustained transformational change. Neville Gaukroger, Strategic Development Director at Benfield Motor Group, said: “Having Melissa in the business full-time has meant we have benefited from her improved understanding of the day-to-day operations, has allowed better relationships to be built with colleagues at all levels and given us an improved understanding of how to implement the principles within the Benfield culture.” The project is advancing understanding beyond tools and techniques and is exploring challenges about the sustainability of practices and the impact of initiatives for organisations. The Business School team anticipates that the model and approach being developed at Benfield will have the potential to be replicated at other organisations. The School is already reaping the benefits of the partnership by using the project as a case study in teaching, as well as working on developing a holistic methodology for evaluating transformational/Lean change initiatives.

Reach | Research at Newcastle University Business School

Corporations fill the gap left by nation state rofessor Roy Suddaby P Strategic Research Advisor

rofessor Roy Suddaby, Strategic Research Advisor at Newcastle University Business School and Winspear Chair of Management and Professor at the Peter B. Gustavson School of Business, University of Victoria, has delved deep into the corporate psyche of US Fortune 500 and FTSE 100 companies, to examine an area called institutional theory. “My current research looks at how the corporation is really becoming a dominant influence in people’s lives,” he said. “More specifically, I’m interested in how the corporation has changed to engage in what we describe as noneconomically rational behaviour.” Roy has examined how big business, such as agricultural equipment manufacturer John Deere, financial services multinational UBS and Deutsche Bank, have amassed huge corporate art collections. Some companies such as Unilever employ their own art curator to oversee their collections, while others employ historians and have museums to chart the development of their business. “The interesting question is why do they have it at all?” said Roy. “The only art collection that has publicly

Hugely valuable art collections, corporate universities and even their own police forces and armies take some global businesses into territory once the preserve of the Church and the sovereign state as the dominant bodies of their day. stated what their collection is worth is the Swiss Bank UBS which valued theirs at $1.8 billion. “That’s a relatively small one. The largest one is Deutsche Bank, they have 100,000 pieces of art scattered around the world. “Some companies, like Coca Cola, actually have multiple historians, PhDs in history whose job it is to manage the archives and manage relationships with their marketing group. “Increasingly, they recognise art and history as valuable assets of the corporation that can be managed strategically.” Roy’s research with former graduate students has also found that some corporations have their own internal police forces – such as US discount retailer Target Corporation, acknowledged as having one of the best forensic police services in the world. Corporate armies even exist to rescue kidnapped employees from global flashpoints. “We used to think of corporate universities as a bit of a joke, a euphemism for an expensive training ground,” said Roy.

a massive hiring spree where they picked up bona fide academics, the former Dean at the Yale School of Business and a couple of historians from Harvard – they were hiring big names. “When you talk to them, they say that in an era where state universities are doing commercialised research we still do pure research, we have people who worry about how this could get commercialised later. “I think that, ultimately, the corporation will become a more engaged social citizen. The current cultural impression is that corporations are bad, evil things. “But take a look at what happened during Hurricane Katrina. Katrina was a statement of the failure of the nation state. The US federal government should have predicted and protected New Orleans and it failed. “And who were the first rescuers on the scene – it wasn’t the US military, it wasn’t the US National Guard. “It was companies like Home Depot and Walmart. They were behaving in a self-interested way, this was fantastic publicity for them, but they were also the most organised and effective at helping citizens.”

“But one that made me take notice was when Apple University went on

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The seemingly unstoppable march of the corporate institution and the waning influence of the nation state has seen corporations become the dominant influence in many people’s lives.

Reach | Research at Newcastle University Business School

Speaking the unspeakable to deliver smarter public services

Senior Research Associate Dr Toby Lowe is a thinker. A facilitator. A doer. And a heretic. and Little Heresies in Public Policy seminar series.

r Toby Lowe D Senior Research Associate

ith a background in political philosophy and a career in regional and national public policy research – his work as part of the University Research centre, KITE – makes him the ideal man to put Newcastle University Business School at the heart of the social change agenda in the North East. Toby is the driving force behind the Leaders Network for Social Change

Both entities are building on the relationships between Newcastle University and the individuals and organisations in the North East who deliver social change. And it’s the difficulties faced by strategic thinkers at a local level in the new political landscape that prompted Toby to kick-start his crusade to make public services work better across the board. “Some graduates from the Common Purpose programme and I looked at the way in which the thinking infrastructure for social change had been massively cut back,” said Toby. “If you look at the cumulative

effect of losing Regional Development Agency, One North East, losing Government Office North East and local authority policy teams being cut back, you can see that it removes thinking capacity from the social change sector – it makes us more stupid.” Launched last November, the Leaders Network has staged two events so far with 130 people signed up to it. They include chief executives of big voluntary organisations through to volunteers in tiny community associations. “We thought that a network was an interesting way to bring people together and put some of that thinking capacity back by providing inspirational speakers,” said Toby.

“The strapline for the Leaders Network is inspiration, collaboration and mutual support. “That’s the three things that people leading social change really need. “The Network is enabling people to come together and connect in new and interesting ways, to get people thinking about different ways about how social interventions work and on delivering social change.” Toby is the original heretic behind the acclaimed ‘Little Heresies in Public Policy’ seminar series. This provides a platform for social change advocates to air researchbacked views which don’t conform to the norm and otherwise wouldn’t be heard. Its national seminar series – dubbed ‘Kittens are Evil’ – attracted 500 attendees and sparked significant social media debate. Topics aired examined how conforming to outcome-based

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performance targets was destined to fail and how bad procurement practices were costing the public purse a small fortune.

“What I found was that the theory does not stack up, which is why whenever you see it implemented it fails in exactly the same way.

“It is really difficult to find a public space to talk about these things,” said Toby.

“My research has shown that all real-life situations are complex. The only way to respond to that complexity is to have experienced people with the ability to make sound judgements on the ground.”

“You never got a platform to talk about them because people didn’t recognise the key concepts, so we thought let’s create a platform for heretical ideas. “It started with the research I had been doing about outcomes-based performance management. “The way in which the public sector works in the UK comes from an ideology called New Public Management, developed in the late 80s and 90s. “I became increasingly suspicious as it felt wrong to me. It just didn’t add up. “I talked to the Business School about this, who asked me to do research as a visiting fellow.

The Centre for Knowledge, Innovation, Technology and Enterprise (KITE) brings together Newcastle University’s extensive research capabilities on: innovation management and policy; enterprise; the social, economic, managerial, organisational and cultural aspects of information and communications technologies and their social consequences; and studies of the role of universities in society.

Reach: Research at Newcastle University Business School

Storytelling

in management practice

r Stefanie Reissner D Senior Lecturer in Management and Organisation Studies

Stefanie’s research looks at how managers communicate with their staff using storytelling and the impact this may have on the work environment. This will strike a chord with any employee who has ever listened to a manager relay stories of their own experiences or recite a tale of wisdom to try to encourage greater workplace understanding.

The keyhe t factor isty of credibili teller y the stor

Dr Stefanie Reissner, a Senior Lecturer in Management and Organisation Studies at Newcastle University Business School, is the first in her field to study how storytelling is intentionally used as a management communication tool. She has already had a book on the project published with her coauthor Victoria Pagan, Storytelling in Management Practice, and a paper on how management communication activities could help employee engagement. Funding from the Economic and Social Research Council enabled desk and qualitative research in two organisations through a series of

interviews and selected documents. But as she found out, while the ability to tell a good story can carry a workforce along with a manager’s plans, the teller’s credibility and how they say it can have the exact opposite effect.

“It’s really about seeing how managers communicate with their staff because there are claims out there that managers who tell stories are more effective managers,” said Stefanie. “Very often, when you speak to people they will tell you a story to understand how they make sense of their world and learn from their experiences. “I came across this notion that you can actually use stories to communicate with other people as a manager in a business context. “I have had interviewees say they use ‘imagine if’ stories if they want to bring in change and people aren’t sure they want it – ‘imagine if we had already achieved that what it would be like’ to get people to dream.

“Or stories like ‘you’ve done it all before, remember when we were in a similar situation and you rose to the challenge, how great the results were’. “That can work quite well but there are many factors that work against that. The key factor is the credibility of the storyteller. “If I don’t trust the person that the message is coming from and I don’t think they are credible, then it is very, very hard for me to believe the story. “There is also an issue about performance. I’ve had quite a few people mention that they see a change in body language when someone tells a story.

“I think the physical signs are really important to help you gauge how credible that person is; do they mean it or is there some kind of hidden meaning I need to watch out for?” The Holy Grail of establishing whether or not storytellers make better managers is a question that is unlikely ever to be properly answered due to the significant amount of variables which make up a manager’s performance at work. But Stefanie is planning to introduce a training tool this summer, to enable organisations to put some of the ideas developed through her research into practice and to aid management development.

“So some people will stand up, some sit down, some will take their glasses off, others will lean back in their chair, there is something about the way in which you tell a story.

Research project funded by ESRC, Grant Reference: RES-061-25-144-A

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Reach | Research at Newcastle University Business School

Making the BOOT fit the customer They are some of the largest and most complex engineering and construction projects in the world – employing thousands of people and costing hundreds of millions of pounds.

igh stakes investment with the ability to make or break a company, from designing and building tilting high-speed trains to upgrading and operating an Argentinian port.

Now more widely used across business in a greater variety of forms, Dr Neil Alderman and a team of researchers at Newcastle University Business School set out to identify exactly what capabilities businesses need to obtain and satisfy these complex contracts with long-term commitments.

Known as BOT or BOOT (Build, Own, Operate and Transfer) schemes, they were originally the brainchild of hard-pressed construction firms looking for new revenue streams in the recession-hit 1980s.

Their resulting publication, Managing Complex Projects: Networks, Knowledge and Integration sets out the findings of an 18-month long project interviewing the companies, their supply chains and holding workshop sessions.

r Neil Alderman D Senior Lecturer

The Business School built close working relationships with French rail giant Alstom Transport and historic Gateshead engineering firm Clarke Chapman. Northumbria Water’s Bran Sands effluent treatment plant on Teesside, although not strictly a BOOT project, was also brought into the study to add a client’s perspective to the study, rather than just a contractor’s. “BOOT or BOT projects came about in the 1980s when construction companies latched on to the idea that ‘if we can raise the funding capital to build a facility that the client wants, the client doesn’t have

to fund it themselves directly,’” said Neil. “The way we fund it is that we raise the capital, we build the facility and we lease it back to the client.” For Alstom, their brief from Virgin Trains was to design and maintain a Pendolino tilting train capable of travelling at 140mph on the West Coast Main Line, while Clarke Chapman, then part of the RollsRoyce group, was working hard to deliver a huge South American contract. “Clarke Chapman was interested in, and had successfully bid for, a contract to refurbish a port facility for an Argentinian steelworks but also to operate that port facility for the steelworks over a 12-year period,” said Neil. “People in the company were interested in understanding how they could do that, what the implications were for the business.

“Alstom had to work out ‘how many trains do we need to build in order to guarantee there are always the right number available to provide the service?’

“One of the key implications is designing for maintainability. If you are taking on all that responsibility, you don’t want it to be an expensive job to do basic maintenance.

“There were a lot of big changes going on with that project and one of the first trains they built was named Mission Impossible by Virgin Trains.

“What we have to conclude is that you can’t make it simpler. By definition, it is complex and one of the interesting observations was that some of the things the organisations were trying in order to make it simpler actually in other ways made it more complex.

“It was a tremendous challenge, a huge project with long-term implications because they are still providing the service element of that project.” And the result of their study? “As soon as you start introducing long-term considerations, you introduce a whole new dimension of complexity,” said Neil.

“We also found that a long-term project is more likely to be affected by things going on outside it, other projects perhaps. In our book we refer to this as the ‘metaproject’ and suggest that project managers need to map this out and understand it.”

“ There were a lot of big changes going on with that project and one of the first trains that was built was named Mission Impossible by Virgin Trains.

”

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Reach | Research at Newcastle University Business School

History repeating itself Business historian Dr Emily Buchnea found a little bit of history repeating itself as she delved into the complex relationship between companies and financial investors.

r Emily Buchnea D Research Assistant

orking as part of a team of five academics from Newcastle University Business School and King’s College London, her research discovered that many of the tensions that exist today can be traced back to Victorian times, through the Great Depression of the 1930s and The City boom of the 1980s. The team of academics – Professor John Wilson, Dr Anna Tilba and Dr Emily Buchnea from Newcastle University Business School and Dr Gerhard Schnyder and Philipp Kern from King’s College London – are looking at the relationship between management in British industry, predominantly in manufacturing and retail, and the disengagement between these key decision-makers and private investors in these firms. Long-term strategic planning for a sustainable future versus short-term economic returns on investment is a toxic mix which is not sustainable for business, the research team have found. “It’s a large project on corporate networks which looks at interlocking directorates from 1904 to 2010,” said Canadian Emily, who joined Newcastle University Business School as a research assistant a year ago.

“What we are looking at is the extent to which ownership changed in non-financial institutions based on investors from financial institutions.” Pension, equity and hedge fund managers, as well as investment bankers buying up shares in publicly listed firms on the Stock Market, is all perfectly legal – their activities producing sometimes huge return on investments for clients. Emily is keen to find out the impact on the companies they invest in. “They are not looking to help with the long-term strategy of these companies and this is the problem, you have owners who only care about making a profit rather than improving the structure of British business,” she said. Emily says she has found a complex interplay between financial and nonfinancial institutions – ownership and control – at the heart of the issue. “We wanted to look at the bigger picture,” she said. “We addressed the current problem, which is investor disengagement and lack of investor control and activism in companies, so we looked back to the historical problems to see where this actually stemmed from. “It can be traced back to the Victorian period, when banks were quite small. They dealt locally with industry so money managers in

banks locally knew a lot about the industries they were involved in. “The problem is when the banks centralised and went to The City a bunch of bankers sitting in London don’t know about industry in the North East or the North West, so they didn’t actually have the knowledge to make a positive contribution to industrial strategy. “They have no personal investment or desire to build a long-term strategy because they are so disconnected from the industries themselves. “We can see as far back as the 1930s that this was a prominent problem in the British economy that was never corrected. “As we have seen a lot of decline in British industry, that’s the historical problem, that these financial institutions are not dedicating their resources to establishing a longterm relationship with industry.” While the focus of the project – due to be submitted as a paper to an academic journal later this year – is retrospective, the team are casting an eye to the future with policy advice on what needs to be done to correct the disconnect. Emily warns. “It is not sustainable – if people are only investing in the short term, there is no longevity in that.”

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Reach: Research at Newcastle University Business School

“financial institutions are not dedicating their resources to establishing a long-term relationship with industry”

Reach | Research at Newcastle University Business School

To switch or Be it energy providers, retailers or financial services, switching providers is an option open to consumers like never before.

rofessor Markus Blut P Professor of Marketing

As Professor Markus Blut succinctly puts it, switching costs can sound like an abstract concept, but is something which increasingly impacts our everyday lives. Markus, Professor of Marketing at Newcastle University Business School, is rolling back the boundaries of academic knowledge by helping broaden understanding of the push and pull factors associated with brand loyalty and switching costs.

Understanding how to retain customers and what keeps them happy is of the utmost importance for brands operating in highly competitive marketplaces. Markus and his team of researchers surveyed nearly 1,700 people across more than 50 service industries in Germany to shed more light on the impact of service characteristics on the switching costs/customer loyalty link. Academics have previously found the impact of moving from one provider to another isn’t just a financial decision.

Brand loyalty

As well as exit fees, there’s the time taken by the consumer to research and compare new providers online for instance, inform friends of a new phone number after a switch, the psychological uncertainty of leaving one provider for another and cognitive effort needed to make the move. And it’s not all negatives. There’s also the positives attached to the switching process businesses can use to stimulate customer loyalty. Detailed research into the effect of switching costs on customer loyalty was thin on the ground – until now. “Switching costs are typically in a customer loyalty context, those costs which are associated with switching from one provider to the next,” said Markus.

not to switch? “But if you just think about it yourself and your experience with service firms, you realised at some point in time it is not just customer satisfaction and happiness, but that there have to be other reasons, other factors why you remain with a particular company. “That’s another aspect of switching cost, the difficulty of finding new firms that don’t have an overview of the market, the process is complicated, it is risky and once you switch, you assume that you may lose some benefits that you might have accumulated over time with the company.” Markus and his team’s latest research revealed surprising psychological findings about the way consumers view relationships with businesses.

“One of the aspects that we found is that customers don’t attribute this lock-in to the company as a negative, instead they make the assumption it is their fault or they are lacking the expertise to leave which makes them stay,” he said. “They don’t blame firms for locking them in which is one of the core findings. Also in recent years literature talked about switching costs as being something negative. “But if you think of a hairdresser, for example, very often people stay with a hairdresser because they have developed a personal relationship. They don’t go there for the good coffee or the good haircut, they go there because they want to gossip about their partners, this kind of relationship keeps customers loyal to firms.

“That’s another core finding, particularly this positive switching cost, that they keep exclusive relationships that are two to three times more effective than those which I label negative switching costs such as lacking expertise and capabilities.” And Markus’ research reveals important findings for firms looking to keep and grow their market share. “The implications are for businesses to focus on the positives of switching costs first, for instance, loyalty programmes where customers can collect some benefits which are appreciated by customers, building relationships with employees, giving the opportunity to get in touch with employees – that is appreciated,” he said.

Cost efficiency

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Reach | Research at Newcastle University Business School

In work

but still struggling

r Jo McBride D Senior Lecturer in Industrial Relations, Work and Employment

A new academic study being conducted by Newcastle University Business School is shedding light on the struggle of low-paid workers to make ends meet. Dr Jo McBride, Senior Lecturer in Industrial Relations, Work and Employment, hopes her groundbreaking research will help influence future government policy on low pay and the living wage and ensure people working for low pay and in multiple jobs are better cared for by employers and wider society. Jo and her research colleague Dr Andrew Smith, of Bradford University’s School of Management, decided to begin their study ‘The Forgotten Workers – Low Paid Workers in Multiple Employment’ after finding no hard academic research existed about the issue. Jo and Andrew are undertaking a series of interviews with people in low-paid and irregular work in the North East and Yorkshire and hope to publish their report findings at the end of this year. “We initially started to look at

research into low-paid employment,” said Jo. “We found that compared to other developed countries, the UK has got a relatively larger number of people working in lowpaid, low skilled jobs, which is quite a concern.” Latest statistics estimate there are 4.9 million people in the UK paid below the living wage of £7.85 an hour. There are also 1.4 million classed as in under-employment – in part-time employment, wanting full-time work but unable to get it. “This has resulted in a rise in temporary employment, low-skilled, less secure work and zero-hours contracts,” said Jo. “There has not been a lot of academic research conducted into “in-work poverty”, especially focusing on people who have more than one job and still in poverty. We thought ‘what about these people who are in in-work poverty with more than one job, what are their experiences like, what about their family-work life articulation, are they trapped in a cycle?’– we don’t know because nobody is asking them.” Their study has pinpointed people working in multiple employment in occupations such as cleaning, hotels and restaurants, retail, admin and support services, sales and customer services, who are all more likely to be low paid. Jo and Andrew have set up an advisory group of support

organisations to back their research, to help them find interviewees, notoriously difficult to reach because of the stigma society attaches to people in work but struggling to make ends meet. They are looking for “rich, qualitative research findings” from interviewees to provide the gravitas to a report they hope will help bring about real benefits for a forgotten workforce. Trade unions GMB, UNITE, DMA and UNISON and the TUC are all backing their research, as are the charities Business in the Community, Poverty Alliance, Citizens UK, Incommunities in Bradford and the Joseph Rowntree Foundation. “We are focusing on the regions of the North East and Yorkshire,” said Jo. “Both regions have undergone drastic social and economic change through deindustrialisation and they are in the top three regions for under-employment, so they were key regions for us to look at. “We are going to try to unravel the complexities, the limitations for these people and to contribute support and evidence to enable others to improve the working lives of these people, for instance employers, trade unions, local and national government and poverty groups. “For local and national government, we are hoping that this research will contribute to evidence-based policy-making. “Hopefully, it will result in contributing to low-paid workers benefitting from better rewards and working conditions, better protection at work, alleviating job insecurity and having a better and more acceptable standard of living.”

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Latest statistics estimate there are 4.9m people in the UK paid below the living wage of £7.85 an hour. There are also 1.4m classed as in under-employment – in part-time employment, wanting full-time work but unable to get it.

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Sky high study of com It’s the world’s most lucrative intercontinental air passenger market.

r Volodymyr Bilotkach D Senior Lecturer in Economics

£50bn

YEAR

50m

PASSENGERS YEAR

Transatlantic flights from Europe to the United States and vice versa is an estimated £50 billion a year business, ferrying around 50 million passengers annually to and from some of the world’s greatest cities. World-renowned aviation expert Dr Volodymyr Bilotkach is the Newcastle University Business School academic the US Department of Transportation and European Commission turned to when reviewing competition in this airspace. He gave his professional opinion of a review commissioned in 2007 of the transatlantic marketplace and, in particular, the air alliances that have come to dominate it.

Such is the sensitive nature of Volodymyr’s findings that he is not allowed to publicly reveal them – only to talk about the broader issues for the industry and the possible impact on passengers. “The concern is of reduced competition in the transatlantic market – it is not entirely clear to what extent the consumers, the travelling public, will benefit from the recent developments,” said Kyiv-born Volodymyr, a Senior Lecturer in Economics at Newcastle University Business School and co-editor of the Journal of Transport Management. “Essentially, we are down to three major alliances – SkyTeam, oneworld and the Star Alliance. These are the three major partnerships.

petition in the clouds “They have within those alliances transatlantic joint ventures, which essentially means that the partners pool all their transatlantic operations together as a single entity.” Rather than act as separate competitors, alliances allow airline companies to be a single competitor. This enables greater efficiency and removes some of the duplication of costs they might have without these partnerships. Within the partnership they can decide which airline is going to best serve which route. “It is perfectly legitimate for the airlines to price discriminate between market segments,” said Volodymyr. “The issue is about the level of prices and the fairness to make sure that you do not create an environment in

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which you have too few competitors and could have more. “The question is if the competition is fierce enough between these three alliances so that those cost savings will translate into lower air fares?” That question remains unanswered. The US Department of Transportation has sounded out Volodymyr about another possible follow-up study in the light of new mergers and acquisitions. “Most of the actual profit being made is on business travellers,” he said. “If you look at business travellers occupying a seat in economy class, he or she can expect to pay considerably more than an average tourist traveller sitting next to them in the same row,” said Volodymyr.

“Some of the studies of US markets have shown that if you take two random passengers sitting next to each other on a flight within the United States you can be expecting an average price difference of about 30%. “Hopefully, my work could shed light on some of the issues for the regulators which will then make wiser regulatory decisions, which could then translate into a more competitive marketplace, lower fares and better travel options for the passengers.” Air carriers will be watching developments with great interest.

“There is something fundamentally wrong in the way that financial markets work”

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Corporate corruption Corporate corruption is rarely out of the headlines, but is it the hubris of CEOs or a flawed financial system which is to blame? r Claudia Gabbioneta D Senior Lecturer in Accounting and Finance

cclaimed research by Dr Claudia Gabbioneta Newcastle University Business School’s Senior Lecturer in Accounting and Finance – has provided academic analysis of institutional environments which are simply not up to the job of preventing corporate wrong doing. A cosy financial system where professional service firms fail to rigorously check each other’s figures and overestimate liquidity, has allowed some unscrupulous firms to trade fraudulently or encouraged companies to do so, Claudia’s research argues. The chastening stories of US energy giant Enron and Italian multinational dairy firm Parmalat – both now synonymous with financial mismanagement – rocked the markets and shook public faith in how big business operates. Claudia was part of a team of academics from universities in Italy and Canada whose studies of the fall of these corporate giants into

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bankruptcy shone a light on the failure of regulators and markets to stop financial corruption. Claudia’s work and conclusions have featured prominently in professional journals. She is helping to create a better understanding of why such crises arise and what needs to be done to stop them happening again in the future. Her research features in her lectures to Business School students. “There is something fundamentally wrong in the way that financial markets work,” said Claudia. “We are not saying in any way that the CEOs or management of corrupted companies should not be held responsible for what they did. “Our point is that it is more the system than a single person to blame. The system does not work, it is broken and it is not effective in preventing corporate corruption in the future.

“The idea is to raise awareness and possibly to influence regulators in order to improve the way financial markets function.” Claudia maintains that unless professional services work more closely together, thoroughly checking each other’s financial figures, then more corporate scandals are inevitable. “It is a mutual reliance on work done by others which enables the system to hide or even push companies into corporate corruption. “I think that a serious reconsideration of the boundaries between professional services firms working in the financial market may actually help solve the problem, to guarantee some sort of effective functioning of the market. “We should reconsider the system as a whole. We should seriously question the way it functions.”

HOW TO MANAGE surplus food, packaging systems, recyclables and customer returns that head back up the supply chain.

What flows down

must come back up

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r Graeme Heron D Lecturer in Operations Management

Getting goods to demanding customers is a process driven with military-like precision by big business. From the fresh food we enjoy to the fashions we wear, there’s a whole business within a business making sure that shops are stocked with the items people want. But how companies deal with the by-products of this process are a little less easy to manage – the unsold food, recyclable packaging and returned items that head back up the supply chain. Dr Graeme Heron, a Lecturer in Operations Management at Newcastle

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University Business School, is an industry-experienced academic leading work with business to help address these issues – reverse logistics flows, as they are known. Getting this flow back up the system in a better way will deliver not just cost efficiencies for the retailer, but also environmental gains, societal benefits and allow customers to make more informed choices about who they want to shop with. His latest research sees him working with two UK multiple retailers looking at their reverse flows. “Although they have very different models of provision and operation, they have exactly the same problems getting stuff back down the line,” said Graeme, who has over 25 years’ experience working in manufacturing industries, latterly in the food sector, before making the move into academia. “The common threads coming out of this are not a lack of willingness to manage reverse flows efficiently, but a lack of good operational knowledge to manage the reverse supply chain as efficiently as the forward supply chain. “If you think of nearly all that fresh food in a supermarket, nearly all of that food is in crates and those crates go back, retail ready packaging like pop bottle stands go back, all the secondary protection packaging like the outer casings of cardboard, they head off back up the system.” Returns of items through online traders is an increasingly large part of the reverse flow process for retailers to contend with – one estimating that more than 60% of garments sent to customers are returned for various reasons. “That is an entirely different view of reverse logistics, but you have to get it right because there is nothing wrong with those goods, they just need reinspecting, reallocating and then off they go back into general retail,” said Graeme.

“ You have to move away from the downstreamupstream and move into this circular stream.

” “The more efficiently you do this then the less road miles are covered, the less amount of non-renewable resources are consumed, the more efficient existing IT systems are, the organisation can take a view on what will probably come back and take that data to influence what they order so there is no double stocking.” So is there a perfect model out there which ticks every box? “Basically, to become a more stable operational function you have to stop thinking about this as reverse logistics,” said Graeme. “You have to move away from the downstream-upstream and move into this circular stream. “We know because there is so much data that we have a very, very good idea of what is going to come back up the supply chain and when it is going to come back up. But nobody has got around to managing that efficiently. “Businesses that say ‘okay, but we are going to carry on because this model works for us’, essentially what they are doing is carrying on with a strategy that says ‘we acknowledge we have an inefficient supply chain model for reverse flows that works within an overall model itself.’ “Rather than addressing the problem, they are looking to mask the problem and miss major opportunities for resource efficiency.”

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The changing face of the world of work

rofessor Alan McKinlay P Professor of Human Resource Management

e is a widely acknowledged expert in work practices in 20th century European and American industry and his research has also taken him into uncharted academic waters. Alan’s research has seen him study working practices from as far back as the 18th century. Fast forward 200 years and he drew on the work of renowned French philosopher and social theorist Michel Foucault to analyse corporate strategy and industrial relations in the automobile, communications and computer industries. And it was Alan’s reputation as an expert in 20th century organisational practices that led to him being invited to deliver a lecture to the Bank of Scotland’s 300th anniversary celebrations and to one of his most intriguing academic papers – ‘Banking, bureaucracy and the career: the curious case of Mr Notman’.

As Professor of Human Resource Management at Newcastle University Business School, Alan McKinlay has a passion for expanding our understanding of how work, management and organisations have changed through the years. a David v Goliath court case which caught the imagination of national media and in the United States as a major news story. A ban by banks on male employees marrying before 28 and earning £200 a year – an age and salary deemed acceptable to conservative bank directors – was an eye-opener for Alan, as was the story of Mr Notman who fell foul of the wrath of the establishment of the day when he asked their permission to marry his sweetheart Lillias. “He decides to ask if he can get married, at least if he can get engaged,” said Alan. “He has to ask the bank ‘can I get married?’ and asks them twice more for their permission and the bank say ‘no’.”

“

Thumbing through dusty tomes detailing the growth of finance north of the border, he found tucked away the remarkable story of humble bank clerk William Notman.

This ‘David v Goliath’ court case caught the imagination of national media and was a major news story in the United States.

His stance against his employers at the Commercial Bank of Scotland became a cause célèbre of its day –

”

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Alan’s research found that Mr Notman let his heart rule his head and he married Lillias. The couple’s start to married life began with a telegram from the bank the following Monday informing him of his dismissal. Mr Notman approached the Scottish Bankers Union for support and in a landmark case they agreed to support his claim for excessive force against the bank. Despite the full weight of bank executives and legal brains being brought to bear to fight his claim, Mr Notman was awarded damages by a jury who found in his favour. “Banks of the 1920s and 1930s had a greater sense of managing corporate culture than any contemporary organisation would have,” said Alan. This was a landmark victory for an employee against a major bank and the first time a trade union had supported a member in a fight of this kind against an employer.

For more information Newcastle University Business School 5 Barrack Road Newcastle upon Tyne NE1 4SE UK Telephone: +44 (0)191 208 1500 E-mail: nubsdirectorofresearch@newcastle.ac.uk Enquire online: www.ncl.ac.uk/nubs/research

This brochure is for information and guidance purposes only. Details are correct at the time of printing (July 2015) but should be checked on the University’s and School’s website.

Acknowledgements Edited by: Newcastle University Business School. Designed by: GDA. Printed by: Statex Colour Print. Photography by: J Donoghue; Crest Photography; page 28 photograph, courtesy of Royal Bank of Scotland. © Newcastle University, 2015. The University of Newcastle upon Tyne trading as Newcastle University.