Reach no2

Reach: Accounting, Governance and Accountability research group

Reach 1 Meet the research groups: Accounting, Governance and Accountability

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Economics

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Human Resource Management, Work and Employment

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Innovation Systems

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Services Marketing

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Strategy, Organisations and Society

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Research Matters Issue 2

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Newcastle University Business School

Building excellence in research Kathryn Haynes Deputy Director (Research) Northern Society Chair in Accounting and Finance

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Reach: research at Newcastle University Business School

Hello and welcome to the second edition of Reach; our magazine dedicated to showcasing research taking place at Newcastle University Business School.

We hope that Reach goes some way to explain how we aim to build excellence in our research. However, let me briefly describe some of the activities we undertake to ensure we meet our aim.

Our research groups We have highlighted projects and profiled a selection of academics over the course of the next few pages in our six areas of specialist expertise: Accounting, Governance and Accountability; Economics; Human Resource Management, Work and Employment; Innovation Systems; Services Marketing; and Strategy, Organisations and Society.

Our research groups are designed to facilitate and support research in the Business School, bringing together collaborative researchers, while providing a hub for intellectual engagement and innovation.

It is through our research groups that we carry out research that aims to have a global perspective and contribute to the responsible and ethical shaping of society. Researchers in the Business School also connect with the wider University, in particular to address Newcastle University’s societal challenge themes: Ageing; Social Renewal; and Sustainability.

Our quality The quality of our research is widely recognised, from local businesses and international organisations, to government departments. This is because it focuses on relevant and challenging issues of our time. Our research is designed to be both of high theoretical value, but also applicable to policy and practice.

Our storytelling We disseminate our research widely in leading international journals and conferences as well as practitioner publications, recognising that for our research to make a difference it needs to reach the people who can be influenced by its findings.

Importantly, we also engage with business and policymakers in the formulation of our research to ensure that the questions we address are relevant and timely.

Our training Training and developing the next generation of researchers is also an important part of our activities.

Our research informs our teaching at undergraduate, postgraduate and executive levels. We also have a thriving PhD programme, which is supported by the North East Doctoral Training Centre (NEDTC) – a collaboration between the universities of Durham and Newcastle – as well as our extensive in-house doctoral training. PhD students are very much a part of our vibrant research community and are members of research groups.

Our outreach Our research groups have international links and collaborative partnerships, ensuring that our research has worldwide influence and relevance – in the tradition of a world-class civic university.

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Newcastle University Business School

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The Business School’s mission:

Through building excellence in teaching, research and engagement activity, we provide all stakeholders with new, global perspectives and the inspiration to contribute to the responsible and ethical shaping of society.

Reach: research at Newcastle University Business School

Research is a springboard to practical solutions for society.

In our mission statement we emphasise that we strive to ‘add value to all stakeholders’. This highlights one of our core duties; to impact the business world around us through our teaching, research and engagement.

As a science-practitioner, I have often found that business practice and research can effectively go hand-in-hand for mutual benefit; creating relevant and rigorous solutions to challenging problems. The practitioner’s viewpoint is essential when uncovering and specifying such problems and practical needs, as well as the environment in which they occur. The researcher, on this basis, can bring in the methodological know-how, and ensure scientific rigour when formulating a corresponding research design.

I am very interested in how theory and practice can merge, creating both academic and economic solutions.

As the Director of Impact at the Business School, I am charged with the brief to facilitate and support fellow academics in bringing the value of our research to life.

The term impact, however, can mean different things to different people, but one of the most suitable definitions I have seen is from the Research Councils UK (RCUK), who describes impact as: ‘the demonstrable contribution that excellent research makes to society and the economy.’

Acknowledging the importance of social and economic outcomes from academic research, research councils are now increasingly emphasising ‘impact’ as an assessment criterion of academic research.

What does that mean for the Business School?

I guess this is primarily good news, as impact is not something that is new to us. We have a strong research portfolio of areas and projects ‘with impact’ that clearly ‘add value to stakeholders’ and a sample of such work is illustrated throughout this publication of Reach.

I hope you enjoy reading about some of the research happening within our six research groups: that goes to show how we further stimulate and accelerate the virtuous circle of excellent research at the interface between science and practice. Basically, how we are adding value to society.

Christof Backhaus Director of Impact Professor of Marketing

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Newcastle University Business School

Economists and psychologists have spent decades studying what we do when it comes to cash, and why we do it. One such researcher is Professor Darren Duxbury, whose work has informed discussions by the Federal Reserve Bank of New York, the Department for Work and Pensions and the White House.

Professor Duxbury’s research is largely focused on behaviour in accounting, economics and finance. He is currently exploring whether responsibility affects how people behave with their investments.

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There is an established school of financial thought called the Disposition Effect, which states that people are more likely to sell winning shares and hold onto losing ones. In line with Prospect Theory, many explained this by saying that people become more risk-averse in winning situations and so they sell to lock-in their gains, but become more risk-seeking in losing situations and so continue to hold their losing shares.

Professor Duxbury contends that Prospect Theory doesn’t explain this on its own. He, working with Barbara Summers, Senior Lecturer in Decision Making at Leeds University, discovered that the responsibility a person feels for a decision has an impact, via emotions, on whether they follow the Disposition Effect or not.

Reflecting on findings published in a research paper Decision-dependent emotions and behavioural anomalies, Organizational Behavior and Human Decision Processes (2012) with Barbara Summers, Darren continues: ‘If a participant is not responsible, they can still experience gains and losses but they do not succumb to the Disposition Effect. They don’t tend to sell their winning shares more readily than

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their losing shares, whereas when we bring back responsibility and bring back specific emotions, now we find regret and elation play a key role.’

So how might this research be applied? Take pensions, for example. The UK adopted an approach in 2012 that automatically enrolled certain people for pensions. How would this shift in responsibility affect how people save for their future?

‘There’s a notion that responsibility could feed into risk preferences. If you see yourself as being more responsible you might be a bit more risk-averse and not invest as much for retirement. Whereas in the auto-enrolment situation, you may perceive responsibility laying elsewhere and may then be prepared to save more for retirement.’

Professor Duxbury is part of the Accounting, Governance and Accountability Research Group, which investigates the impact of accounting and finance in wide society. It has a particular strength in social and environmental aspects of accounting, and its research focuses on issues such as ethics and sustainability, gender and society, and control and evaluation. The research group is organised into three themes: Accounting, Governance, Ethics and Sustainability (AGES); Gender, Professions and Society (GPS); Finance, Accounting, Control and Evaluation (FACE). Professor Duxbury’s work focuses within the FACE subtheme.

Reach: Accounting, Governance and Accountability Research Group

There’s a rational way to handle money.

And then there’s our way.

Professor Darren Duxbury Chair in Finance

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Newcastle University Business School

Beyond finance, broader measurement within business models.

Dr Jane Gibbon Senior Lecturer in Accounting

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Reach: Accounting, Governance and Accountability Research Group

The concept of Social Accounting envisages a report that says more about what a company has achieved.

It could include information on social and environmental impact, details that may not be as easy to stick in a box, but which say more about how well an organisation has stuck to its ethos.

‘A focus on finance and money should not be the only thing that is significant,’ said Dr Jane Gibbon, a Senior Lecturer in Accounting at Newcastle University Business School. ‘Your finances are important, and whilst you cannot be continually making a loss, it is also about understanding what other things you value as a social organisation.’

Dr Gibbon spent a decade as a management accountant before entering academia, and was introduced to social and environmental accounting in the early 90s.

‘There are aspects of it within corporate social responsibility, but it challenges norms, and challenges the mainstream. The inclusion of social and environmental information helps to balance where the financial overrides everything and dictates how we come to decide which course of action to take. The provision of wider information assists people when assessing their options and making decisions.’

Dr Gibbon’s research brought her to the attention of the researchers behind iBUILD, which aims to explore new business models that could be applied to large infrastructure projects. The project combines the expertise of Newcastle University, the University of Birmingham and the University of Leeds, and has received a £3.2 million grant from EPSRC and ESRC.

‘I think there’s a belief that the decision-making models we use at the moment are inadequate and do not include enough dimensions to explore value other than financial whilst providing adequate future-proofing.

There are complex issues that need to be addressed such as climate change and how resilient we are to these issues. It’s about adapting to change. We need to be developing business models and financial models that incorporate these wider complex issues.

‘The aim of iBUILD would ultimately be to change policy.

You’ve got to talk about having a direct impact on decision-making at quite a high level within government.’

The iBUILD project intends to create an internationally leading centre for innovative infrastructure business models, and to increase the importance of factors such as social and environmental value when infrastructure is being created. As a result, it’s an interesting fit for Dr Gibbon, who believes that other elements of value should be included within business models to challenge a financial focus.

‘It’s easier to reduce a decision to using financial information. If you include more difficult and messy measures into decision-making, it might not be easy to resolve, but acknowledgment and exploration of those factors is a start.’

For more information on iBUILD, go to www.research.ncl.ac.uk/ibuild

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Newcastle University Business School

Oral health is not a widely researched topic in academic circles. That’s a concern, as the quality of a person’s teeth isn’t just an issue of looks. It can also determine whether you find a job, a relationship, or act with confidence in social situations.

‘Poor oral health, as well as being painful, can lead to detrimental job market outcomes and social outcomes for individuals,’ said Professor of Health Economics John Wildman. ‘Dealing with health inequalities is partly about equalising opportunities.’

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Newcastle University Business School is looking to address this, in collaboration with University College London and the National Centre for Social Research.

Thanks to a grant by the Economic and Social Research Council, researchers have spent 18 months investigating the socio-economic inequalities in oral health.

‘It’s about trying to identify which measures we should be using, what has changed over time and what can be done going forward.’

Professor Wildman adopts an economist’s perspective on the data, while the group boasts a range of complementary expertise such as epidemiologists and dental experts.

‘In the past, I’ve looked at health inequality in obesity in comparison with Canada, inequalities in self-assessed health and in psychological well-being. They can all have an impact on each other.’

Professor Wildman is the principal investigator in a multidisciplinary group investigating the factors that feed into oral health inequality, how policymakers and medical practitioners can intervene, and how oral health has changed in the last few decades.

While the grant-funded phase of the research is nearly over, Professor Wildman hopes to continue probing this particular area with the team.

‘Oral health is about cumulative lifetime damage.

Once the damage is done, it’s done. There’s usually no recovery process.

‘We’ve got a really good team of people who are very interested in the topic. We’re only just scratching the surface, and there’s lots of complex work still to be done, drilling down into the data to look at access and health behaviour models.

‘We’re looking at trends and pathways through which inequalities may develop in order to guide policy that may have an impact on oral health.’

While the quality of a person’s teeth can be determined by a number of factors – from location to age, social status and genetics – researchers are looking at statistics from UK Adult Dental Health Surveys from 1988, 1998 and 2009 to uncover trends, inequalities, socio-demographic information and health outcomes.

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‘Dental health has often been the poor relation in academia. It doesn’t always get the attention it deserves, but it’s starting to stimulate a lot of interest among policymakers and organisations at the moment.’

John Wildman Professor of Health Economics

Reach: Economics Research Group

What is the true state of the UK’s teeth?

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Newcastle University Business School

Governments used to prioritise which risks to address by estimating the loss of economic output that would result from a person’s death or injury. More than a decade ago, a group of researchers at Newcastle University formulated a new approach.

The method focused instead on how much people might be hypothetically ‘willing to pay’ to reduce the risk of death by a particular threat to safety, health or the environment. This has been adopted by public bodies in the appraisal and prioritisation of policy options and allows the government to take into account the pain, grief and suffering caused by accidents. It also switches the perspective from an appraisal based on loss to one based on prevention.

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Group member and Professor of Economics Sue Chilton said: ‘There’s a strong methodological element.

What we’re trying to uncover indirectly is what economists would call public preferences over different projects, and we do that via a money value as it’s a reasonable representation of people’s preferences.’

The methodology has been refined over several years, to make sure that the result is as accurate and representative as possible. Participants are asked to put a hypothetical cash value on how much they would pay to address a particular risk, and an average is taken from the views of a wide crosssection of the population.

The cash value is a theoretical construct, as participants are used to thinking of cash as something that represents value, but which is taken from a finite pot.

Their judgement is prefaced by a structured discussion, in which individuals are primed to consider the factors and relevant benefits that will help them make an informed long-term decision.

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Sue said: ‘You can’t just go out into the street and ask people’s willingness to pay. You have to develop in-depth surveys to get them to understand what it is they’re being asked to value and what the benefits may be of a particular programme.’

While the group has fine-tuned its methodology over the last decade or two in cases such as road or rail safety measures, it is now also working on attaining values for more complex things, such as cancer and life expectancy gains.

‘It’s an ongoing research agenda, and the more complex the risks, the more it requires additional theoretical and empirical work.

‘If you take something like air pollution, it’s harder for people to understand the impact on themselves of ongoing risk reductions over time, which is actually to improve life expectancy. At the same time, we continue to develop the underlying theory for the valuation of risk reductions like these to ensure the continued validity of the numbers going forward into any government appraisals.’

The publicly shaped model has been used by a range of departments and organisations, and has been included in the HM Treasury’s The Green Book, which guides public bodies on the steps to take before assigning funds to a policy or project.

Sue Chilton Professor of Economics

Reach: Economics Research Group

Our approach switches the perspective from risk appraisal based on loss to one based on prevention.

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Newcastle University Business School

Sometimes you can feel unwelcome without a door actually being slammed in your face.

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Reach: Human Resource Management, Work and Employment Research Group

It’s not unusual to hear accounts of how migrants feel uncomfortable in their adopted homes, even when they’re legally cleared to be there. So there’s clearly something else at work here, behind the rules and regulation.

Dr Jenny Rodriguez calls it ‘the dark side of globalisation’.

‘I genuinely don’t believe this is a clear-cut scenario,’ said Dr Rodriguez, who is a Lecturer in Human Resource Management. ‘You still have people that have a right to be here, but struggle to get jobs.

There’s something else, and I think it’s a combination of things, rooted in the interpretation of regulation but also in other categories.’

Dr Rodriguez’s research focuses on intersectionality and transnational mobility, which aims to understand the relationship between being a migrant and social inequality. Her initial research focused on gender and the experiences of women, but has expanded to consider the interplay of other categories such as race, nationality and age.

She said: ‘Rather than looking at what the state does and what organisations do – which I think is relatively visible – I’m interested in how individuals experience that.’

People build up a picture of everyone they meet.

What interests Dr Rodriguez is how they construct and interpret that picture. A feeling of alienation is often put down to a single factor, such as foreignness.

But that can be experienced very differently by a Bangladeshi native living in the UK and someone from Latin America. Her work has also expanded to include a study of how the interpretation of regulation affects different individuals.

‘A lot of these regulations are just documents, and they’re enacted in a certain way. When people talk about being stopped at Heathrow, what is really happening to lead to this interpretation of the regulatory regime? It goes beyond just racial profiling.

‘There’s such a strong focus on organisations that sometimes the individual level gets obscured.

I recognise the value in looking at institutional arrangements and structures, but I think there are other issues we could understand more comprehensively.

‘You can get a lot from what individuals relate to you, because they’re telling you their version of events, how they exist within them and what they do.’

Dr Rodriguez’s work forms part of the Business School’s Human Resource Management, Work and Employment Research Group, which aims to contribute to debates about the way that work and organisations are changing. The group is particularly interested in matters of diversity, organisational dynamics and workplace regulation.

Dr Jenny Rodriguez Lecturer in Human Resource Management

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Newcastle University Business School

The UK’s workforce is ageing. So how should clever and responsible companies respond?

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Dr Matt Flynn Senior Lecturer in Human Resource Management

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Reach: Human Resource Management, Work and Employment Research Group

This is the question at the heart of the work of Dr Matt Flynn, a senior lecturer in human resource management, who has conducted research worldwide on the impact of ageing societies on the workplace.

Dr Flynn is part of the Centre for Research into the Older Workforce, which was created to investigate the attitudes of older people to work, and how they might help to fill skills gaps in industry.

‘Over the next 10 years, there are going to be 13.5 million vacancies opening up in the UK, and 7 million school leavers to fill them. Where are employers going to get the extra 6.5 million? It’s going to be through using the skills of everyone across the workforce.’

So how are employers going about reshaping themselves to adjust to this trend? ‘In terms of quick fixes, it’s about taking what’s already out there for other workers and extending it to older workers, especially when it comes to flexibility, healthy work environments and training and development opportunities.

‘It’s also making older people aware of the choices which are available to them, not only when it comes to pensions but also opportunities to engage in a variety of different activities as they approach the end of their careers, which they might not have thought of before.’ The call for more flexible hours was recently echoed by Age UK, which reported that many women over 50 are either in long-term unemployment or parttime work with annual wages under £10,000, due to caring responsibilities which push them into lowerpaid jobs.

Dr Flynn also believes it is important to find ways for employees to “transition” into retirement, giving them different roles as their abilities change. He recently worked with the NHS to explore which roles could be filled by older workers when the pension age rises to 69 over the next 30 years.

‘What the working group found out quite quickly was that the key to managing age is giving people pathways so they can do different things as they age.’

While he acknowledged that some older people can be reluctant to make radical shifts near the end of their career, he says this can be mitigated by offering them clear and fair guidance on how it will affect their retirement.

‘People often retire without knowing what their pension income is going to be. If you want people to make better decisions when it comes to their work and retirement, then just giving them the information is a big step forward.’

Dr Flynn’s work has led him to carry out research in the UK, Germany, Japan and Hong Kong, and linked him up with organisations from the European Union to the United Nations Secretariat.

‘The nice thing about this research field is that it’s quite high impact. You’ve got a number of organisations who aren’t really sure as to how to deal with this issue.

They’re looking to academics, and we can have a role in that.’

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Newcastle University Business School

Postgraduate research student

Eve Ewington

Eve Ewington spent three years in the UK civil service before starting her research into women’s participation in trade unions.

‘It’s definitely different from doing a regular job. The biggest thing I struggled with initially was that the deadlines were all self-set. It was disconcerting in the first year not to have to produce a certain document or report.’

Eve is interested in continuing in academia after her research, or joining a think tank. She believes that researchers can have an important role to play in reshaping the workplace.

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‘There aren’t many opportunities to spend three or four years purely devoted to a topic, so the understanding developed from that research can inform business practices or union practices. Without understanding you can’t change things for the better.’

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Reach: Profile | PhD Research students

Postgraduate research student

Eleni Dermentzi

‘It’s not just a degree or a period in my life,’ said Eleni Dermentzi, who was awarded the David Goldman PhD Scholarship at the Business School this year. ‘It’s where you learn how to do research.

I’ve learned so many things in a small period of time.’

Greek-born Eleni is exploring how universities can employ communication technologies such as social media to engage with stakeholders and the public, and the factors that stand in their way. She’s getting the perspectives of academics, universities and the public. Eleni aims to pursue a career in academia afterwards, possibly in the UK. ‘I love the fact that you can learn things and create knowledge and that you’re really independent.

It’s a job in which you’re working with others, but you have to be able to motivate yourself.’

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Newcastle University Business School

Postgraduate research student

Bo Gao

Bo Gao was also struck by the freedom of the PhD when he arrived from China, and the opportunities it offered at home and abroad.

‘A lot of Chinese universities are becoming more international, and welcome people with a background of education abroad. Even if you don’t have a job in academia, you can use it in other industries.’

Bo is exploring Chinese export behaviour between 2004 and 2007, shortly after its accession to the World Trade Organisation in 2002. His focus is company data, and there’s a lot of it, from profit to R&D investment.

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‘China is a big trading country, but a lot of its exports are by foreign-owned companies. Apple designed in America, but manufactures in China.

‘Following two theoretical models I have built, at present most of my work involves data. I’m looking at all the big firms, instead of state-owned, private and foreign-owned firms, and joint ventures. I’m working with a database of financial, transaction and export data.

‘Everyone knows China is a big trade partner to many countries, and I’m looking at what drives this. I’ve found myself getting a lot of support and guidance, and I’m looking to improve the understanding of this area.’

Reach: Profile | PhD Research students

Postgraduate research student

Mariam Alshibani

Mariam Alshibani was a lecturer in Saudi Arabia when she decided to study the factors that affect organisational change in Saudi Arabia.

‘I’d already done my bachelor in Saudi Arabia and my master’s in Australia, so I was really interested in the UK and liked the programme at Newcastle. It’s one of the top universities for research.’

Mariam has conducted interviews with ministry officials, managers, head teachers and teachers to discover more about why her country struggles with organisational change, particularly in the public sector.

Her research has honed her critical thinking skills, and dug into an important cultural topic for the country.

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‘When you interview people there are two different responses. Some claim that effective communication improved their management to change. Others believe that only one-way communication is present since the flow of information is highly controlled, resulting in vagueness of change projects and limited transparency and accountability, they receive rules that they have to apply without any further communication, even when they want to express their opinions. Many provided very cautious responses at the start of an interview, but after developing a rapport with the interviewer their answers shift and they say the truth about what is happening.’

When Mariam finishes her work, she may join an agency that’s been set up to monitor outcomes in education in Saudi Arabia. But she’s not the only person to make the leap from employment to research.

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Newcastle University Business School

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Postgraduate research student

Kathie Ross Kathie Ross is thousands of miles from home, working on a study that will take years to complete.

The former accountant talks online to her family in Canada every day, but spends much of the rest of her time researching what factors affect how female accountants approach their professional development.

‘I say that I’m happiest when I’m learning,’ she said.

‘My husband says that I’m not happy unless I’m learning.’

She is one of 57 people currently studying PhDs at Newcastle University Business School. Researchers from 21 countries currently call the city home.

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Kathie came to Newcastle to work with Professor Kathryn Haynes on her research, in which she talks to women about the choices they’ve taken and how a person’s identity impacts their role in the workplace. In the longer term, she’d like to see her work contribute to changes in the accountancy industry.

‘We’ve seen changes and growth, but we still need more. It’s 50/50 coming into the field, but by the time you get to the top it’s only 20 per cent female partners in accountancy practices, and many of those aren’t equity partners.’

Both Kathie and her husband already have a retirement income, so she’s motivated by the research rather than the need to carve out a career. But what do others believe a PhD could unlock for them?

Reach: Profile | PhD Research students

Postgraduate research student

Muhammad Hassan Muhammad Hassan left his teaching post in a university in Pakistan to explore how firms’ performance on the Karachi Stock Exchange and the board roles were affected by a law regarding restructuring of corporate boards.

‘The PhD is a different kind of education process.

The bachelor or master’s are more of a taught programme, where the student is reactive. With PhDs, you have control of everything. You have more liberty to do what you want… You’re the expert in your field, and you can apply to positions with more confidence.’

Muhammad expects to return to Pakistan after his research is complete.

‘It’s a passport that opens many doors. It’s not just monetary. It transforms the thought process of the person for the rest of their life.’

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Newcastle University Business School

In a competitive global marketplace, the pressure to create new and innovative products is huge.

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Reach: Innovation Systems Research Group

As a result, companies that were previously used to creating new products and services in-house are linking up with external experts to pool knowledge and come up with the next big thing.

However, once a company has made the decision to pursue ‘open innovation’, how does it actually go about doing it?

Dr Hanna Bahemia is a Lecturer in Innovation and Entrepreneurship who is focused on how open innovation is managed and delivered at a companylevel. Her research looks at the way the open innovation process can effectively be managed, and how inherent risks can be minimised.

‘I’m looking at the strategy of how companies implement an open innovation strategy for different types of innovation projects, and the implementation process will tend to be different, for example for incremental and radical innovation projects.’

While the benefits of opening up to outside experts far outweigh the risks, there are elements to be aware of. For example, should a company be open with its partners from the outset to improve understanding, or should it remain cagey about its work until a certain point to protect its intellectual property?

There are also questions as to the role that managers should play in building relationships with external partners, and the issue of how companies pursue radical innovations through open innovation while maintaining their own R&D activity.

‘It’s about getting a balance between an open innovation strategy and internal R&D. Some companies see open innovation as a cost-cutting strategy, but if you try to reduce your internal R&D you could be caught in a spiral. Open innovation is complementary. It’s not substitutional.’

A large part of Dr Bahemia’s work is with automotive companies. She has undertaken a number of case studies in the industry, and recently wrote up a paper on the implementation of an open innovation strategy.

‘Traditionally, there’s always been collaboration with suppliers in the automotive industry. What we’re seeing is companies opening up more to suppliers in very different industries. The Technology Strategy Board is also playing an important role in incentivising these firms, as they look at areas such as the lowcarbon agenda and the electric vehicle.’

Importantly, the success of an open innovation strategy rests not just with the choice of partner, but with the business itself.

‘If you’re trying to implement an open innovation strategy, there should be a culture that promotes experimentation. Support from senior management is crucial, as it encourages staff to be more inclined to explore, and learn by trial and error.’

Dr Bahemia is part of the Innovation Systems Research Group, which encompasses a broad range of interests from the management of complex projects to the challenges of developing new products and services. It also investigates how entrepreneurs can identify new opportunities, and the role that governments, universities and businesses can play in that process.

Dr Hanna Bahemia Lecturer in Innovation and Entrepreneurship

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Newcastle University Business School

Larger businesses often have the capacity to research and implement new initiatives and projects, but in a small company, when you’re the CEO, the marketing manager and the tea-maker, time is tight.

Many SMEs appreciate the savings and efficiencies that could come from implementing Lean techniques and methodologies made famous by the automotive industry. However, they often find they cannot spare the staff and the time, and they struggle to pinpoint where best to apply these techniques.

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Newcastle University researchers, Dr Tom McGovern, Professor Christian Hicks and Dr Adrian Small, took the lead in a project that aimed to cut that process into more manageable chunks. Building on earlier research, they took part in an EU-funded project to improve the adoption of Lean by SMEs in the North Sea region, known as the European Regions for Innovative Productivity (ERIP).

Professor Christian Hicks said: ‘The idea of Lean is eliminating waste from a process, and optimising that process so you achieve maximum value. That’s got a financial component, but it’s also about quality and delivery.’

ERIP implemented a “bite-size” methodology, consisting of a three-stage process that reduced the time that team members were required to block out for training and meetings. It begins with a half-day diagnostic event which gives an overview of Lean. This is followed by the diagnostic stage, in which the team discusses which areas of the company need attention.

Then there are the improvement workshops, which address how to deal with those particular needs.

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This method dealt with another popular complaint among SMEs, namely that they often knew about the principles of Lean but struggled to identify priority issues within their organisation.

The approach was applied to 25 SMEs throughout the North Sea region. German printing company L-Druck reported cost savings of more than €140,000 after it had reduced the lead-time of their quotation process from 16 hours to one hour. In Belgium, one SME reported a 52 per cent increase in productivity, while UK business Peacocks Medical Group reduced waste by 25 per cent by fine-tuning its materials requisition, and improved the utilisation of its floor space by 15 per cent. It said that ‘the development of a bite-size Lean approach was more appropriate for our organisation as it allowed us to meet our operational commitments as well as engaging with the ERIP project’.

The ERIP project has helped spread the application of lean in SMEs. In Holland, for example, over 100 companies are currently involved in this work in some way. ‘There’s a lot of international collaboration now,’ said Professor Hicks. ‘Our research aims to have realworld-impact, be regionally routed and internationally recognised.’

This project was funded by the EU’s European Regional Development Fund through the INTERREG IVB North Sea Region Programme.

Reach: Innovation Systems Research Group

Have you ever felt like you simply didn’t have time to change?

Chris Hicks Professor of Operations Management

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Newcastle University Business School

Companies around the world are being urged to become more sustainable.

Fred Lemke Professor of Marketing and Sustainability

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Reach: Services Marketing Research Group

Does it mean the same thing to them as it does to us?

‘When you talk to individuals about sustainability, you get so many different views,’ says Professor Fred Lemke.

‘One says it’s about green issues, and that’s the view many companies have. But consumers see more.

They believe it encompasses fair pay, employment conditions, and where materials are sourced.

Professor Lemke cites the example of the “horsemeat scandal” last year, in which customer-facing supermarket chains bore the brunt of the reputational damage when horsemeat from a supplier was found in stores.

‘Consumers are very aware and very informed.

They’ve learned that companies can appear more green without actually changing anything, so they’ve become far more sceptical and look more carefully.’

‘You don’t have to change an image problem that much. But if you have a reputation problem, turning it around is far more difficult. You need a warning system in the supply chain to say this could be dangerous. I’m not sure companies have a system like that. They’re good with the flow of raw materials, but reputational risk is so subjective, and there are not many companies that manage it well.’

Professor Lemke joined Newcastle University Business School as Professor of Marketing and Sustainability in 2013, and is a management consultant for international companies such as Sony, BASF and Bosch. He has published papers on the nature of sustainability and the notion of responsibility through the supply chain.

‘Many companies look at legal compliance. They have a look at what happens within the boundaries of the organisation but don’t understand that consumers believe they have to take a wider responsibility and look past themselves.

‘The thing about the supply chain is that the companies closest to the market take the greatest risks and have to take the greatest responsibility.’

Professor Lemke is part of the Services Marketing Research Group, which was founded in 2012 to create and share best practice in the fields of services management and services marketing. This ranges from how to create an outstanding service experience to the role of technology and external partners.

He stresses that we are now in an age in which sustainability impacts not only on reputation, but also on the bottom line.

‘In the old days, it was a compliment to say that a salesman could sell an Eskimo a fridge. Now the Eskimo comes back with the fridge and says: ‘Why did you sell me this? I don’t need it and you know it’.’

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Newcastle University Business School

Brand and service – what does it mean to customers?

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Reach: Services Marketing Research Group

As part of his civil service in his native Germany, Christof Backhaus worked in a youth hostel. He says it’s that experience that got him interested in the relationships between a brand or service and their customers.

‘I have always liked some kind of human element in interactions… in the moment in which you perform a service you have a large impact as an employee on how the service is actually seen by the customer.’

He is now a Professor of Marketing at Newcastle University Business School, researching the fields of services marketing and services management. He works with companies from Vodafone to Volkswagen on issues of customer relationship management and service innovation.

‘I’ve tried to bring it down to three core areas. There’s service innovation management, or how to design a service so it performs well. There’s customer relationship management, and then there’s branding and how to communicate the whole thing effectively.’

Together with colleagues, Christof has spent time analysing surveys on how 2,500 franchisees in different industries felt about their parent franchise over time.

He noted that the euphoric enthusiasm tended to wane by the second year, but that positivity rose later on as the two settled into the relationship.

His research also includes a study into how customers react when brands spin out into unfamiliar territory. In a paper published last year, he investigated whether reactions to luxury brand extensions differed from non-luxury brands.

In an online survey of close to 500 subjects, researchers asked how they felt if six different

companies branched out into hotels, interior design, pralines, or smartphones. Investigators chose Chanel, Yves Saint Laurent and Dolce & Gabbana as the luxury brands for this hypothetical situation, and Lacoste, Abercrombie & Fitch and Mango as the non-luxury options. The study indicated that a luxury brand’s reputation for arousing feelings of pleasure and hedonism had a big role in winning customers over to a new venture. Owning a particular brand’s item was also an important factor.

‘In both cases, the overall fit of the brand extension is the most important thing. Also, it emerged that brands that conveyed reliability fared better, in general. Thereby, the effect of reliability is weaker for luxury brands and more relevant for non-luxury brands. Whereas with a luxury brand, the higher the hedonic value, the further they can extend.’

In recent years, luxury brands have been taking advantage of this goodwill. Armani dipped its toe into books, bars and spas, while Versace launched a hotel brand. But Christof cautions that reputation only takes you so far.

‘It’s important to engage in some scenario-based research. If I was in a company thinking about something like this, I would definitely test the market first to see what the audience’s reaction would be.’

Christof Backhaus Director of Impact Professor of Marketing

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Newcastle University Business School

The world of work is changing.

Daniel Muzio Professor of Professions and Organisation

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Reach: Strategy, Organisations and Society Research Group

In recent decades, we’ve seen subtle and marked changes in what it means to be a professional. We’ve seen changes to roles, to shift patterns, to hierarchies.

We’ve seen increased diversity, different strategies, and a shift in how organisations innovate and collaborate.

Professor Daniel Muzio’s work seeks to advance the study of professions.

‘I’m very much committed to developing the study of professions as an independent topic in its own right.

‘Organisations are the main employer of individuals.

They’re also the most important vehicle for professional action through which individuals can influence society, and the most important vehicle for economic development.’

Professor Muzio started his career in management consultancy, but has spent much of his working life researching facets of professions, professionals and professionalism. He hopes to boost interest in this area with The Journal of Professions and Organisation. The journal’s first issue launched in March, with Professor Muzio as one of its founding editors.

‘If you look at the curriculum, the great majority of examples in organisational theory draw on the world of manufacturing. But services are 75 per cent of the economy. If there’s something that Britain knows how to do well, it’s professional services, but what we teach doesn’t reflect what the economy is good at.’

His own interest is mainly in the legal profession, a profession that has seen change over the years despite being tentative about new ways of working.

This includes the introduction of more diversity at non-board level, the delegation of decisions to committees, and the introduction of limited liability which stops individual partners being personally liable for company debts.

However, while organisations have started welcoming a wider range of people into the game, it’s a long and winding road to the top.

‘Increasingly, professional firms resemble a tournament model whereby you take more people than you need, and compete over scarce places, working harder, working longer, and whoever wins the tournament gets promoted. At the beginning you’re paid less but you accept it because – if you perform well – within 10 to 12 years you’ll have access to massive riches.

‘However, the tournament is becoming harder, and lasting longer. There are probably less places in the pyramid to be promoted to. It takes longer to be promoted. There’s a tendency to do more with less, and there is increasingly the threat of losing your partnership if profitability suffers.’

Professor Muzio is part of the Strategy, Organisations and Society Research Group at Newcastle University Business School, which uses social theory to look into major organisational, societal and strategic issues. It is particularly interested in multinationals, the organised professions and the media.

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Newcastle University Business School

So what obligations and responsibilities should trustees and consultants have when dealing with pension funds?

In a review published in 2012, Professor John Kay has been very critical of the way UK equity markets are geared towards generating short-term investment profits, emphasising the need for a shift towards longterm and ‘fiduciary’ standards, necessitating loyalty and prudence within the investment world.

While these standards require that the client’s interests are put first and conflict of interest avoided, there’s a wide gap between how pension fund trustees interpret and enact that in practice.

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It was at that time that Anna Tilba published her PhD research on the factors behind engaged and disengaged institutional investors in companies, a study that covered why investors such as pension funds may take less of an interest in corporate governance within their investment portfolios.

She’s since found herself part of the advisory group that has looked into the concept of ‘fiduciary duty’, as part of a consultation paper for the Law Commission, Fiduciary Duties of Investment Intermediaries (2013).

‘This notion is a very fuzzy concept. It can mean many different things to different people.

‘There should be a clarification of what these fiduciary duties should mean or could mean to people. Trustees need to be able to understand where they stand.’

One area of particular interest to Anna is the investment consultant, whose key role is to advise pension fund trustees on strategic asset allocation and investment fund manager selection.

ncl.ac.uk/nubs/research/centres/sos

‘Pension fund trustees are not required to be investment experts, so more and more financial advisers are called upon to help them,’ she says.

Professor Kay has suggested that investment consultants are a source of investment short-termism behaviour because the investment consultants are making the recommendations to pension fund trustees based on recent investment performance histories of the investment fund managers, rather than future strategy.

This can lead to a situation in which trustees are advised into investment complexity which would make it difficult to oversee the investment strategy let alone engage with companies they are investing in, while consultants select investments that generate shorter-term returns and impress prospective clients.

There are many factors which contribute to the shorttermism of financial markets. Anna believes that the lack of clarity associated with ‘fiduciary duty’ seems to exacerbate the problem further.

‘If we are to start tackling this pension issue, we need to account firstly for the complexity associated with current financial markets. Secondly, we need to focus more attention on the responsibilities and accountability of financial intermediaries such as the investment consultants who advise the trustees and the investment fund managers responsible for managing pension fund assets on their behalf.’

Dr Anna Tilba Lecturer in Strategy and Corporate Governance

Reach: Strategy, Organisations and Society Research Group

Pension fund trustees are not required to be investment experts, so more and more financial advisers are called upon to help them.

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Contact Newcastle University Business School 5 Barrack Road, Newcastle upon Tyne NE1 4SE UK Tel: +44 (0) 191 208 1500 E-mail: nubsdirectorofresearch@ncl.ac.uk Follow us on Twitter: @NUBizResearch

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We would like to thank the following for the use of their illustrative material: Critical Tortoise; John Donoghue Photographer; Graeme Peacock; Picture Farm; Simon Veit-Wilson Photography Ltd. Copywriter: John Hill.

Designed by: GDA, Northumberland.

Printed by: Statex Colour Print. Š Newcastle University, 2014.

The University of Newcastle upon Tyne trading as Newcastle University.