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Prof Williams leads Greek government bailout plan on undeclared economy

Tuesday, October 25th, 2016

Professor Colin Williams, chair in public policy at the Management School, is leading the Greek government’s action plan to tackle their undeclared economy. A recent report released by the International Labour Organisation (ILO), a United Nations agency, provides a set of policy recommendations informed by Prof Williams’s (pictured above) expert knowledge, which will set Greece on the right path to receiving their bailout money from the European Commission.

The ILO will now establish a road map with the Greek government to decide the timetable for the implementation of the legislative and component policy measures. They expressed special thanks to the high level team of experts that prepared the comprehensive diagnostic report, led by Prof Williams.

For the Greek government to receive debt relief, one of the five conditions agreed in August 2015 was that they would develop a national action plan to tackle their undeclared economy. Funded by the European Commission, Prof Williams has led the mission to Greece to produce this plan. Following a period of extensive consultation by him with the Greek government, the Bank of Greece, trade unions and employer organisations, it was accepted and validated by all partners in July.

Prof Williams has written extensively on ‘best practice’ policy approaches and measures for tackling the undeclared economy. A key aspect of his work is to use institutional theory to explain the undeclared economy. To tackle the undeclared economy, he has argued that formal institutional failings need to be addressed which produce a lack of alignment between the laws and regulations, and citizens’ and businesses’ beliefs about the acceptability of operating on an undeclared basis.  The national action plan produced for Greece is based on tackling these formal institutional failings.

Prior to Prof Williams leading the mission to Greece, the employer representative organisations held four national-level workshops regarding their diagnosis of the problem and their view of the policy measures required. The trade union movement in Greece held two workshops to do the same. These reports were then presented to Prof Williams on his arrival in Greece in April 2016 at the commencement of his diagnostic mission.

Click here to read the ILO’s report.

Prof Sumon Bhaumik comments: ‘Inside the machine: how two Nobel winners taught us how companies tick’

Thursday, October 20th, 2016

Originally posted on The Conversation 17 October 2016

One of the most notable evolutions in economic theory is the change in how we look at companies. No longer do we see a black box which uses some process or technology to turn inputs into outputs. These days we think of a business as a nexus of contracts among different stakeholders – shareholders, creditors, managers, workers, customers, suppliers and so on.

This evolution has led us to look at corporate governance through the design of contracts between those stakeholders. Oliver Hart and Bengt Holmström have laid the foundation to enable us to do that. The 2016 Nobel prize in Economics went some way to acknowledging this contribution.

While contracts are commonplace, they are generally not simple. They might be designed at times when the objectives of stakeholders differ (the so-called “agency problem”). For example, shareholders may want to maximise a company’s profits, while managers may want to build an empire through mergers and acquisitions.

There is also something called “asymmetric information”, where the actions of one set of stakeholders are not visible to other stakeholders in the company. Everyone can read the financial statements, but shareholders cannot directly see how much effort the managers put in to drive profits.

Shareholders can, however, enter into a contract with a company’s leaders that would give the managers an incentive to work in the interest of the shareholders. Pay can be linked to observable measures of a company’s performance. Similarly, shares and stock options may be included. In the Nobel citation, Holmström, a Finnish professor working at the Massachusetts Institute of Technology, was credited with demonstrating how shareholders should design an optimal contract for a CEO whose actions they would not be able to fully monitor.

Contracts can also be incomplete. It is either not possible or too expensive to write contracts that take into account all possible future outcomes. It is precisely the incompleteness of contracts that provides a rationale for corporate governance. This follows from research carried out by Hart, a British professor working at Harvard.

Hart of the matter

Consider, for example, a simple executive pay scheme in a company where shareholders own the company but control lies with the management. The relationship offers both an agency problem and asymmetric information. As mentioned earlier, one option for shareholders would be to write a contract that links the compensation of the managers to an observable outcome such as revenue or profit.

But profits can be affected by factors out of a manager’s control, and a contract that takes into account all combinations of managerial effort and external factors is impractical. Managers generally act in groups and so it may also prove difficult to assign an outcome to one person. You can write contracts that penalise the group if a product fails or a plant proves inefficient, of course, but Holmström argued that uncertainty about the causes of such failures would mean that monitoring would be necessary and hence the associated costs are unavoidable.

You could judge the performance of managers against that of their peers to decide compensation (a supermarket CEO might cheer that sales are up 10%; shareholders less so if other stores are up 12%). But this approach would still only work if you can successfully remove the influence of common external factors affecting how managers perform.

In this case, where simple contracts may not be easy to design or enforce, we need a mechanism – corporate governance – that ensures that the interests of non-managerial stakeholders are not undermined. Hart views corporate governance as a mechanism to allocate rights to control a company’s non-human assets among the stakeholders.

Credit due

An interesting implication of this perspective on corporate governance is a rationale for debt. Suppose the shareholders of a firm are mainly interested in short-term profits, while managers prefer grandiose empire building that brings private perks and benefits. Any contract that attempts to address this conflict is likely to be incomplete, unable to account for every influence over the company’s future profits.

This opens up the possibility of a significant dispute between the shareholders and the managers about the latter’s compensation. Managers might claim low profits came despite their best efforts, rather than because of their poor efforts or judgement.

How can debt help in this case? A debt contract can enable the creditor to enforce liquidation of a firm if it cannot meet its repayment obligations. If the firm performs well and can meet these obligations, control over the assets of the company remains with the managers. If, on the other hand, the company performs poorly and cannot repay the creditors then it can be liquidated. At the time of liquidation, after the creditors have been repaid, the residual (or remaining) rights over the company’s assets are with the shareholders – the managers have no rights over these assets any more.

In other words, where contracts between shareholders and managers are incomplete, debt taken on for whatever reason can force an alignment of objectives. In the words of Hart and Sanford J Grossman: “managers can avoid losing their positions only by being more productive.” Productive managers are precisely what shareholders want. A company’s capital structure can, therefore, be used to both discipline managers and give outsiders (creditors) an incentive to enforce the discipline. Hart and Grossman also examined how control is exerted in work on voting rights.

Holmström and Hart do not provide all the answers to resolve the problems associated with weak corporate governance. They do, however, induce us to think about a firm as a microcosm of the society in which we live, where stakeholders with different objectives compete for power and control. Their work has helped us to move away from one-size-fit-all rules about things such as financial structure and pay and has led us to focus on making contracts and mechanisms that work. That is a transforming contribution to corporate governance research.

Author: , Chair in Finance, Sheffield University Management School

Study demonstrates how academia and business can ensure sustainability of resources

Monday, October 17th, 2016

Lenny Koh

Collaboration between business and academia can identify the most urgent research priorities to ensure the sustainability of food, energy, water and the environment, according to a new study.

Companies both depend upon and impact the environment, yet their perspectives are often overlooked by the research community which lacks access to business thinking. Equally, businesses find it challenging to engage with the academic community, and to define researchable questions that would benefit from more detailed analysis.

This study, convened by the Cambridge Institute for Sustainability Leadership (CISL), engaged over 250 people, including Prof Lenny Koh from the Management School and companies such as Asda, EDF Energy, HSBC and Nestlé, to co-produce research priorities that are scientifically feasible and also include outputs that can be practically implemented by the business community.

The project is part of the work of the Nexus Network, a network of researchers and stakeholders coordinated by CICL, the University of Sheffield, the University of Sussex, the University of East Anglia and the University of Exeter, and supported by the Economic and Social Research Council (ESRC).

Prof Koh, co-author of the study and director of the Advanced Resource Efficiency Centre at the University of Sheffield, said: “This collaborative research shapes interesting research priorities using the nexus approach on food, energy, water and the environment. The co-design by leading academics and industry provides strategic directions to help address the global natural resources sustainability challenges. With the backing from ESRC, the nexus approach gives a platform to consider these challenges in an integrated way.”

“It links to the mission of the Sheffield University Management School, which integrates sustainability throughout its vibrant environments on research, learning and wider impact. Our involvement in Nexus2020 research is an excellent example demonstrating our sustainability leadership in this field.”

Several themes emerged from this study, highlighting the issues that require more research and better engagement between the academic and business communities. These included research around development of pragmatic yet credible tools that allow businesses to incorporate the interactions between food, energy and water demands in a changing environment into their decision-making; the role of social considerations and livelihoods in business decision-making in relation to sustainable management; identification of the most effective levers for behaviour change; and understanding incentives or circumstances that allow individuals and businesses to take a leadership stance on these issues.

It will be the role of multi-disciplinary groups of researchers and business practitioners to devise the projects that will deliver the solutions to these pressing issues around food, energy, water and the environment.

The damage is already done: Greater environmental risks identified in ‘green’ material

Monday, October 17th, 2016

Lenny Koh

Expertise from a University of Sheffield research team, comprising two leading departments, has used life cycle analysis to find that legislation proposing the replacement of a common material has led to wider use of an even more toxic substance.

Professors Ian Reaney (Materials Science and Engineering) and Lenny Koh (Management School, pictured above) undertook the first comparative life cycle analysis of piezoelectric materials as part of an EPSRC project. Their findings indicate that a replacement for lead zirconate titanate (PZN), recommended by global authorities due to its green credentials, is more dangerous to the environment.

The mining and production process for the recommended replacement, potassium sodium niobate (KNN), releases heavy metals and radioactive materials and has a significant adverse effect on air quality, water quality and the land. By applying life cycle analysis to both materials, Reaney and Koh were able to identify that harmful effects of KNN took hold on the environment prior to using the material – the damage was done before it even reached manufacturers meaning that EU legislators could have been unaware of its implications.

These findings will have a significant impact on global policy and the manufacturing sector. Piezoelectric materials are used in a wide array of products and projects including sensors, military hardware, generators and smart structures – global demand for the material is estimate at $1billion with an annual growth rate ten per cent.

Prof Koh, co-investigator on the research, said: “Our findings demonstrate the pivotal role of life cycle analysis in determining the environmental sustainability of substitutions of materials. Materials scientists, engineers and industry must consider the life cycle impact of materials in design and manufacture before deciding on the preferred substituted choice. Legislative bodies play a leading role in enforcing such responsibility in order to protect the scarcity and criticality of materials resources and prevent unsustainable practices.”

The main findings of this study were recently published by the Royal Society of Chemistry in the Energy and Environmental Science Journal. Lead author on the paper, Dr Taofeeq Ibn-Mohammed, is an ESPRC research associate and works with Professor Koh at two centres linked with the Management School, the Advanced Resource Efficiency Centre and the Centre for Energy, Environment and Sustainability. Of the work, he said: “Overall, the research demonstrates that application of life cycle analysis and supply chain management to a strategic engineering question allows industries and policy makers to make informed decisions regarding the environmental consequences of substitute materials, designs, fabrication processes and usage.”

Professor Reaney, principal investigator on the project, concluded: “The research has strong implications for future legislation concerning piezoelectrics within the European Union and worldwide.”

Predicting behaviour to save lives: Research with South Yorkshire Fire and Rescue comes to fruition

Thursday, October 6th, 2016

Dr Dermot Breslin

How can South Yorkshire Fire and Rescue (SYFR) plan to maximise the effect of its fire prevention initiatives?

Research from the Management School, in collaboration with Edge Hill and Coventry universities, models community behaviour so SYFR can identify high-risk areas and intervene – reaching vulnerable communities and reducing incidents. This decision support tool, called Premonition, enables fire services to input scenarios – the mapping software then combines geographical, demographical and behavioural data to predict areas where there might be increased risk of fires and other emergencies.

This informs SYFR’s resource planning and means that fire prevention initiatives can be focused on the relevant areas, protecting the most vulnerable in our community.

Dermot Breslin from the Management School (pictured above) explained: “We live in increasingly complex social networks and our behaviours are influenced by many factors. This predictive model unpacks the complexity so SYFR, and potentially services in other areas, can manage their resources and services targeted at the most vulnerable groups in our community.

“We hope that over time this will lead to improved community behaviour and less emergencies.”

Hear from the Premonition team in this video:

Contact Dermot on

Innovative seminar series addresses behavioural spillover

Friday, September 30th, 2016


Does one thing lead to another? Experts at the Management School hope to find out.

PhD student Caroline Verfuerth (pictured), Prof Victoria Wells and Dr Caroline Oates from Management School research centre CReiMS, alongside Dr Chris Jones from Sheffield’s Department of Psychology, are involved in an innovative seminar series funded by the British Psychological Society (BPS).

Together with researchers from Cardiff University, University of Surrey and the London School of Economics, the team will host one of four events of the seminar series called ‘Does one thing lead to another? Behavioural spillover in theory and practice’.

Caroline explained: “Behavioural spillover is when a change in one behaviour leads to changes in other behaviours. In this seminar series we aim to bring together researchers, policy makers and practitioners from psychology, management, sociology, marketing and economics, to discuss theoretical and methodological issues in spillover research and its implications. We hope the seminars will advance the field of this research by producing an innovative research agenda.

“Furthermore, we hope that the seminar series will inspire future research projects and policy which addresses social, health, environmental and management issues.”

Email for more information.

Management School to assist in design of major new Pilot Plant

Thursday, September 15th, 2016

The UK Centre for Carbon Utilisation (CDUUK) at the University of Sheffield recently won a competitive tender to join a team to design a new carbon capture and utilisation plant for the Tees Valley. The contract pairs the University of Sheffield with the Teeside Collective a pioneering infrastructure project who are at the forefront of innovative carbon capture and usage technology. The collective are working together to establish Europe’s first clean industrial zone. Prof Lenny Koh, chair in operations management at the Management School, is a member of the CDUUK board.

CDUUK are academic specialists from across seven departments (Chemical and Biological Engineering, Materials Science Engineering, Mechanical Science, Chemistry, Physics and Astronomy, Management School and Psychology) who will bring a range of interdisciplinary expertise to the Collective. CDUUK will be designing the demonstration centre and commercial and operating models of this ground breaking project.

The move comes as the Government formulates its policy on decarbonisation in the light of the cancellation in November of funding for Carbon Capture and Storage (CCS) in the power sector. A policy review is due to be published by Lord Oxburgh, who visited Teesside to hear about the Collective’s plans as part of his review.

Professor Peter Styring, Chair of CDUUK, commented: “The impact of the proposed carbon capture and utilisation demonstration centre cannot be underestimated, helping more heavy industrial companies decarbonise their facilities and explore innovative uses for carbon and income streams. Utilisation of CO2 is gaining momentum globally and this will put the UK at the forefront of that effort”

CDUUK provides a cohesive centre for interdisciplinary research into carbon dioxide utilization in Sheffield. Using a co-ordinated approach to research and a strategic approach to funding opportunities the Centre is at the forefront of CDU research in the UK.

Teesside Collective are a cluster of leading industries with a shared vision: to establish Teesside as the go-to location for future clean industrial development by creating Europe’s first Carbon Capture and Storage (CCS) equipped industrial zone. Tees Valley Unlimited, the Local Enterprise Partnership which includes the Teesside industrial cluster, has been awarded £1m funding by the UK Department of Energy and Climate Change to develop a business case for deploying industrial CCS in the Teesside cluster and to make recommendations for a funding mechanism.

Comment: What Africa can learn from Sheffield’s investment deal with China, by Sharif Khalid

Tuesday, August 30th, 2016

Originally posted on The Conversation.

The British press has been devoting acres of coverage to a £1bn foreign direct investment deal into Sheffield, an industrial city in northern England. Branded as an extension of the “golden era” of relations between Britain and China, the contract between Sheffield and Sichuan Guodong Construction Group has been heralded as a remarkable investment. It is easily the largest Chinese investment in Britain outside London. And it comes with a 60-year life span.

The deal elicits useful lessons for Chinese investments across the African continent.

The Sheffield deal came with clearly stipulated terms of engagement. These included the creation of employment opportunities, and an obligation to fill a clearly defined urban development gap. This includes a five star hotel, sport fields, new office and leisure properties and both high-end and affordable housing in the city centre.

Significantly, the developments are to be undertaken using local and not Chinese labour.

These conditions stand in contrast with what deals look like between many African countries and China. Despite a plethora of such deals, leaders on the continent have not shown enough commitment to ensuring equitable partnerships with China. The Sheffield case shows what’s possible if the negotiating partner is firm about insisting on certain conditions for any deal.

Chinese interest in Africa

Trade between China and Africa has risen significantly. It now stands at an estimated $198.5 billion. This has been shaped largely by Chinese hunger for raw materials.

By some estimates there are about 1,673 Chinese-backed projects dotted across 51 African countries. This is obviously significant and surpasses any other region of the globe. By and large the terms of these pacts have been dominated by China’s needs. This is inimical – but it needn’t be the case.

The Chinese probably possess the most malleable foreign and trade strategy on the international landscape. As such it responds to the strategic investment programmes of its partner states. Chinese investors respond to the robust policy of Europe and America just as easily as they meet Africa with what demands it brings to the table.

Current Sino-Africa relations are best understood against the backdrop of the strategic Beijing China-Africa Summit of 2006 and the recent Johannesburg Forum on China-Africa Cooperation. Since then numerous loans, grants and infrastructure contracts have been inked between African governments and Chinese entities.

In addition, Africa plays host to a flourishing “barter” enclave. Under these deals the continent feeds sprawling Chinese industries in exchange for development loans and infrastructure contracts.

This form of barter comes with significant implications for Sino-Africa relations. In most instances the barter promotes an indirect involvement of China’s corporations in the extraction of Africa’s mineral resources. A case in point is the £3 billion loan agreement between China Development Bank and the government of Ghana, as well as other deals with Exim Bank China. These formed part of a $13 billion concessionary agreement for the development of infrastructure in Ghana, including its oil sector.

About 60% of contracts emanating out of this relationship are in the hands of Chinese corporations. Vital ingredients are missing. Issues such as corporate governance, social responsibility, corporate reporting, stakeholder engagement and responsible investment are ignored. These governance factors come to be treated as nonessential.

Many Chinese investors are also not directly involved in the actual mineral extraction. They often work through third parties. This means that the investors themselves cannot be held directly accountable and often evade their responsibilities.

The social and environmental effects across Africa’s resource value chain are massive. And African governments are left to deal with the environmental damage.

Africa has a strong hand to play

Given China’s need for raw materials, there is undoubtedly an opportunity for Africa to redefine power relations in its dealings with the new global giant. The mineral rich continent can set on course a win-win situation within the rubric of this existing relationship. Failure to do so might perpetually limit the continent’s ability to maximise economic value from its mineral resources.

Key factors must include skill transfer initiatives, localisation and fit for purpose infrastructure development.

Since the first Beijing Ministerial Conference in 2000 Africa has made little progress in preparing itself to meet China as an equal partner in economic dealings. The conference set in motion the Forum on China-Africa Cooperation and Programme for China-Africa Cooperation in Economic and Social Development. It could have spurred Africa to develop a more strategic response designed to accelerate development.

Africa needs to assemble the required mettle to change power relations in its dealings with China. The continent’s relations with China must be tailored to yield commensurate benefits.

Sheffield’s City Council seems to have been empowered enough to engage China on a mutual benefit bases. Given that Africa is the epicentre of most Chinese foreign direct investment it has a much stronger hand to play.

Even though the Sheffield case involved a private sector player, Africa must also turn agreements at government level into deals that deliver maximum economic value.

And African countries must use existing safety valves, like constitutional clauses and parliamentary agreements, to their advantage.

The Conversation

Sharif Mahmud Khalid, Lecturer in Accounting, University of Sheffield

This article was originally published on The Conversation. Read the original article.

CREED summer school explores migrant entrepreneurship

Tuesday, August 30th, 2016


Dr Chay Brooks from the Centre for Regional Economic and Enterprise Development (CREED) has been leading the European Entrepreneurship Summer School held at the University of Sheffield’s International Faculty in Greece. The summer school, now in its seventh year, is held in conjunction with our international partners from University of Groningen (Netherlands), High School of Economics (Russia), and the University of Twente (Netherlands).

Dr Brooks said: “It has been amazing week with the students learning about entrepreneurship in the sun! We have had a great range of international speakers sharing insights from their research.”

Across the week students were involved in a series of lectures, workshops and debates in different areas of entrepreneurship. This year the central theme of summer school was the socio-economic impacts of migrant entrepreneurship, which is an important issue in Europe. During the week students had sessions by academics on research including informal entrepreneurship, technology entrepreneurship, corporate entrepreneurship and entrepreneurship and public policy.

Dr Robert Wapshott, who also taught at the summer school, explained: “The aim of the event is to bring together students from across Europe to learn about and debate cutting edge entrepreneurship research.”

During the week students worked in international teams to develop in-depth presentations on some of the big questions facing entrepreneurship research. As the teams explored their topic in depth they sought to unpack the complexities of creating more entrepreneurial individuals, organisations and societies. The team awarded the best presentation included Ann Lozovaia and Alexander Kalita from HSE, Tuong Nguyen from Leipzig and Zhuang Jing from Sheffield, who gave a critical account about the importance of informal entrepreneurship.

Reflecting on her participation in the summer school, Kelly Lawrence, a Sheffield student, said: “The summer school was a fantastic opportunity to meet other students interested in entrepreneurship research. The programme was excellent and we all had a brilliant week.”

The CREED team participating in the summer school this year led by Dr Chay Brooks. It also included Dr Robert Wapshott, Dr Peter Rodgers, Cristian Gherhes and Professor Tim Vorley. Next year the summer school will be held in Moscow and the topic will be on green and sustainable entrepreneurship. If you’re interested in applying to take part, watch this space.




SUMS hosts BAFA corporate governance conference

Friday, August 5th, 2016

Sharif Khalid and Jill Atkins at the Management School are welcoming paper submissions for the BAFA (British Accounting & Finance Association) Special Interest Group on Corporate Governance conference, to be held at Sheffield University Management School on 21 December 2016.

The theme is qualitative research in governance and accountability. The conference will bring together academic researchers from around the world where points of discussion will include: governance mechanisms (such as boards, committees and NEDs); accountability mechanisms (audits, stakeholder engagement, shareholder relations); governance and accountability issues in emerging and developing economies; social and environmental accounting, accountability, auditing and governance; and codes of practice (their effectiveness and development).

Sharif said: “We’re looking forward to welcoming guests to Sheffield, and to discussing such a fascinating, fast-moving subject. There’s a long standing tradition of quantitative research into corporate governance, but recently many researchers in the area have moved towards a qualitative manner of understanding. We want to focus on the rich results and understanding that good quantitative research can lead to.”

An invited guest speaker will be announced in due course; there will also be a research methods session for doctoral researchers, as well as a facilitated doctoral stream.

Sharif and Jill are calling for abstracts to be submitted to by 31 August 2016. Papers accepted for presentation at the conference will be considered for publication in a special issue of the journal Qualitative Research in Financial Markets. Click here to read more about the conference.