Business School Research Roundup: April 14 2015

Duke Fuqua paper raises concerns over scientific investment

New, or basic, scientific research of the kind that leads to innovation is likely to suffer because large firms have become more interested in funding the application of existing research.

That’s the conclusion of a new working paper from Duke University Fuqua School of Business (Duke Fuqua) and the University of East Anglia, described as “alarming and concerning” by one of the paper’s authors, Sharon Belenzon, a strategy professor at Duke Fuqua.

"We show that while research expenditure is going up, the mix of research is moving away from basic research into more applied research. It reconciles the puzzle that R&D [research and development] expenditures are rising but growth rates are stagnating,” Belenzon explains in a press release.

The reason for this shift seems simply to be that applied research offers quicker returns for large firms – the abstract to ‘Killing the Golden Goose? The Decline of Science in Corporate R&D’ runs with the metaphor that firms would rather back a golden egg than a golden goose with the potential to lay golden eggs.

In their research, Belenzon – together with his Duke Fuqua colleague, Ashish Arora and the University of East Anglia’s Andrea Patacconi looked at the level of investment of around 1,000 firms engaged in R&D between 1980 and 2007.

Previous research into science investment has already shown that, post-1980, large firms have tended to rely on smaller firms to produce innovative research and then pay them for their discoveries.  However, Belenzon says that in the timeframe his team analyzed, large firms were not just relying on smaller firms to conduct the basic research - they were also investing less (through acquisition) and paying less.  

“They [larger firms] are only going to pay for the applications. There's no longer an incentive for pure scientific research," the Duke Fuqua professor reasons. From a profit and loss standpoint, it’s easy to see why this last point rings true for a number of large firms:  

“The thing about basic research that is so, so valuable is that you are creating something that is a public good, something anyone can use,” Belenzon expands: “This is why it spurs innovation and creates growth and technical change in the whole economy. But from an individual company's standpoint, it also means you are making the investment and somebody else is reaping the benefit.”

Copenhagen Business School hoping to take research to wider audience

Faculty at Copenhagen Business School will be offering free talks about their research to the general public as part of the Festival of Research, coordinated by the Danish Agency for Science, Technology and Innovation, next week, April 22-23.

One scheduled talk will look at how computer algorithms have impacted on financial markets and changed the role of the stockbroker. Another will see researchers present predictions on where they believe future growth will come from. Talks are available in both English and Danish.

In addition, the school has a roster of 12 faculty talks that can be booked online to take place away from the Copenhagen Business School campus, with titles that include ‘Storytelling in Organizations’.

Ethics’ undoing in a dark chapter of history: Yale SOM student to join fellowship   

A member of the MBA class of 2015 at Yale School of Management (Yale SOM) is one of 12 fellows in the discipline of business selected to participate in a two-week study of professional ethics in the context of Germany’s Third Reich (1933-45) and the Holocaust.

The study is an annual program run by FAPSE (Fellowships at Auschwitz for the Study of Professional Ethics), an affiliate of New York’s Museum of Jewish Heritage. Taking place in Germany and Poland, the course seeks to examine how a breakdown in moral codes can affect the role of a professional. The idea being that an intensive focus through the lens of such an extreme episode in history can impart vital insights into the wider role of ethical considerations and the challenges they present in today’s context.

Aside from students and young professionals with backgrounds in business, those specializing in law, medicine, journalism and the clergy have taken part each year since 2010.

The Yale SOM student, Hugo Santillan, joins current MBA students from UC Berkeley’s Haas School of Business and Harvard Business School as well as a recent graduate of Berlin-based European School of Management & Technology (ESMT) among others in this year’s program and expressed his gratitude at the opportunity in a news story for Yale SOM.

“I expect this fellowship to influence my development as a leader,” Santillan said, adding that he looked forward to “visiting sites of historical significance and engaging in discussions that will help us all better understand ethical failures in the business community.”