The latest Business Network Breakfast Briefing saw Dr Anna John use examples from all over the world as she explored three approaches to managing political risks to foreign investments. The Lecturer in Strategic Management presented her research and took questions at the Milton Keynes campus on Tuesday 9 April.

Her presentation, ‘Managing non-market risk to foreign investments: do nothing or manage actively?’, explored these different approaches with examples from countries as varied as Mozambique to China, India to Russia – with the UK and its never-ending Brexit another good source – helping to bring the theory alive.

Non-market risk comprises social risks (for example, nationalist movements and environmental protests) and political risks (for example, political regime change and regulatory uncertainty). Arguably, social activity of organisations, groups and individuals is more visible so social risks are relatively easier to predict and manage. Managing political risks is more of a challenge as the lack of information about political actions and intentions of organisations and governments makes it more difficult to make sense of these risks.

I wanted to focus on how, if at all, political risk should be managed relating to foreign direct investments. What is better: to ‘do nothing’ or to manage actively?

Dr Anna John, Lecturer in Strategic Management, OUBS

Two views – traditional, and modern – exist on what companies should do. The traditional view says political risk has negative implications for the performance of foreign direct investments and is largely defined by actions of governments (for example, protectionist policies). It should be avoided, meaning any investments into highly risky areas should be avoided too.

The modern view, which emerged in the early 1990s, suggests that political risk does not always have negative implications for the performance of organisations; instead, it may be a source of opportunities. Organisations can manage political risk and use it to their benefit.

Anna explored these two views in suggesting three approaches to political risk management of foreign direct investments: institutions approach (reactive), resources and capabilities approach (proactive) and resource dependence approach (active).

The institutions approach suggests that organisations passively react to pressures of political and regulatory institutions and ‘do nothing’. They either passively comply with the existing legislation, or avoid investing into a new and unfamiliar area; for instance, some US-listed companies are expected to comply with the Foreign Corrupt Practices Act (1977) and may not invest in some African and Asian countries where corruption is high.

The resources and capabilities approach suggests that organisations can proactively manage political risk and turn it their advantage by using political resources and capabilities. For instance, companies may benefit from prior experience of working in politically risky contexts (political resource) and from the ability to use this experience to make sense of new politically risky contexts (political capability). Some companies from politically risky environments like Russia, China and South Africa invest actively in Africa, Asia and Latin America.

The third resource dependence approach is a midway option with its major assumption that organisations are not autonomous; instead, they are dependent on resources of others. Like the institutions approach, this focuses on the negative implications but, like the resources and capabilities approach, suggests that organisations can manage political risk by managing their resources dependence upon others.

Reducing resource dependence by gaining control over key strategic resources is a possible strategy. For example, some newcomers to the Mozambican oil and gas sector such as Qatar Petroleum gain access to its key onshore and offshore blocks by partnering with more experienced firms with established ties to key government officials to lead the bidding process. This reduces dependence upon the government officials in the petroleum sector of the country.”

Dr Anna John, Lecturer in Strategic Management, OUBS

The effectiveness of these approaches varies from one context to another:

• The institutions approach is more effective in places such as China and Russia where institutions are well defined and homogenous, and where the central authority is rather strong.
• The resources and capabilities approach may be more effective in volatile places such as Venezuela and Ukraine.
• The resource dependence approach may work better in the USA and India, and somewhere like Mozambique, which have divisions due to federal structure and ethnic differences.

These approaches are not mutually exclusive or in conflict with each other; they can complement and be used in combination with each other.

The Breakfast Briefings are a series of face-to-face events, as part of The Open University Business Network. These events aim to foster collaboration and create an opportunity to explore together the latest and best of business thinking. We understand business and want to help your business flourish by sharing our insights into leadership and management at this series of collaborative events. In between briefings, why not join in on LinkedIn.

Big data analytics seems entirely absent in research on Corporate Social Responsibility (CSR) and sustainability. Yet the potential of big data to advance environmental and social concerns is enormous.

Big data analytics is about analysing very large structured datasets (e.g. those drawn from financial records and stock exchanges) and unstructured datasets (e.g. those generated by emails, tweets and GPS signals) that often cannot be analysed using traditional statistical methods. It opens up entirely new possibilities for spotting previously unnoticed patterns and anomalies.

In our research published in the British Journal of Management last year, we found that big data capabilities of managers are linked to higher sustainability of their organization. We surveyed 175 top management representatives (chief executive officers and managing directors) in food import and export firms headquartered in the UK and New Zealand. Our results from structural equation modelling indicated that big data competencies of top managers help towards environmental practices. What we still do not know is what specific technical or relational big data competencies would be best to advance sustainable practices and how.

What is the potential of big data in sustainability?

There is exponential growth of big data volumes driven by technology advances and lower equipment costs. Let us take a few practical examples from the oil and gas sector that I am familiar with. For example, Chevron’s Tengiz oil field in Kazakhstan has about one million sensors. Combined with real-time weather data and other types of data, big data generated by such equipment can be used to provide near-real-time alerts and help prevent accidents. Similarly, big data from safety inspections, location devices and drone photography can be used to develop predictive analytics to improve safety. In the area of transportation, for example, Devon Energy in the United States apply big data analytics to monitor the speed and location of their vehicle fleet and the need to evacuate workers in areas where hydrogen sulphide is located.

Big data has also been used in human development. The UN established Global Pulse, a big data lab in New York with satellite offices in Kampala and Jakarta. For example, in Indonesia, Global Pulse applied mobile phone data to understand food price fluctuations, and in Uganda, population movements. Non-governmental organizations and initiatives – particularly in health services – are also using big data (e.g. Médecins sans Frontières, Global Viral Forecasting Initiative).

Indeed, the donation of data by companies (or ‘data philanthropy’) has become a CSR activity by itself. For example, IBM and other companies regularly host ‘Open Data’ events (‘jams’ and ‘hackathons’) in which governments, NGOs and companies are encouraged to release data that can be used for some social or environmental purposes.

In a few countries, there is also some regulatory pressure for big data adoption. In the United States, the Deepwater Horizon disaster influenced debates about better process indicators for improving health and safety in offshore oil drilling. For example, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) requires offshore oil drillers to monitor critical safety equipment in real time and then archive the related data onshore – which generates huge volumes of data. More indirectly, government mandates for energy efficiency, climate change and other environmental restrictions have spurred some companies to use big data analytics towards environmental improvements.

So why is so little work done to apply big data?

There are open-source applications such as Apache Hadoop and IBM’s BigSheets that have made big data analytics more accessible to individuals and organizations around the world. So why is so little work being done to apply big data analytics for sustainability?

Part of the explanation may be that a lot of good work may remain unnoticed under the radar screen. Despite the attraction of the topic, the academic community and some popular media outlets do not seem to find this of interest, or perhaps the researchers and writers may feel out of their depth in writing about big data.

Another part of the explanation is that companies have largely focused on big data analytics to improve financial performance, for example, by mining customer data to help sell more products, applying big data analytics to effectively manage inventories or – in the example of the oil sector – using data from sensors to facilitate exploration and production operations.

CSR and sustainability seem to have been left behind. When I spoke with a number of CSR advisers in the oil and gas sector recently and tried to get their companies to support my research, I was told things like ‘I couldn’t sell this to my boss’. However, if you really want to tackle sustainability in new ways, you sometimes need to move outside of your comfort zone. This is what I have done.

Prof. J. George Frynas is Professor of Strategic Management at the Open University Business School. This blog is partly based on the article “Essential Micro-Foundations for Contemporary Business Operations: Top Management Tangible Competencies, Relationship-Based Business Networks and Environmental Sustainability”, British Journal of Management, 29(1), 43-62, 2018. Contact George.

The recent news that the Finnish Government will not be expanding its trial which provided 2,000 unemployed people with a state-supplied basic income has sparked fresh debate on the topic.

A basic income is defined as ‘a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement’. It is supplementary to any other support someone might receive such as unemployment, child or housing benefit.

Dr Charles Barthold, Lecturer in People Management at OUBS, discussed the potential advantages and drawbacks in ‘Modern Empowerment Today: The Possibilities of a Citizen’s Basic Income’, one of three presentations at a masterclass organised by OUBS at the Crowne Plaza in The City on Wednesday 2 May 2018.

Charles discusses the issue:

“The important criteria of a basic income are that it is an ‘unconditional’ income to every individual in a particular country via a repetitive cash payment and is universal (so not means tested). The idea is to democratise society with an intention to be inclusive as everyone becomes ‘part of society’ regardless of gender, class or poverty. It could empower us all and provide more choices for people such as offering the opportunity for couples to both work part-time, for example. It would be simple to administer and much easier than the complex current means tested system which is subject to both fraud and errors, although some people would still be receiving other benefits on top of this basic income.

“There is an expectation that innovation will destroy and create jobs and that the current level of employment will continue to increase. Basic income is an instrument to smooth the transition from one job to another but with individual responsibility to look for the next job and to be employable. It’s meant to provide a minimum income as you transition to another job – perhaps by learning new skills through going back to education – as a response to automation which will see some repetitive, low-skilled jobs replaced and a move towards other low-skilled jobs that are not repeatable such as cleaners and care workers.

“Usually these experiments are very limited in both the amount of people involved and the time it happens for. Despite the Finnish experiment not being continued beyond the end of the year, people have continued to work and stress levels decreased during these trials. I don’t see the basic income as a silver bullet as it’s difficult to provide money to people without any responsibility – according to the current world view – but it could offer more freedom and choice through education and entrepreneurship.”

‘The future of work 4.0: Disruptive technologies, opportunity or threat?’ Business Perspectives masterclass also featured presentations on the fourth industrial revolution and regulating blockchain led by Lecturer in Law Robert Herian from The Open University Law School, as well as a discussion on some of the opportunities and challenges posed by potential economic ‘disruptions’.

By Robert Herian, Lecturer in Law, The Open University Law School

Blockchain technologies first emerged as the architecture making Bitcoin work after the 2008 financial crisis, and arguably as a direct response to it. Since then, blockchains have been promoted as a means of conducting peer-to-peer, decentralised networking in a variety of sectors in order to do away with the problem of the ‘middleman’, and help build the economic layer the World Wide Web never truly had.

From supply chain management to land registries, provenance to artist income, electoral monitoring to health records, blockchain appears to its stakeholders as a clear answer to the question of how online activity between individuals and businesses can be made more secure, trustworthy and transparent. Centralised global financial institutions and services that blockchain was designed to circumvent are, however, now in control of much of the research and development around the technology. So, what is the future for blockchain?

Robert Herian from the OU Law School sits on the All-Party Parliamentary Group on blockchain, examining policy development and regulation of distributed ledger technologies. With the debate raging about how to regulate – or indeed even ban – cryptocurrency and the role blockchain can play in the world economy, his new book ‘Regulating blockchain’ is due out later in the year. The Lecturer in Law also gave one of three presentations at a masterclass organised by the OU Business School at the Crowne Plaza in The City last Wednesday (2 May) to discuss his ideas.

“There’s so much excitement and positivity about blockchain at the moment, while radical blockchains undoubtedly scare governments and big business. It’s still really unclear what role blockchain will play in the fourth industrial revolution but one thing is for certain, this technology can’t be ignored.

“Businesses have been put on notice but in reality, it’s really hard to tell when it will arrive on a wider scale. There is a marked contrast between blockchain evangelists who claim that the technology can solve all the world’s problems, versus a far more mundane reality that blockchain is little more than a means of accounting. Our underlying problems in society will still exist even though we’re using a new technology.”

‘The future of work 4.0: Disruptive technologies, opportunity or threat?’ Business Perspectives masterclass also featured presentations from Dr Charles Barthold, Lecturer in People Management, on the fourth industrial revolution and the possibility of a universal basic income, as well as a discussion on some of the opportunities and challenges posed by potential economic ‘disruptions’.

By Dr Charles Barthold, Lecturer in People Management, The Open University Business School

A life full of copious amounts of leisure time with mundane tasks a thing of the past, or a world with mass unemployment which is ruled by machines?

Nobody is quite sure what the period we are entering, often referred to as the ‘fourth industrial revolution’, will mean for mankind but there will be significant changes to the lives of many as we progress through the 21^st century.

Is it a positive, utopian prospect as we become a technology-driven ‘leisure society’? Or is there a far more troubling dystopian view that robots and corporations will dominate in a world of large-scale unemployment as both blue and some white collar jobs disappear?

Dr Charles Barthold, Lecturer in People Management, discussed both theories in ‘Preparing for Industry 4.0’, one of three presentations at a masterclass organised by the OU Business School at the Crowne Plaza in The City last Wednesday (2 May).

“The future is not inevitable and it’s something humans will create. It’s only the beginning and there’s lots of scope to shape what will happen. The future will be what we make it to be and it will be shaped by debate and will require global buy-in through investment decisions and political support.

“With artificial intelligence (AI) able to make strategic decisions, it could operate interconnected factories, rather than having a need for the current network of managers. ‘Smart’ organisations will be more efficient, providing better services to their customers. According to current patterns, inequality between countries as a whole is likely to decrease but also increase among individuals in a world of ‘smart’ technologies, organisations and cities. There is the assumption that low-skill jobs will be replaced; with our existing economic model disrupted, a new lifelong education system will be required to upskill workers for the new jobs created.

“This vision of the future is sure to raise moral and ethical issues such as drones fighting our wars, using genetics to cure cancer, or even AI controlling our sacrosanct justice system as lawyers and even judges could become obsolete. All the three previous industrial revolutions led to conflicts – will this one be any different?”

‘The future of work 4.0: Disruptive technologies, opportunity or threat?’ Business Perspectives masterclass also featured presentations on the possibilities of a basic income and regulating blockchain led by Lecturer in Law Robert Herian from the OU Law School, as well as a discussion on some of the opportunities and challenges posed by potential economic ‘disruptions’.

Are we in the dawn of a new era?

Technology is rapidly changing both our work and lives. Many experts are predicting that we are rapidly headed toward a ‘fourth industrial revolution’.

In this masterclass, held on 2 May in London, Lecturer in People Management Dr Charles Barthold asked how can the rapid technological advances in computing, robotics and communications that are revolutionising work and life, be empowering, rather than dis-empowering, for people and organisations? He explored the ways in which practitioners can use technology for social empowerment and how we can create a smarter work force.

Robert Herian, Lecturer in Law from The Open University Law School, discussed Blockchain – what is it, how it is regulated, and how it will affect workplaces of the future.

Video highlights are available:

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