Aspire

Issue 11, Spring/Summer 2012

News and views from the University of Glasgow Adam Smith Business School

Chinas remarkable economic growth?

Adam Smith Business School hosts top theorists | The Big Society, values and co-operatives | Diversification | Why did Greece go bankrupt? Diffusion of advanced techniques in Management Accounting

Welcome to Aspire
Aspire Issue 11. Spring/Summer 2012 Executive Editor: Professor Robert MacIntosh Editorial Board: Peter Aitchison Dr Mario Cerrato Errolinda Ward Editor: Emily Stewart Photography: Photography Unit, University of Glasgow; Canstock Photo; Shutterstock The University of Glasgow Business School Executive Board Head of School: Professor Farhad Noorbakhsh Head of Accounting & Finance: Professor Jo Danbolt Head of Economics: Dr Alexander Kovalenkov Head of Management: Professor Iain Docherty Director of Graduate Studies: Professor Robert Paton Director of Postgraduate Research: Dr Joe Byrne Director of Research: Professor Denis FischbacherSmith Director of Undergraduate Studies: Dr Moira Fischbacher-Smith Head of School Administration: Helen Young
Welcome to the 11th issue of Aspire, the magazine of the University of Glasgow Business School. I am delighted to announce that this is the first issue of the newly named University of Glasgow Adam Smith Business School. As of 1 June 2012, the School has been formally renamed to honour the legacy of the Universitys most celebrated alumnus and staff member. 2012 marks the end of one chapter for the School, and the beginning of another. The 2011/12 academic year was one of unprecedented growth and achievement for the school. We have increased student numbers and are now the largest business school in Scotland and second largest in the UK for full time postgraduate students. We have also hired a number of new Lecturers and Chairs, and will continue to recruit in 2013. 2012/13 will see the School working to enhance its reputation in the UK and abroad, and developing further links with partners overseas. We will also further develop internationally recognised research that will inform policy and practice, and help us to promote the tradition of Scottish enlightenment and enterprise. The School will be hosting top theorists and influencers throughout the year, with events like the High Potential Concepts, Phenomena and Theories in International Entrepreneurship Research Conference (page 8) and the Strategic Management Society Conference as well as the gala launch event for the Adam Smith Business School in the autumn. Colleagues will continue to strive to make an impact on research and practice, like Professor Ronald MacDonald, who is now in the top 1% of Economics researchers, Professor Vivien Beattie who received the Distinguished Academic award by the British Accounting and Finance Association (BAFA) (page 4), and Professor Richard Harris who was named Lead Expert on government Future of Manufacturing Project (page 6). I hope you will join us as we move forward with the new School, and see was developments and growth the coming year has to offer.

Professor Farhad Noorbakhsh Head of School

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Contents
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Business brief A round-up of news and events in the Adam Smith Business School

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The Business School renamed to honour Adam Smiths legacy From 1 June 2012, the Business School has officially been renamed

Chinas remarkable economic growth Sai Ding, Lecturer in Economics at the Business School, reflects on the challenges faced by Chinas developing economy

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Recent and upcoming publications

The Big Society, values and co-operatives Fiona Wilson and Donald MacLean have initiated a research programme which revisits the co-operative format in the current climate

The Adam Smith Business School hosts top theorists Top theorists visited the Adam Smith Business School for a conference on High Potential Concepts, Phenomena and Theories in International Entrepreneurship Research

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Understanding diversification Chris Veld looks current issues in banking and politics to explain the nuances of diversification.

Contributors
Sai Ding Sai joined Economics at Glasgow in January 2010. She obtained her PhD in Economics from the University of Birmingham in 2006. Sai previously held a postdoctoral research fellowship at the University of Oxford and was also a visiting lecturer at Brunel University, and a tutor at St. Catherine's College at Oxford University. Donald MacLean Donald received his PhD in optoelectronics from the University of Cambridge and spent ten years working in the optoelectronics industry, during which time he gained an MBA from Kingston University and held management positions in both the commercial and technical dimensions of the business. In 1991 he left industry for academia, first at Leeds Business School and then at the University of Glasgow where he is now a senior research fellow. His time is split between research at Glasgow and private work with a variety of clients on matters of strategy, leadership and business development. Evangelos Vagenas-Nanos Evangelos joined the Business School in 2010 as a lecturer in Finance. Previously, he was a teaching assistant in Finance at Durham Business School. Evangelos gained a BA in Economics from Aristotle University (Greece) while at Durham University he obtained an MSc in Finance and Investment as well as a PhD in Finance (2011). He also holds the Postgraduate Certificate (PGCert) in Teaching and Learning in higher Education qualification. His main research areas of interest lie in Corporate Finance, especially within the sub-field of Mergers and Acquisitions and Capital Structure as well as Behavioural Finance. Chris Veld Chris obtained his PhD from Tilburg University (Netherlands).

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Why did Greece go bankrupt? Evangelos Vagenas-Nanos looks at the reasons behind the Greek crises

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Diffusion of advanced techniques Hassan Yazdifar discusses a new area for research on the diffusion of management accounting innovations

Peak Time: an International Business Student Competition The Adam Smith Business School and the College of Social Sciences sent three students to Riga for the Peak Time finals

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My business: Quantitative Analysis John Crosby, Managing Director at Grizzly Bear Capital, on becoming a Quant

Olympic bid Adam Smith Business School alumni win contract for producing Olympic merchandise

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New Head of Subject for Management Iain Docherty shares his plans for the Management subject group

Bright stars Two Business and Management students participated in the Marketing Societys Student Star Programme

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Making connections Adam Smith Business School staff reaching out to their wider network

He worked at Tilburg in different capacities until 2004. He also held a part-time Chair in Personal Financial Planning sponsored by Rabobank. He joined the University of Glasgow in 2011. Chris has published in journals such as The Journal of Finance, Journal of Financial and Quantitative Analysis, Financial Management, Journal of Banking and Finance, Journal of Corporate Finance, and European Financial Management. Fiona Wilson Fiona came into academic life as a research assistant to the

Director of Manchester Business School, Professor Tom Lupton in the late 1970s. The research was Action Research, designed to help companies solve their problems. Her first permanent job as a lecturer in Organizational Behaviour was at the University of St Andrews in 1988. She was promoted to Senior Lecturer in 1998 and was offered the job of Professor of Organizational Behaviour at the University of Glasgow in 1999. Hassan Yazdifar Prior to joining Glasgow University in 2011, Hassan held an academic position at Sheffield

University and has taught at several other universities in the UK and overseas. Hassan gained a BA in accounting at the University of Shahid Beheshti (Iran), an MA in accounting at the university of Tehran (Iran), an MA in Social Research Methods at the University of Manchester (UK) and a PhD in Management Accounting from the university of Manchester (UK). He acts as an academic referee for a number of journals, publishers, and professional bodies.

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Business brief
SAMS Doctoral and Early Career Researchers Workshop
In association with the High Potential Concepts, Phenomena and Theories in International Entrepreneurship Research conference, CIER with support and sponsorship from the Society for the Advancement of Management Studies (SAMS) ran a doctoral and early career researchers event. Twenty doctoral and early stage researchers attended the conference sessions to witness how theoretical and empirical advances are made in a new, hybrid field of study and had the opportunity to network with speakers and discussants. To help participants make the most of this opportunity, Professor Richard Thorpe, Leeds University Business School, chaired a session at the end of the day to enable participants to consolidate what they had learned, reflect on the various debates and discuss lessons relevant to their own research and publication.Dr Margaret Fletcher (CIER) the workshop organiser said Professor Thorpe is well known for his interested in doctoral education and research, and we are delighted to welcome him as an honoured guest to the conference and workshop. For further details contact margaret.fletcher@glasgow.ac.uk

A round-up of news and events in the Adam Smith Business School

Lecture (supported by the Business School) on Economics: Unfit for Purpose.For more information, contact Robert McMaster on robert.mcmaster@glasgow.ac.uk.

Adam Smith Business School professor in the top 1% in the world

Professor Ronald MacDonald, Adam Smith Chair of Political Economy at the University of Glasgow Adam Smith Business School, has achieved an average rank score in the top 1% of researchers in Economics in the world according to IDEAS. The rankings on RePEc are compiled by IDEAS, a service hosted by the Economic Research Division of the Federal Reserve Bank of St Louis. RePEc (Research Papers in Economics) is a collaborative effort of hundreds of volunteers in 75 countries to enhance the dissemination of research in Economics and related sciences. The information in the database is used to rank over 30,000 registered economists. Ronald MacDonald has a wide range of interests in the general areas of macroeconomics and international finance, has published over 130 articles in peer-reviewed journals and has authored or edited 12 books. His work on exchange rate modelling has been influential in the academic literature and also for practitioners and policy makers. He has acted as a consultant to many organisations including the European Commission, the IMF, to governments, a wide range of central banks and a number of private sector financial institutions.

Adam Smith Business School Professor receives prestigious Distinguished Academic award
Professor Vivien Beattie was awarded the Distinguished Academic award by the British Accounting and Finance Association (BAFA). At the national conference of the British Accounting and Finance Association (BAFA) in April, Professor Vivien Beattie, Professor of Accounting within the Adam Smith Business School, was awarded the prestigious Distinguished Academic Award (DAA) for 2012. The award is made annually to an individual who has made a substantial and direct contribution to UK academic accounting and finance life, through research, teaching and public service. Previous recipients include leading UK academics such as Geoff Whittington (Cambridge), Anthony Hopwood (Said Business School, Oxford) and Michael Bromwich (LSE). The chief responsibility of the awardholder is to present a plenary paper at the BAFA Annual Conference subsequent to the Annual Conference at which the award is given. Subject to appropriate editing, it is expected that the paper presented will appear, as an invited paper, in the British Accounting Review in the March issue of the calendar year following presentation.

Association for Social Economics World Congress

The University of Glasgow will host the 14th World Congress of the Association for Social Economics (ASE) from 2022 June 2012, with the Adam Smith Business School supporting one of the plenary addresses. The theme of the conference is: Towards an Ethical Economy and Economics. The keynote speakers are: Prof Tony Atkinson (University of Oxford) who will lecture on Inequality and Economic Crises, and Prof Ben Fine (School of Oriental and African Studies, SOAS, University of London) who will deliver the Cairncross

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The Business School renamed to honour Adam Smiths legacy

From 1 June 2012, the Business School has officially been renamed the School will now be known as the University of Glasgow Adam Smith Business School. The new name reflects the University of Glasgows long association with the moral philosopher and political economist, Adam Smith, and the Schools aim to celebrate his legacy. The name of Adam Smith is recognised worldwide as one of the most influential figures to emerge from the Scottish Enlightenment and the field of Economics. His name has immense recognition worldwide. Naming the Business School in his honour commemorates his close ties to the University and will enhance the Universitys international reputation. Adam Smith (1723?-1790) enrolled at the University of Glasgow in 1737. He went to Balliol College, Oxford as a Snell Exhibitioner in 1740, returning to Scotland in 1746. He was appointed Professor of Logic at the University in 1751 and became Professor of Moral Philosophy the following year and held the chair until 1764. Smith served as Dean of Faculties and as the librarys Quaestor (an official in charge of accounts), and he was elected to serve as Rector from 1787 to 1789. He established his reputation as a teacher and writer at the University of Glasgow; Theory of Moral Sentiments was published in 1759, based on his lectures on Ethics. He left Scotland in 1764 and returned three years later to live in Kirkcaldy, where he worked on his classic study An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776. In 1787, he remembered his years as a professor at the University as by far the happiest and most honourable in his life. The Adam Smith Business School is committed to honouring and developing the academic tradition of Adam Smith at Glasgow and to sustaining and enhancing the Schools traditionally Scottish, broad, and multi-disciplinary approach to education. The Schools ambition is to develop enlightened, enterprising and engaged graduates and to produce internationally recognised research that has an impact on society. By engaging in multi-disciplinary and research led teaching we engender in our students an appetite for critical enquiry and learning. We also encourage, informed by an employability and engagement agenda, the development of 21st century graduate attributes and skills. Internationally recognised research that informs academia, policy and practice will drive the Adam Smith Business School forward; its dissemination will inform teaching, shape our culture and deliver impact, whilst promoting the tradition of Scottish enlightenment and enterprise. Farhad Noorbakhsh, Head of School, commented: The University of Glasgow Business School is developing rapidly in its mission to be internationally known and highly regarded for both teaching excellence and high quality research. Our link to such a distinguished scholar differentiates the University and the Business School and demonstrates our interdisciplinary approach to business disciplines. The official launch of the Adam Smith Business School will be celebrated with a gala event in September, followed by a series of events in Scotland and abroad throughout the 2012/13 academic year. There will also be a special issue of Aspire magazine. Further information about the schedule of events will be made available on www.glasgow.ac.uk/ business.

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Business brief
Richard Harris, commenting on his appointment, stated I am delighted that the Government has decided to run this project. I have been an advocate of the importance of manufacturing throughout my academic career, and this has been a feature of many of my journal publications.

Richard Harris named Lead Expert on government Future of Manufacturing Project

Engaging with the Business Community

of Tax Competition, Common Consolidation Tax Base and Fiscal Autonomy. The conference, which is organised jointly between Celine Azemar from the University of Glasgow Adam Smith Business School, Rodolphe Desbordes from the University of Strathclyde and Ron Davies from University College Dublin, is a Scottish Institute for Research in Economics (SIRE) event. The programme will consist of the presentation of academic papers with half a day devoted to discussion with policy makers and practitioners. Confirmed participants include Eckhard Janeba (Mannheim), Michael Devereux (Oxford), Ben Ferret (Loughborough), Nadine Riedel (Hohenheim), Simon Loretz (Bayreuth), Ian Wooton (Strathclyde), and Helen Miller (Institute for Fiscal Studies). The conference will take place 9-10 July 2012.

The two-year project will call on industry and academic expertise from the UK and abroad to look at the long-term picture for the manufacturing sector, investigating global trends and drivers of change. It will explore how the UK can maximise these opportunities and provide an evidence base to help policy-makers navigate a challenging and uncertain future. It is being led by the Foresight team in the Government Office for Science under the direction of the Governments Chief Scientific Adviser, Professor Sir John Beddington, and is sponsored by the Department for Business, Innovation and Skills. The findings will inform Government policy throughout the duration of the project and beyond. Speaking at the Financial Times Future of UK Manufacturing Conference, Business Secretary Vince Cable said: Manufacturing has a key role to play in economic growth, in particular driving exports and productivity. But as industries and technologies evolve, we need to make sure were staying ahead of the game. The Government is working with business to support and strengthen the UKs manufacturing capability. I look forward to this report from the respected Foresight team. It will make a powerful contribution to our work supporting British industry and to making sure that we retain our position as a world-class manufacturing nation at the cutting edge of new products and processes.

In April the Adam Smith Business School took part in B2B Scotland 2012. This event, now in its second year, brought together key figures from the public and private sector to build a cross-industry community of forwardthinking organisations currently working across Scotlands core sectors. In line with the Scottish Governments ongoing commitment to supporting Scottish businesses and helping them to flourish, B2B Scotland showcased the crme de la crme of Scotlands vibrant businesses and was supported by both Scottish Enterprise and Business Gateway. Just under 800 delegates from both public and private sectors came along for a series of workshops and seminars. Professors Robert MacIntosh and Donald MacLean gave a keynote address based on their research into strategy development and leadership. One of the schools alumni, Bill McBride of Westcrowns, also spoke at the event alongside Crawford Gillies, Chairman of Scottish Enterprise, Nick Price, Founder & CEO of Bright Purple and Monica Langa of the Institute of Directors. Speaking after the event, Professor MacLean said its great to see the school reaching out to the business community and building mutually productive relationships in key development sectors.

The Art and Craft of Discussion Leadership

The University of Glasgow Adam Smith Business School hosted a Case Method Teaching Seminar with Harvard Business Publishing. Dorothy A Leonard, the William J Abernathy Professor of Business Administration, Emerita, at Harvard Business School, facilited a discussion of fine-tune participant-centred learning and the case method. The event was attended by academics from Heriot Watt University, Lancaster University, RSM BV Erasmus University, University College Dublin, University of Strathclyde, the University of Turku and the University of Glasgow.

Glasgow to host International Business Taxation Conference

The University of Glasgow will be hosting the an International Business Taxation Conference on the theme

Recent and upcoming publications

Scottish Centre for Economic Methodology
On 26th March the University of Glasgows Business School hosted, for the first time, a Scottish Centre for Economic Methodology (SCEME) seminar. The seminar was held to commemorate and celebrate the works and contribution of Mark Blaug, who passed away last November. Speakers included: Profs Vivienne Brown (Open University); Sheila Dow (Stirling); Richard Lipsey (Simon Fraser University, Canada) and Brian Loasby (Stirling). The Business School hosts the SCEME website, where information on future events will be available: www.gla.ac.uk/schools/business/ research/researchcentresandgroups/ sceme/. The seminar was supported by the Scottish Institute for Research in Economics (SIRE). For more information about SCEME, contact Robert McMaster on robert. mcmaster@glasgow.ac.uk.

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Celine Azemars paper, Market Familiarity and the Location of South and North MNEs will be published in Economics and Politics. Vivien Beattie has two forthcoming articles in Accounting and Business Research: Evaluating disclosure theory using the views of UK finance directors in the intellectual capital context and Publication Records of Faculty promoted to Professor: Evidence from the UK Accounting and Finance Academic Accounting Community. A paper by Jo Danbolt and Gillian Maciver on Cross-Border versus Domestic Acquisitions and the Impact on Shareholder Wealth has been accepted for publication by the Journal of Business Finance & Accounting. Sai Dings Investment and Financing Constraints in China: Does Working Capital Management Make a Difference? will be published in the Journal of Banking and Finance. Iain Docherty has three recent publications: Scotlands fiscal options a response to Midwinter in Public Money and Management, Transport in a Sustainable Urban Future, in the The Future of Sustainable Cities: Critical Reflections (J Flint and M Raco) and The Governance of Transport Policy in Automobility in transition? A socio-technical analysis of sustainable transport (F Geels, R Kemp, G Dudley and G Lyons). Margret Fletcher recently had her article, Knowledge Acquisition for the Internationalization of the Smaller Firm: Content and Sources, published in International Business Review. A paper that she wrote with Shameen Prashantham has recently been chosen as a Highly Commended Award Winner at the Emerald Literati Network Awards for Excellence 2012. The paper Knowledge Assimilation Processes of Rapidly Internationalising Firms: Longitudinal case studies of Scottish SMEs, was published in the Journal of Small Business and Enterprise Development in 2011. Richard Harris has a forthcoming article in the Journal of Regional Science - Is productivity higher in British cities? Alexandros Kontonikas has a paper, The EMU sovereign-debt crisis: Fundamentals, expectations and contagion, which has been accepted for publication and is forthcoming at the Journal of International Financial Markets, Institutions and Money. Robert MacIntosh has a new book on change coming out in June 2012: Managing Change: Enquiry and Action.

Alumni reception in Shanghai

Chris Coles hosted an alumni reception in Shanghai. The dinner was attended by over 70 former and prospective students, and was arranged by Sarah Armour from Alumni Services. Other speakers were Jane Ducketts (Confucius Institute) and Annie McLoughlin (RIO). Coles met many former students in Shanghai, which is rapidly becoming one of the worlds foremost financial services centres.

Graeme Martin is writing an invited piece for the CIPD expert series on Talent management and innovation. Based in part on work with a colleague from the Southern Federal University of Russia Greg Stoner has co-written Introductory Accounting with Matrices at the Southern Federal University, Russia which will be pulished in Issues in Accounting Education, an official journal of the American Accounting Association. Chris Veld has articles forthcoming in Applied Economics Letters - The optimal call policy for convertible bonds: Is there a market memory effect?, Financial Management - What drives security issuance decisions? Market timing, pecking order, or both, and Journal of Banking and Finance - Why are convertible bond announcements associated with increasingly negative abnormal stock returns? An arbitrage-based explanation.

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The Adam Smith Business School hosts top theorists

Top theorists in international entrepreneurship research visited the University of Glasgow Adam Smith Business School for a conference on High Potential Concepts, Phenomena and Theories in International Entrepreneurship Research.

The Centre for Business Education and Research (CIBER) - University of Colorado and the journal Entrepreneurship Theory and Practice have collaborated with the University of Glasgow Adam Smith Business School to host and sponsor this invitation-only conference. Professor Ray Bagby, editor of the journal Entrepreneurship Theory and Practice sponsored a celebratory dinner after the event in the prestigious Turnbull Room in the university. The aim of the conference was to advance research and theory in international entrepreneurship through the cross fertilisation of ideas and conceptual mapping of methods and theories from major established domains in management research, emphasising always the international context. The conference, which attracted theorists from around the world, took place on 14th and 15th June in the Adam Smith Business School. The generous sponsorship allowed the organisers to bring to the University some of the worlds top scholars in international business entrepreneurship and management. The invited authors are known for their advances in theory development in the strategic management area and have outstanding publication records in world class journals. Most also hold positions of influence in leading scholarly organisations, at top-ranked business schools and are on the editorial boards of leading journals.

The conference was co-hosted by Professors Marian V Jones, University of Glasgow, Patricia McDougall-Covin, Indiana University; Manuel Serapio, Center for International Business Education and Research (CIBER), University of Colorado Denver; and Professor Ray Bagby, Hankamer School of Business, Baylor University and Editor of Entrepreneurship Theory and Practice. Those giving invited papers or acting as invited discussants included from North America: Professors Sharon Alvarez and J.B. Barney, Ohio State University; Jeffrey Covin, Indiana University; Stephanie Fernhaber, Butler University; Rebecca Reuber, University of Toronto; Rod McNaughton, University of Waterloo; Saras D Sarasvathy, University of Virginia and Shaker Zahra, University of Minnesota. From Europe and beyond presenters and discussants included Dr Lucrezia Casulli, University of Newcastle; and Professors JeanFranois Hennart, Tilburg University; Galina Shirokova, University of St Petersburg; Roger Strange, University of Sussex; Ivo Zander, University of Uppsala; and Antonella Zucchella, University of Pavia as well as Professors Pavlos Dimitratos and Marian Jones from the Adam Smith Business School. International entrepreneurship studies are concerned with how individuals and firms identify and exploit opportunities from the international environment and create new value.

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International Entrepreneurship deals with complex phenomena. It involves understanding the antecedents and processes of opportunity discovery and creation and exploitation across national borders and their outcomes, involving a complex interplay of economic, institutional and behavioural factors. Thus various theoretical domains have informed international entrepreneurship research, ranging from resource based perspectives, social capital and network perspectives and a dynamic capabilities focus to learning, cognition and effectuation logic and economic geography. The area brings together researchers from a wide range of social science backgrounds and approaches and, while this interdisciplinary focus and interest is stimulating, forging the links to move theory and research practice forward in a coherent way is challenging. The invited papers have addressed the concepts, phenomena and theories from each theoretical domain to provide direction, insight and facilitate mapping with existing concepts in international entrepreneurship. We look forward to a significant step forward in international entrepreneurship research as a result. Professor Marian V Jones, Director of the Community for Internationalisation and Enterprise Research (CIER) in the Adam Smith Business School said: We are delighted to have been co organisers of this conference. The invitation and sponsorship from the

Universities of Colorado and Indiana and the top-rated journal Entrepreneurship Theory and Practice to host this elite conference is recognition of the growing international status of this group of researchers within the Adam Smith Business School. CIER staff now have over thirty years of pioneering experience in the research and the development of this interdisciplinary field and our work is part of the interdisciplinary research emphasis of the University of Glasgow Business School as a whole. CIER is one of the worlds largest and best recognised groups of researchers on internationalisation and CIER now comprises 12 members of academic research staff, 4 visiting professors, 9 honorary research fellows and 11 doctoral students. Over 100 students have graduated during the past 4 years of our masters programmes and 8 PhDs have been completed. Research has been widely published in leading academic journals with over 120 outputs since 2008. This conference will further enhance CIERs position. CIER has hosted numerous previous international conferences and workshops, but this June event is the most exciting so far. Subject, of course, to review, conference papers will be published in Entrepreneurship Theory and Practice (a 4* leading scholarly journal in the field of entrepreneurship studies) and we look forward to the outcomes of the excellent networking and idea dissemination opportunity that the conference has offered.

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Chinas remarkable economic growth?

Sai Ding, Lecturer in Economics at the Adam Smith Business School, reflects on the challenges faced by Chinas developing economy.
How has the Chinese economy managed to grow at such a remarkable rate - no less than ten per cent per annumfor over three decades? This is one of the most important questions facing contemporary economists. The policies pursued by the Chinese Communist Party since the late 1970s qualify China as a developmental state, in which the overriding policy priority is economic growth. China became a developmental state when the leadership under Deng Xiaoping introduced economic reform in order to restore and maintain political legitimacy. The drive to create a market economy succeeded because one reform led to another in a cumulative process. New institutions provided the right incentive structures, a prime example being that appointments at many levels rewarded success in promoting economic growth. A policy of fiscal decentralisation gave growth incentives to all tiers of government. Entrepreneurs gained confidence from these policies, leading to a remarkably high level of both investment and saving by international standards. This combination of factors produced a virtuous circle of high confidence, high investment, high growth, and so on.

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In our research, we examined the causal processes at work in the evolution of Chinas institutions and policies. We estimated cross-country and cross-province growth regressions to shed light on the proximate, and some of the underlying, determinants of the growth rate. For instance, Chinas outstanding performance relative to other countries is mainly due to the accumulation of physical capital, conditional convergence, and improvements in factor productivity through labour transfer out of agriculture. The level of human capital and slower population growth also contribute to the growth difference between China and other developing countries. Investment that matters The use of provincial level data permits investigating this issue further. For instance, finding capital accumulation to be important, we looked at what types of investment matter for Chinas growth. The impact of fixed investment is found to be especially powerful in the case of expenditure classified as investment in innovation, suggesting that physical investment is more productive when it is bound up with technological progress. For similar reasons, foreign direct investment makes a greater unit contribution than domestic investment. Chinas transition also involves rapid structural transformation: from domestic to export production, from the state to the non-state sector, and from agriculture to industry. In each case resources are reallocated from a less to a more productive activity. We measured the growth effect of these structural changes. The increase in the GDP share of both exports and imports raises the growth rate, consistent with the gains from trade derived from Chinas comparative advantage. Privatization of the economy also has a positive impact, consistent with improved incentives. The relative growth of non-agricultural employment has a similar effect, consistent with the higher product of labour in industry and possible externalities. In these three ways, by bringing it closer to the production frontier, the efficiency of the economy, and its growth rate, are improved substantially. The consequences of rapid growth Our research explored important consequences of Chinas rapid growth, posing a series of key questions, such as: is the economy running out of unskilled labour; why and how has inequality risen; has economic growth raised happiness; what are the social costs of the overriding priority accorded to growth objectives? Looking forward: can China continue to grow rapidly, or will the maturing economy, or the macroeconomic imbalances, or financial crisis, or social instability, bring it to an end? The growth success has brought with it new and different problems, which may threaten the current virtuous circle. Income inequality initially too low to provide the incentives

needed in a market economy has risen to become the highest in Asia. Chinas environmental problems have escalated, and corruption is a source of concern for the leadership. Chinas system of governance provides little voice for its people and little political accountability. There is also the risk of an adverse shock, such as a financial crash associated with Chinas macroeconomic imbalances or social unrest. Because of these rising tensions the Chinese government has recently introduced policies to promote a Harmonious Society. Wealth vs. happiness The recent wealth of Chinese people does not equate with personal happiness. The unhappiest group in Chinese society are the rural-born workers who have migrated to the cities and towns. People still living in rural areas are found to have the highest happiness scores. Despite their much higher incomes, urban-born people are less happy than rural people. This is due to the loss of their iron rice bowls the security that the state-owned enterprises had provided before they were reformed or privatised - and their aspirations to keep up with the Zhous in the new market economy. The rural-urban migrants - there are now 150 million of them - have commonly raised their incomes by migrating but their aspirations have risen even faster as they become part of urban society. Future growth The Chinese economy is unlikely to continue to grow at its current rate. There is less scope for the rapid structural change that has fuelled growth up to now. The one-child family policy of the reform period means that the labour force is beginning to decline, and the hitherto abundant supply of migrants from the countryside is drying up. This will require a change in development strategy away from the currently successful one of producing labour intensive exports. As a matter of fact, according to the recent World Bank data, Chinas growth rate turns out to be 8.1% per annum for the first quarter of 2012, which is the lowest pace in the past three years and lower than most analysts had predicted. What can other developing economies learn from China? The Chinese economy is too different to permit simple copying. The most important lesson that it offers other countries lies in the answer they can find to the question: Can they create a developmental state while avoiding the disadvantages that have accompanied it in the Chinese case? Chinas Remarkable Economic Growth by John Knight (Emeritus Professor of Economics at Oxford University) and Sai Ding (Lecturer in Economics at the University of Glasgow) is published on Oxford University Press.

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The Big Society, values and co-operatives

In a context of government promotion of co-operatives, a growth in the co-operative economy, and in times when use of the term co-operative appears to have broadened to include any form of employee ownership, Fiona Wilson and Donald MacLean have initiated a research programme which revisits the co-operative format in the current climate.
There appears to be a renewed interest and enthusiasm for co-operatives, The United Nations proclaimed 2012 the International Year of Co-operatives declaring, Co-operatives build a better world. The UKs coalition government has pledged to support the creation and expansion of cooperatives as part of The Big Society1. The Big Society has been defined as A society in which power and responsibility have shifted: one in which, at every level in our national life, individuals and communities have more aspiration, power and capacity to take decisions and solve problems themselves, and where all of us take greater responsibility for ourselves, our communities and one another2. In the initial stages of our work we explore issues such as What does co-operative working mean to those who work in co-ops, and, Is there clear evidence of co-operative values to be found in co-operatives? These questions are posed at a time The Big Society is not without its critics. For example critics have accused the government of hijacking the co-operative movement pointing out that its definition of the Big Society is remarkably similar to the definition of the cooperative movement whose espoused values include self help and self responsibility. Growth in the co-operative economy There has been a period of growth in co-operative economy. In 2010, while the UK economy as a whole contracted by 4.9%, the co-operative economy grew by 15.8% to 33.5billion. There has also been growth in turnover, profit, net assets, members and numbers of registered cooperatives. In the UK there are now 4,820 jointly owned and democratically controlled businesses owned by 11.3 million people (1 in 5 of the population) sustaining more than 205,800 jobs. In addition, recent research reveals that employee-owned businesses, employing 75 staff or less, generate
1 See http://www.cabinetoffice.gov.uk/media/407789/building-big-society. pdf 2 http://www.thenews.coop/blog/when-big-society-not-big-society-whenit%E2%80%99s-co-op-movement

substantially better profits before tax than non employee owned businesses of a similar size. They have created jobs more quickly during the recession and are more resilient than conventionally structured companies, outperforming the market during the downturn and demonstrating a lower risk of business failure. More than two thirds of quantitative academic studies have found a favourable relationship between employee ownership and employee attitudes and behaviour. Motivation and commitment can be enhanced. Cooperatives are four times more likely to be described as fair and honest compared to Public Limited Companies (PLCs); PLCs are seven times more likely to be described as greedy by consumers. It is not surprising then that the economy would be seen to benefit with the generation of more co-operatives. Defining the co-operative For most of us the, idea of a co-op conjures a picture very similar to the official definitions such as that of the International Co-operative Alliance (ICA): A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democraticallycontrolled enterprise3. Underpinning this definition is an assumed subscription to values such as self-help, democracy and equality and an ethical stance aligned with principles and practices of openness, participation and social responsibility. We wanted to gauge the extent to which these values and principles evidenced in practice of cooperatives. It was within this context of a renewed interest in, and controversy about, employee owned business and cooperatives we began researching co-operatives in Scotland. In Scotland, economic development policy recognises significant scope to generate sustainable economic growth thorough promoting business models based on
3 See http://www.ica.coop/coop/principles.html

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collaboration. Co-operating with others is seen to reduce risk and enable economic, environmental and community benefits to be realised. These benefits are of particular relevance in rural and island Scotland where socio-economic fragility and risk of decline are seen to be high, and sustainability of communities is a key ongoing concern. Cooperatives in Scotland make a significant contribution to the economy employing 28,600 and produce just over 4billion in turnover. Safeguarding independence Perhaps surprisingly, initial findings led us to question whether the participants in these producer co-operatives see themselves as working in a co-operative at all. Those who participate in the co-operatives are typically independent farmers, fishers and artisans keen to promote their individual businesses and protect their independent livelihoods. They are motivated primarily by individualism and survival rather than shared or co-operative values. Paradoxically, this indicates co-operation as a specific means to an end continued independence. The relationship between cooperation and autonomy is thus more intertwined than one might glean from many contemporary accounts; they do not exist as separate and distinct set of interests or behaviours. Members are independent and individual first and then secondly are prepared to co-operate to safeguard that independence. Somewhat ironically, most co-op members the researchers encountered might be said to have a strong collective or shared belief in the primacy of independence. Far from being managerially distinctive, our questioning found a number of further interesting issues. First, while the co-operatives had been set up to help the members buy at lower costs and sell with reduced risk at higher returns, and give them access to markets otherwise beyond their reach, the members were not necessarily co-operating in the sense of active participation with one another on a daily basis, but were having the co-operative managers do it for them. It could be argued that the act of co-operating had been delegated to professional managers. They would use a shop or a manager to manage the work of the co-operative. This is the opposite of what the Big Society is about and how member control and participation might be expected to work in a co-operative. While government policy and cooperative principles are formulated to encourage people to run organisations such as co-operatives themselves, they actually may not have the expertise, experience or motivation to run the co-op themselves, but are content to have managers do it for them. Secondly, one might expect that the co-operatives would have been set up by people who believed in the principles of co-operation and that the members would share that enthusiasm and belief in co-operation. However, in each case, the initiative for setting up the co-operative had come

from out-with the co-op and those it would benefit. In one case, the Chair of the co-ops brother persuaded them to form a co-operative. It was thought that a co-operative would make the participants more equal than an association. Another a fishing co-op was begun by two teachers and the majority of founding members were not fishermen but included coal merchants, tailors and a baker. This was a group whose main aim was to help the fishing industry which they saw as key to the islands traditions and future, and, so in turn, to the sustainability of their own businesses and community. While the co-operative was set up under cooperative rules, the model rules might be said to be firmly in the background, where the emphasis is on the practices of a typical, professionally run business. Co-operative principles The research also discovered that the founding principles and values of co-operatives were not very visible or easy for current members to articulate. It would have been difficult, if not impossible, for any co-op member to discuss the principles or values of co-operatives. While a minority of co-op members may have been active participants in setting policies and making decisions in the co-operative, one suspected that the majority were not. Also the word co-operative did not appear in their name, so the projected identity of the organisation was not clearly co-operative. One of our interviewees said that he thought a lot of co-ops have tried not to look like co-ops as the co-operative identity is seen as old fashioned. So the preliminary evidence raises questions about the evolution and current status of the values, principles and practices of co-ops and indeed the variety of expressions of co-operative formats. This may be good news for those involved in promoting the Big Society where there is a need for self-help and self-responsibility as well as for people to work co-operatively. Or it may be that we need to rethink the reality of co-operative as a panacea remedy to issues of sustainability and self-help. In the view of our research, some important work is still to be done starting with a more systematic appraisal of what is meant by different stakeholders and groupings when they use terms such as co-operation, collaboration and participation, what forms these ideas take in terms of structure and practice in co-operatives, and how this varies, for example, on a geographical basis. When this work has been done, we might be better placed to say whether the coalition government can expect to see greater cooperation in the Big Society.

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Understanding diversification
Diversification is a far-reaching concept that translates into some of the hotly debated topics in the press. Chris Veld looks at the payment of bank managers in shares of their own bank and the discussion on the Scottish independence, to explain the nuances of diversification.
Do not put all your eggs in one basket An important concept in investments is diversification. The basic idea is very simple: if you invest all your money in shares of common stock of the same company, e.g. Microsoft, you run a larger risk than if you spread your investment over different shares. The reason is that by investing in only one company, you run company-specific risk, also referred to as non-systematic risk.

15

Microsoft could end up in an expensive lawsuit, the CEO of Microsoft could suddenly decide to step down, or Microsoft Outlook could be hit by a malicious virus. By spreading your investment you decrease the importance of this firmspecific risk. Moreover, since it is easy and virtually costless to bring down the firm-specific risk component, investors are not compensated for carrying this type of risk. Based on this reasoning, many investors choose to invest in different shares of common stock or, if they dont have enough money to diversify themselves, they choose to invest in investment funds, where managers do the diversification for them. Even though the concept of diversification is wellunderstood, there are still some hotly debated topics in the popular press where the concept is relevant, but where it is not always picked-up. Bank managers bonuses A topic that frequently makes headlines (and fairly so) is bank managers bonuses. Each announcement or even speculation about upcoming bonuses is greeted with an amount of criticism about the size of the bonuses that the banks are planning to hand out. The size of the bonus that is reported is invariably the sum of the cash amount (if any) and the value of shares and stock options that are awarded. However, the shares that are awarded typically have to be held for three years. The fact that managers are forced to heavily invest in shares of the company for which they already work, strongly limits their potential to diversify their wealth. For that reason the value of the stocks for the managers is less than the value of the stocks on the market. Using the methodology of Meulbroek (2001), we have done some research on what would be a reasonable discount for managers that would have to hold stocks of a large Dutch company (CMG), where managers are forced to hold half of a large Dutch company (CMG), where managers are forced to hold half of their annual salary in shares of CMG (see Veld and Veld-Merkoulova, 2002). The discount depends on the percentage of CMG shares in the portfolio of the manager. We find that if the percentage of shares of CMG in the total portfolio is 25% that the applicable discount is 3% if the holding period is 1 year. This percentage runs up to 41% if the holding period is 20 years. Similarly, if the percentage of the total portfolio is 75%, the applicable discount is 6% for one year and even 74% for 20 years. Of course, the bonuses of the bank managers can be substantial (sometimes several millions), but it is fair to acknowledge that the lack of diversification possibilities limits the true value of the bonus. An independent Scotland Another contemporary topic, and one making even more headlines is that of the question whether Scotland should become independent. Of course, independence is about

much more than financial matters, but one aspect that has not received a lot of attention is that of the relatively poor diversification of the Scottish economy. In 2010-2011 oil revenues accounted for 18% of the GDP of Scotland. That is a very large amount. A problem with oil, and with virtually every other commodity, is that its price is influenced by non-systematic risk components. If a revolution breaks out, or to the contrary gets resolved, in one of the countries in the middle-east, the oil prices will be affected. It is an important question whether the residents of a country would so strongly want to rely on the price of one commodity. If Scotland would, on the other hand, remain part of the UK, its reliance on oil revenues would be much smaller. In 20102011 oil revenues only accounted for 1.8% of the British GDP . As The Economist (2012) puts it succinctly: Scotland would be far more vulnerable to shocks as a nation of 5m people than as part of a diversified economy of 62m. Are there solutions? The development of markets for derivative securities can offer potential solutions for problems of poor diversification. In theory, a manager who holds a large amount of restricted stock could take a position in derivative securities and solve the diversification problem. She could e.g. buy put options on the companys stock. These put options would entitle her to sell the stock for a fixed price. However, it is not likely that regulators and shareholders would approve of managers betting against their own stock. The case for hedging oil risk for the Scottish government is easier. Nowadays an entire array of different oil derivatives is available to hedge oil risk. The government of an independent Scotland could use e.g. oil futures or oil forwards to hedge the risk. In that case the government would receive money from the counterparty in the derivatives transaction if the oil price would go down and they would pay them if oil prices went up. The only problem they would have is explaining to the voters why they have made losses on derivative securities in times of rising oil prices. References: Meulbroek, Lisa: The efficiency of equity-linked compensation: understanding the full cost of awarding executive stock options, Financial Management, Summer 2001, page 5-44. The Economist: The Scottish play, April 14, 2012, page 31-32. Veld, Chris and Veld-Merkoulova, Yulia: Zichzelf verarmende topmanagers (transl. Top managers who make themselves poorer), Economisch Statistische Berichten, 2002, page 764-765.

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Why did Greece go bankrupt?

It is not a question anymore whether Greece has defaulted or is about to default or escape by enforcing austerity measure. Greece has gone bankrupt. Evangelos Vagenas-Nanos looks at the reasons behind the crises.
Why did Greece go bankrupt? Households are in financial distress, pensions and salaries, both in public and private sector, have declined by more than 30% so far further reduction are about to come, suicide rates have gone up dramatically, and the credit rating agencies cut Greek economys rating to C, the lowest in the scale, or in some cases SD-Selective Default and the country is financially isolated from the markets. It is therefore of little importance whether the Greek economy will be officially declared as defaulted-D Misconceptions The question is why Greece has gone bankrupt. One could say because Greek people do not pay taxes and because they are lazy. This is a quick, easy and nave answer one can get. These are some of the misconceptions created by Greek politicians reporting to foreign media. According to the OECD statistics, worldwide, Greece is ranked in the second place (after Korea) in the list of average annual hours worked per worker. It is at least nave for the management of a country to argue that it got into financial distress simply because its citizens avoid paying taxes. Governments set the rules and the system has to follow them. Tax avoidance is a world wide phenomenon and governments need and do take action to confront it. The average small-medium Greek business and tax-payer does indeed pay taxes. Legislation is strict and high fines apply. Nevertheless, there are specific, wealthy professions who should pay large amounts of tax but they do not. The respective government knows them but avoids to touch them. They are politically-connected and are aware that they are not going to be punished. That is indeed part of the problem, but not the main one. The Problem The major problem of the Greek society and economy is corruption, both domestic and foreign. Vast amounts of funds have been misused or end up in the wrong pockets. The cost for infrastructural development has been reported to be three, four or even six times more expensive than the average European one. Is Greece an expensive country? No. To be assigned large projects, you need to make a special payment. It is the same, specific businessmen (and coincidentally media-owners as well) who are assigned these projects. Additionally, the two big co-called enemies, Turkey and Greece spend vast amounts of tax-payers money to purchase defense systems (mainly from France and Germany) to afford national security. Recent evidence on the newspapers proves that ministers of defense and their teams have been vastly bribed to buy specific defense systems, contributing in increasing the countrys debt. Over the last 30 years, a number of economic scandals involving MPs have come to light. Nonetheless, nobody has ever been punished. NONE. Greek political system Are Greeks aware of this situation and if yes why do they keep voting for the same corrupted politicians again and again over the last 30 years? The political system has managed to create an army of political customers. There is a dependant relationship between voters and MPs. MPs promise to employ voters in the public sector in exchange of voting them. A large, unbalanced public sector has been created in the expense of the private sector. This is the other major problem that led the country to bankruptcy. In essence, the Greek issue is not a problem of economics or finance but a deep political matter. You may be wondering whether I am describing the political system of a) a country member of the European Union and the Euro-zone or b) a third-world underdeveloped corrupted country. I would go for (b).

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18

Diffusion of advanced techniques

Hassan Yazdifar discusses a new area for research on the diffusion of management accounting innovations.
Change is a never ending scenario: changes in Business Environment and Management Accounting Responses Management Accounting (MA) forms an important part of organisations information and control systems. However, there have been many claims that MA practices, broadly comprising management accounting techniques, information and/or systems, have remained relatively unchanged for more than half a century (Johnson and Kaplan, 1987; 1991). It has been argued that conventional MA practices fail to provide relevant information for management decision making in new (contextual) settings. This new setting is one of changing competitive environments in times of significant globalisation, volatile markets, new organisational structures, mergers and acquisitions, new management practices, faster reaction times, significant advances in information technology (IT), and a need for more flexible organisations to cope with customer demand. Management Accounting is said to be too late, too aggregated and too distorted to be relevant for managers planning and control decisions (Johnson and Kaplan, 1987; Johnson and Kaplan, 1991,p.1) in the new business environment. As a result, some commentators have claimed that the discipline is in crisis and clamour for changes in MA practices (Bromwich and Bhimani, 1989). Since the publication of Relevance Lost (Johnson and Kaplan, 1987), in which the authors suggest that all organizations need to re-examine their existing practices and must attempt to design entirely new MA systems, the last two decades have witnessed a re-evaluation of MA in terms of developing new techniques and systems. In particular, the 1990s witnessed a flurry of books and articles aimed at developing new (so-called advanced) MA techniques, including activity-based costing, target costing, Kaizen costing, the balanced-scorecard, strategic management accounting, life-cycle costing and throughput costing. Despite the commercial promotion given to new techniques, and the enthusiasm of their key advocates, such new MA techniques appear not to have been adopted as much might have been expected (for evidence of this, see for example studies on ABC by Innes et al., 2000). It appears from recent evidence that organisations prefer to continue to use traditional MA systems, and make different uses of the information thus generated, rather than adopt revolutionary MA approaches (Bromwich and Bhimani, 1989; see also Burns and Yazdifar, 2001, 2002 for the application of the new MA techniques in the UK). There are also studies of some organisations that have adopted new MA techniques, although the literature abounds with illustrations of change projects which have been terminated (Innes and Mitchell, 1995a,b). So, there seems to be a problem with the diffusion of the new techniques. On the one hand a substantial body of literature suggests that traditional MA techniques cannot cope with the requirement of todays managerial needs, but on the other hand new MA techniques, a potential solution to this problem, have not been highly diffused and adopted by potential users. Possible reasons: Studies on the factors influencing the diffusion of MA innovations and problem statement There has been a flurry of studies in the field of MA, investigating the reasons for the delay in the adoption of innovations. For example, Kaplan (1986) claimed that four factors including: lack of top management willingness, lack of adequate role models, the emphasis on financial accounting and the dominance of computerbased accounting systems have reasoned for the delay in the adoption of MA innovations. Libby and Waterhouse (1996) and Gosselin (1997) expanded these factors by including organisational strategy and structure and examining the effect of these factors on one of the MA innovations. Bjornenak (1997) also identified the influence of communication channels and information sources as other influencing factors on diffusion of one of the MA innovations.

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The above studies, and many others in the field of MA, have been focused on the identification of the impact of some influential factors related to the characteristics of adopters (organizations and managers) on the diffusion of MA innovations. Surprisingly, no study of the impact of characteristics of innovations (relative advantage, compatibility, complexity, trialability, and observability), which are claimed to have the highest influence on the diffusion of innovations (Rogers, 1995), has been reported. Rogers (1995), reviewing the diffusion research literature, concludes that the majority of variance in adoption rate of innovations can be explained by characteristics of innovations. In other words he suggests that characteristics of innovations have the most significant influence on their diffusion. More surprisingly, no research on the influence of characteristics of MA innovations on their diffusion has been reported. As Rogers (1995) suggests, research on the impact of characteristics of innovation on their diffusion has received scant attention in the literature. This represents a serious gap in the knowledge required for understanding the influence of contextual factors on the diffusion of cost and MA techniques/procedures to facilitate the diffusion of these new techniques by recognition of obstacles to their diffusion in practice, and provides a focus for this research. A case for research Given the importance of understanding the impact of the characteristics of innovation on its adoptions, a new area for research is open to researchers including PhD applicants: What are the impacts of contextual factors (characteristics of innovations) on the diffusion of MA innovations? Expected contribution to the current literature/ knowledge Inconsistent results of diffusion studies in the literature in general, and the scant number of research projects undertaken on the impact of characteristics of innovations on their diffusion in particular, demonstrates the need for further investigation into the impact of characteristics of innovations on diffusion of innovations. Undertaking such research in the field of MA is expected to have an important contribution to the current literature, as limited research has been undertaken in this field. The results are also expected

to provide important information to facilitate the diffusion of recently developed MA techniques in practice. Such diffusions are expected to increase the satisfaction of users of current MA information. Furthermore, it is expected that the findings also will guide managers and practitioners to get more understanding of the nature and characteristics of new MA techniques that they are going to adopt. This will also be helpful in successful implementation of any MA change program. References: Bjrnenak, T. 1997. Diffusion and Accounting: the case of ABC in Norway, Management Accounting Research, 8: 3-17. Bromwich, M. and A. Bhimani (1989): Management Accounting: Evolution not Revolution, London, London: CIMA. Burns, J. and H. Yazdifar (2001): Trick or Treat, Financial Management, (March), pp. 33-35. Also appeared in Insider, (2001), (March), pp.30-32. Innes, J. and F. Mitchell (1995a): Activity-Based Costing in D. Ashton, T. Hopper and R. W. Scapens (eds): Issues in Management Accounting, Prentice Hall Europe, pp. 115-136. Innes, J. and F. Mitchell (1995b): A Survey of Activity-Based Costing in the UKs Largest Companies, Management Accounting Research, 6, pp. 137-153. Innes, J., F. Mitchell and D. Sinclair (2000): Activity-Based Costing in the UKs Largest Companies: A Comparison of 1994 and 1999 Survey Results, Management Accounting Research, 11, pp. 349-362. Johnson, H. T. and R. Kaplan (1987): Relevance Lost: The Rise and Fall of Management Accounting, Boston Mass: Harvard University Press. Johnson, H. T. and R. S. Kaplan (1991): Relevance Lost: The Rise and Fall of Management Accounting, 2nd ed, Boston: Harvard Business School Press. Rogers, E. M. (1983): Diffusion of Innovations, 3rd ed., New York: Free Press. Rogers, E. M. (1995): Diffusion of Innovations, 4th ed., New York: Free Press.

My business: Quantitative Analysis

John Crosby, Managing Director at Grizzly Bear Capital, on becoming a Quant. John is an Honorary Professor of Finance in the Centre for Economic and Financial Studies at the University of Glasgow Business School. He is also an invited lecturer on the MSc course in Mathematical Finance at Oxford University.

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John gained a first class honours degree in Applied Mathematics and Theoretical Physics at Girton College, Cambridge University before going on to study Electrical Engineering at University College, Oxford University. He began his career by trading fx options. He then moved to Monis (formerly London Business School Financial Software) where he researched and wrote their pricing libraries for a very wide range of exotic options as well as co-writing their three-factor Convertible bond model, which captured stochastic equity prices, interest-rates and default risk. He has worked at First Chicago, Barclays Capital, Lloyds TSB Financial Markets and UBS where he has been responsible for developing advanced models for pricing and risk-managing a wide-range of complex derivatives. John is best known for publishing a number of papers on the subject of pricing commodity derivatives using a multi-factor jump-diffusion model and for being a co-author of the Carr-Crosby fx options model.
How did you end up in your line of work? I became a quant by accident (like most people, it seems). I was offered a job as an fx options trader at a major investment bank when I left University. At the time I joined the bank, I scarcely knew what an investment bank did - I knew even less about fx options. I did my first trade on my first day on the fx options desk, but I still didnt even know what the Black-Scholes formula was all about. It was only a few months later when I was browsing in a bookshop that I came across a copy of a book called Options, futures and other derivative securities (it was a very early edition) written by a man called John Hull. At the time, the name meant nothing to me, but browsing through the book, I noticed there was a proof of the BlackScholes formula and that options could be priced by solving a partial differential equation or by Monte Carlo simulation (which I knew about from my time as a graduate student in engineering at Oxford). I bought a copy of the book and learnt about option pricing by reading Options, futures and other derivative securities in my spare time at home. When I was made redundant as a trader two years later, I was able to get a job as a quant because I knew how to derive the Black-Scholes formula from first principles. That was right at the beginning of the time when there were such people as quants. My career as a quant went from there. But it definitely started by accident. I have to say that I have found it fascinating to be a quant there are many interesting problems to solve. What are the main skills you use in your current role? Financial Economics Where do you think the market is moving in the future? Will it be harder or easier to get into this type of work? Harder. What do you think the finance industry will look like in 3 to 5 years? I think most people in the industry want it to look exactly like it is now which means every institution in the finance industry carries on as if the global financial crisis never happened and, to cut to the chase, involves everyone getting bigger and bigger bonuses regardless of the financial health of their firm. On the other hand, shareholders in banks have suffered catastrophic losses and that looks like it will continue for the foreseeable future. Why should bank CEOs get paid large bonuses when the owners (ie shareholders) of the company get nothing? Why should tax-payers bail out banks when they make losses but when they make profits, all the profits go to senior executives? I think the industry needs to undergo substantial changes although I cannot be 100% sure it will happen since many within the industry are incentivised to not change. We shall see. From the point of view of working as a quant, the most important skills will be to understand the markets from an economic viewpoint. I think, if anything, over the last ten years, models have become more mathematically complex without being more realistic from an economic viewpoint. I think the global financial crisis has shown that models need to be rooted more in economic fundamentals. What is the best advice you can give new graduates wanting to go into this field? Get a good education. Work smart (which is not necessarily the same as spending all your time in the office). Dont think the same as everyone else. Good IT and programming skills help.

New Head of Subject for Management

A new head of subject has been named to take on the leadership of Management, one of the three subjects that make up the Adam Smith Business School. Professor Docherty is a professor of Public Policy and Governance, and his research and teaching addresses the interconnecting issues of public management, institutional change and regional competitiveness. In addition to his role as Non-Executive Director of Transport Scotland, Iain is a member of the Commission for Integrated Transports Expert Academic Panel, and advises a range of private sector, governmental and other organisations in the UK, Europe and North America. Iain shares his plans for Management with Aspire.

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Aspire: What was the first order of business when you took over the post? Iain Docherty: To effectively manage the recruitment process to expand the staff in response to our growth and success. Im looking forward to several new colleagues joining in the second half of 2012. A: What, if any, changes have you already made? ID: On the research side, weve already made sure to consult with our partners in business and government to see how we can exploit our links with them more fully. Weve already agreed some joint bids for research money, and placed more students with companies to undertake their dissertations and other project work. Students quite rightly demand more genuine engagement with potential employers than ever before, and its right that our support for them extends well beyond the classroom walls. A: What would you like to achieve with Management in the next year? ID: The growth in our staff complement opens up opportunities for colleagues to spend more time undertaking high quality research work. Were also working hard to reequip our in-house teaching spaces in time for the start of the 2012/13 academic year with state-of-the art IT and AV to take full advantage of the latest innovations in course delivery and classroom interaction. A: What would you like to achieve in the next three years? ID: Management as the Business School more generally has a number of strategic ambitions to further improve our teaching and research performance so that we make an impact at the global scale. I want to see our activities evolving further so that the work of our staff and graduates makes even more of a positive impact on economic performance and quality of life. This means staying true to our core values of Critical Enquiry and supporting the Enlightened Manager, but further extending the scale and scope of our activities and partnerships. We also need to spread the word about our values and mission, which means being more proactive and forging new links with practice and collaborating schools around the world.

A: What do you see as the biggest challenge in the coming year? ID: Our problems are those of success. We have very strong demand for our courses, and numbers at both undergraduate and postgraduate levels are rising. Our biggest challenge is to manage this so that we maintain our very high student satisfaction results. We also need to be alert to potentially important external factors, such as the UK Border Agencys revised systems with respect to overseas students studying at UK HEIs. A: What do you see as the biggest long-term challenge? ID: The view of business schools and their contribution to society has changed irrevocably since the onset of the financial crash in 2008. The University of Glasgow has always been an important civic university, closely attuned to its role as a place of learning and innovation, but also active in contributing to increased prosperity for its local community. We need to extend this ethos and apply the values, insight and skills of our staff, students and graduates to make the best possible contribution to the development of the economy and society across the world. Many business schools are playing catch up with this agenda, in part it must be said to atone for the sins of the past that contributed to the financial turmoil that we are all living through. But at Glasgow, our civic mission has always been at the forefront of our activities and we need to remind the outside world of this by making it ever more real and tangible. A: What are you most looking forward to? ID: These are incredibly exciting times to be working in Glasgow and Scotland more generally. All eyes are on us as we both host the world at the 2014 Commonwealth Games, and debate our place in that world in the run up to the independence referendum. There are endless possibilities for us to get involved in shaping the future, and Im looking forward to colleagues and graduates playing a full and important part in this at home and abroad.

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Peak Time: an International Business Student Competition

The Adam Smith Business School and the College of Social Sciences sent three students to Riga for the Peak Time finals.
Peak Time is the largest international business student competition in Eastern Europe involving participants from all over the world, organised by the Stockholm School of Economics in Riga. The international community of the competition promotes cultural integration and gives the participants an opportunity to expand their networks and exchange ideas with the most talented students. Peak Time 2011 gathered more than 1500 creative and entrepreneurial students from 202 universities, 70 countries, 6 continents. The aim of Peak Time 2012 was to challenge talented and energetic young people with complex corporation problems by testing them with a set of various tools business simulation (Cesim), case studies and guest lectures. The competition offered the opportunity for businesses and students meet face to face, providing an adequate assessment for everyone students, universities and companies. The first part of Peak Time 2012 preliminary rounds finished in March. 197 top performers (100 teams and 97 individuals) were selected to continue competing in the next round, which consisted of a case study and application package. The case study for preliminary rounds was prepared by boutique management consulting company Civitta. Participants had to solve the case, prepare their solution in a PDF Presentation, and film the presentation. The Adam Smith Business School and the College of Social Sciences recently supported three 2nd year undergraduate students, Lukas Deksnys, Mante Zelvyte, and Laurynas Spangevicius, to attend the Peak Time International Business Student Competition finals in Riga. Mante - a finance and maths student - shares her experience with Aspire. http://peaktime.org/

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The Peak Time International Business Student Competition - traditionally holds its finals in Riga. It is a four-day event that gathers the most active people interested in business from all over the world who passed preliminary rounds - involving the CESIM business management simulation game, and the presentation of a business case study. This year there were 80 finalists, with only 16 teams and 16 individuals out of the original 1481 who applied. The teams came from 48 different countries. The finals consisted of two rounds. Firstly, students competed in an additional CESIM business management simulation (CESIM Global Challenge as opposed to CESIM firm in preliminary round). On the third day students then presented a solution to the business case study, which they had prepared the week before finals. The five best performing teams are then selected to compete in the final case study presentation which takes place on the last day. We found both the business simulation and the case studies very useful and were able to use most of our knowledge from our different accountancy courses. Preparing for the case study also improved our team working skills, as well as our time management skills (we had only 1 week to prepare and that was during exam period!) Finally, it was really interesting to watch the finalists presentations as we could see different approaches to solving case studies and could compare them to our own, as well as seeing how they were evaluated by the selection panel. It was also quite interesting to see the cultural differences in the presentations of the five finalist teams, all from different countries.

The finals in Riga were not only about the competition. We also had an opportunity to attend seminars run by guest lecturers such as Glen Grant, CEO at GG Consulting; Maris Martinsons, Director of the Pacific Rim Institute for the Studies of Managemet; Finn Majlergaard, Managing Partner at Gugin; and Marcus Orlovsky, Director at Bryanston Square. The speakers discussed diversity and differences in East and West business cultures and leadership. Finally, we participated in a workshop organised by Latvian entrepreneurs, which involved trying to think creatively about introducing new business ideas to the use of an old tobacco factory. Despite all of these activities, there was also time for socialising and exploring other cultures with national evenings, a formal party, and a cultural evening. We found the experience of the competition - especially attendance at the finals - extremely motivating, and we will now actively seek out other opportunities to increase our employability in the future. Seeing so many active people from all over the world who are looking for opportunities to employ their business knowledge, encourages to be the best you can be! Getting involved in student enterprise and business competitions whilst at university can be a great way to develop key business skills and significantly enhance your CV for employers. The Adam Smith Business School and the College of Social Sciences will support students to get involved in competitions, so if you are a current student and are interested in getting involved, contact Dickon Copsey, College Employability Officer on Dickon.Copsey@glasgow.ac.uk.

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Olympic bid
The London 2012 Olympics kicks off on 27 July 2012 and will be the focus of the nation. Ramin and Kian Golzari, both former students will be watching with a keen vested interest as the family business, Highlander Scotland Ltd, has produced high quality Olympic merchandise specifically for the Games.
Ramin (Class of 2008) and Kian (Class of 2010) both had a keen interest in business management whilst at school, and went on to study Business and Management at the University of Glasgow. After completing their degrees, both brothers joined their familys business, Highlander Scotland. Having worked extremely hard for the business in the past several years, both Ramin and Kian have created their own footprints at Highlander: Ramin as Sales Director and Kian as Product Development Manager, primarily based in the Far East. Highlander traditionally designs and manufactures camping and outdoor equipment such as backpacks, sleeping bags and tents, however, with this years London 2012 Olympic Games, the focus has changed. In July 2010, Ramin won the contract to exclusively design, manufacture and distribute official London 2012 merchandise throughout the UK and European retail. When I joined the business after university, I was aware that I was joining what was already a successful business, so I was eager to make my own mark and diversify our business opportunities. I had put a lot of work into the application process and didnt know what to expect. When the company was invited to discuss our business plan further, I realised that we were in with a great shout. Its a once in a life-time opportunity for me and for the business and I plan to enjoy it. Ramin has even more to look forward to this year as he was nominated by the Bank of Scotland to be one of the Official Torch Bearers as the Olympic Flame tours round the country. Kian joined the business just after Highlander had won the contract and was tasked with the momentous job of heading up the team that chose the product range, designed the products and organised the manufacturing and delivery into the UK. It was a great opportunity having come straight out of university. Ive been working very hard on the product range for the last 18 months which is over 100 different product lines with several trips back and forth to China. It has been a lot of fun to work with the suppliers and see the process of an idea turn into a design, manufacture a sample, select the best supplier then see the goods being mass produced on the production line. However, the best feeling without doubt is seeing the products in retailers such as Next, Argos, John Lewis and see people in the High Street using the products. Both Ramin and Kian look forward to going down to London to watch the games and working on similar projects in the future. The Olympic contract has created a lot of new opportunities for the business and created new jobs for Highlander which will see it grow into new markets with the continued efforts from Ramin and Kian.

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Bright stars

Two Business and Management students participated in the new Student Star Award and Apprenticeship Programme offered by the Marketing Society as part of their University Partnership Programme, which was launched last year.
The programme is open to all business and marketing students, and involves students participating in a two-day workshop with guest speakers from business as well as marketing tasks, which include projects on market segmentation, new product development, creative task, and marketing planning. The focus of the workshop is to develop a marketing campaign for a drinks company. Students compete for the Marketing Society Student Star of the Year Award and a three-month Apprentice placement gaining paid work experience at a variety of brand companies and top agencies. Mariya Lyanguzova and Janine Moehring, third year Business and Management students from the University of Glasgow, attended the programme in March. They were both shortlisted for the Star Award. For further details contact Dr Margaret Fletcher e-mail: margaret.fletcher@glasgow.ac.uk. www.marketing-society.org.uk Mariya Lyanguzova shares her experience with Aspire: The two-day workshop The Marketing Society organised in Edinburgh was a great opportunity to meet and work with like-mined people of the same age, socialise with some of the marketing gurus in Scotland and test my abilities and academic knowledge in a practical environment. On the first day, my colleague Janine and I arrived at an amazing 4-star hotel in Edinburgh which was going to host the event. We were divided into teams of four or five and the work for the day commenced. I am still startled at how easy it was for us to quickly turn into teams as opposed to just groups of people working together. The work itself, I am not going to lie, was exhausting but so fulfilling by the end of the day I was feeling like I was actually working for the marketing team of a big corporation. However, it wasnt all work and no play. In the evening we had a wonderful drink reception with cocktails made with the very same rum we were working on promoting all day. This was followed by a delicious dinner, where we had the opportunity to converse with representatives from various marketing firms and gain insight into the real world of marketing (and to find out that apparently a night away from your three over-energised kids is bliss!). After the dinner, we went(wait, wait, I almost forgot to tell you about the goodie bags we received!). Sowe went to a bar that served that very same rum and had some fun to Latino rhythms and Cuba Libres. We came to understand that when you work hard, you play hard, but should still leave some energy for the next day. The next day what a day it was! It was even more fun (and more work) than the first one. Highlight of the day: we recorded a radio commercial, which ended up sounding so good, you might just as well be hearing it on the radio! So, the two amazing days were over, but between all the tasks we needed to complete while having a cocktail or something to eat, we managed to bond with other attendees who are now my friends. At the end, this experience not only provided me with a real-life understanding of how the marketing business works and an opportunity to utilise all my skills and knowledge, but also presented a chance for creating relationships with some remarkable individuals. And the best part I actually got shortlisted to be among the finalists for the Marketing Student Star Award and I attended the ceremony on the 17th May (which was of similar scale to the Oscarsalright, maybe the Golden Globes). And I had the opportunity to be one of the brightest stars!

Making connections
Greg Stoner presented at, and helped to organise, the British Accounting & Finance Association (BAFA) Accounting Education SIG Annual Conference in Sheffield. Stoner is the Treasurer for BAFA and raised finance from the major professional accounting associations in the UK including CIMA, ICAEW, ICAS, and CIPFA. Celine Azemar presented a paper entitled Tax Competition and Hidden Tax Discrimination: Firmlevel Evidence in Europe at the Outsourcing and FDI conference in Dundee in April. She will be presenting the same paper at the International Business Taxation Conference in Glasgow in July. She also participated in a panel discussion in Glasgow as an economist expert in taxes. The discussion followed a screening of a documentary on `Fair Trade and Tax Justice by Christian Aid and the Guardian Media Group.

Adam Smith Business School staff reaching out to their wider network

Celine Azemar presented a paper entitled Country Characteristics and The Incidence of Capital Income Taxation on Wages: An Empirical Assessment at the Royal Economic Society conference in Cambridge in March.

Chris Veld presented a paper at the Western Economic International Association in San Francisco in June.

Celine Azemar presented a paper at the seminar of the department of Economics of the University College Dublin in March. Pavlos Dimitratos presented a paper entitled Micromultinational or not? International entrepreneurship, networking and learning in the 39th Academy of International Business - UK & Ireland conference, University of Liverpool in March.

Chris Veld will be presenting a paper at the Northern Finance Association in Niagara Falls in September.

Iain Docherty gave the opening keynote address, The Economic Geography of High Speed Rail in Great Britain, to the Academy of Social Sciences/Regional StudiesAssociation/Royal Geographical Society Parliamentary Seminar The case for High Speed Rail: a regional, social and economic perspective in London in February.

Graeme Martin gave two webinars for New York-based Reputation Institute in May.

Richard Harris had a series of meetings at the Bank of England to discuss their interest in firm-level productivity. Ben Broadbent, member of the Monetary Policy Committee, was involved. He will be giving the keynote presentation at the Secure Data Service: One year celebration, Department of Business, Innovation and Skills (BIS), Central London in June.

Pavlos Dimitratos as the Representative of Greece to the European International Business Academy (EIBA) participated in the EIBA Board Meeting in Brighton, University of Sussex in May. Luis Angeles was the invited speaker for the research seminar at the department of Economics of the University Pablo de Olavide, in Sevilla, Spain in June. Jo Danbolt presented a paper, CrossBorder versus Domestic Acquisitions and the Impact on Shareholder Wealth (co-written by Gillian Maciver), at the European Financial Management Association Annual Conference in Barcelona in June, where the paper has been nominated for a best paper award.

Graeme Martin was a keynote speaker at a conference for HR directors in Paris in May. Other conference speakers came from organisations like Disneyland Paris, Hilton Worldwide, Staples Europe, GE, Kimberly Clark, Volvo and LOreal. Iain Docherty presented his paper, The Impact of Changing Conditions for Transportation and Trade on the Competitiveness of Cities,as the keynote address to the German NationalAcademy for Spatial Research and Planning workshop Locational Competition and the Competitiveness of Cities and Regions workshop in April.

Greg Stoner presented at the European Accounting Association (EEA) 35th Annual Congress in Ljubjana, Slovenia in May. EEA is the main European association of academic accountings.

Alexandros Kontonikas presented a paper entitled The determinants of sovereign bond yield spreads in the EMU at the 2012 Financial Management Association European Conference in Istanbul in June.

Chris Coles gave a guest lecture to students at Tianjin University of Finance and Economics (TUFE) and South West University of Finance and Economics (SWUFE) in China. A dinner was also held in Chengdu, attended by alumni and prospective students, hosted by the Vice Principal.

Jo Danbolt visited the International Hellenic University in Thessaloniki, Greece, to give a number of talks and to undertake collaborative research in June.

Luiz Moutinho gave a research seminar on Neuroscience in Marketing at the Singapore Institute of Management University in May.

Luiz Moutinho was a keynote speaker at a conference on Social Business/Social Marketing along side speakers such as Kofi Annan and Mohammad Yunus in Dhaka, Bangladesh. He will also be giving research seminars at Universities in Bangladesh.

Alexandros Kontonikas attended the 2012 European Monetary Forum hosted by the Bank of Greece in March. Cleopatra Veloutsou is a member of the organising committee of the 9th Annual International Conference on Small and Medium Sized Enterprises: Management MarketingEconomic Aspects in Greece in July and August. She is the Chair of the 10th International Conference on Marketing, organised by the Athens Institute for Education and Research in July. She was a member of the organising committee of the 9th International Conference on Tourism, Athens, Greece, organised by the Athens Institute for Education and Research in Greece in June and a member of the Scientific Committee, for the 2nd Advances in Hospitality and Tourism Marketing & Management in Corfu in May.

Luiz Moutinho gave research seminars at five universities in Indonesia in May, as well as delivering the graduation speech for Tarumanagara University in Jakarta. He will be giving opening speech at the Enterprise Marketing and Globalisation conference in Jakarta in October. Cleopatra Veloutsou is a Member of the Scientific Committee.

Graeme Martin was invited to give a presentation in Brisbane at the University of Queensland in March.

The University of Glasgow Adam Smith Business School Gilbert Scott Building, West Quadrangle, Glasgow G12 8QQ www.glasgow.ac.uk/business
The University of Glasgow, charity number SC004401

University of Glasgow, 2012