Billionaire inventor James Dyson: Why we invent in Britain, but build in Singapore

Why we invent in Britain, but build in Singapore

James Dyson

Published at 12:01AM, February 26 2013

Singapore offers skills, location and a supply chain. The UK’s future lies in ideas and patents

For the past 15 years, Dyson’s highly-skilled engineers have been developing a tiny revolution in our laboratories. It is a new motor a third the size of a traditional one, but which can spin 100,000 times a minute — five times faster than a Formula One engine. Making 6,000 adjustments a second for optimal performance, the Dyson digital motor can supercharge prosaic machines.

At Dyson we invest heavily in our ideas and develop all of our technology in Britain: All our research takes place in Malmesbury where we employ 850 world-class design engineers and scientists — about a third of them recent graduates.

Our new motor performs like no other — and because we are developing it in our own laboratories, with our own people, no one else can get their hands on it (despite trying!).

This is not only good for Dyson, but also for Britain. The intellectual property is owned here and all the profits will flow back to the United Kingdom where we pay more than 85 per cent of our global tax.

But last week, Dyson opened a new £150 million (S$281.4 million) motor manufacturing facility in Singapore. Why?

Savvy governments understand the need to support advances like our new motor and to create incentives for companies to develop them. They also value the highly skilled workforce able to develop them — 40 per cent of graduates are engineers, versus 2 per cent in Britain. They realise that the more successful the company, the more they export, bringing more revenue into the country and employing more people.

And the potential for discovery at the moment is enormous, particularly in the sphere of materials. There are significant gains to be made from materials such as carbon 60 and graphene, which was discovered in Manchester. This is 40 times stronger than steel and 1,000 times more conductive than silicon.

Thankfully, Britain is moving in the right direction and there is a renewed desire to develop technology on its shores.

Prime Minister David Cameron has increased the research and development tax credit — which supports companies that take risks and invest in developing ideas for the future — to 225 per cent. As a result, patent applications rose 29 per cent in 2011 and investors have reacted positively.

But Britain still has a shortage of engineers — it has a 60,000 engineering deficit. Who will develop the ideas?


Britain is not the only country that is creating incentives for invention — and companies such as ours are in global competition. Singapore understands this and rewards investment in research and development with a thumping 400 per cent tax credit. The country supports and values inventiveness and backs it up with an education system that encourages ingenuity — they have plenty of world-class engineers.

Bereft of natural resources, Singapore realises that human resources and ideas are its trump cards.

The result is a buoyant economy, with highly inventive companies such as Rolls-Royce knocking at its door.

Building a complex motor such as the one that Dyson is developing, with minute tolerances, requires the precision of a fully automated production line. The highly-skilled workforce, the tax incentives and the nearby supply chain make Singapore appealing for us.

We will make six million motors this year; increasing our production capacity by 100 per cent — a necessary jump to meet rising demand, particularly from Japan and America. We source the motor’s 22 components from across Asia, so it makes little sense to ship them to Britain, only to export the finished motors back again. So Singapore is the obvious place for production.

Britain’s focus should be on generating ideas and patenting them — that is the high-value part of the process and the one that will earn this country a competitive advantage. Britons must focus on being the best problem solvers in the world, developing technology and then exporting it.

And for this Britain needs high quality engineers, backed up by supportive government incentives. The country has the foundations in place — but continuing government support, both through the education system and tax system, is essential.

Sir James Dyson is the founder of Dyson, the technology company. This commentary first appeared in British daily The Times.

Is the start-up nation sustainable? Israeli policy talks in terms of growth, not leadership, and that is no longer enough, argues Roy Keidar

Is the start-up nation sustainable?

Israeli policy talks in terms of growth, not leadership, and that is no longer enough, argues Roy Keidar.

26 February 13 12:59, Roy Keidar

The book “Start-up Nation” is very popular among American Jews. The idea that a small place like Israel, poor in natural resources and facing major security and diplomatic challenges, is number one in the world in start-ups per capita is a source of pride for Jews and Israelis, and an inspiration for other nations. But many people have begun to ask: In view of the processes underway in Israeli society and culture on one hand, and global trends on the other, is the “Start-up Nation” sustainable?

Israel’s success story is interesting and unique. It begins with the need of a society of immigrants to survive in the region. This need gave rise to technological innovations, such as drip irrigation, solar energy, and a slew of defense products developed in Israel. The adage, “Necessity is the mother of invention” was realized in Israel.

But it is not enough. Over the years, we have created a winning combination of scientific ability and an Israeli tendency to take risks. This combination was also the result of high-quality Russian-speaking immigrants, which brought to Israel thousands of scientists, and skilled manpower who were discharged from the army’s technology units.

Following Israel’s economic changes of the 1980s, the opening to the global environment and foreign capital, and access to overseas scientific and technological know-how, the country discovered the formula, which gave rise to the “Start-up Nation” model for the 2000s. And this without even mentioning Israeli genius.

But in the past decade, there have been signs that the model is becoming frayed, especially when global trends and their effect on Israel are examined. The world is competing for innovation and creativity. Multinationals aggressively buy talent, and skilled personnel move from country to country following financial incentives.

Governments provide huge budgets and tax breaks for R&D to create strong national economic clusters. Former growth engines, such as information, computers and telecommunications (ICT) are giving way to new technologies, such as self-production and 3D printers, which require different specializations and preparations to adapt the economy.

Given Israel’s security and economic challenges, it must be the world’s scientific-technological innovation spearhead, since this is the country’s largest resource and the only non-perishable one. The assumption that what worked in the past will also work in the future, and that the market should be allowed to do its thing cannot serve as a working assumption. The world is changing, and Israel must adapt and renew.

How can Israel create the conditions to remain the world’s scientific-technological innovation spearhead? The answer cannot be found in a book or plan, nor can it only depend on the government, the education system, or the private market. The way to be the spearhead of innovation begins and ends with a common vision which sets innovation as the goal and calls on all parties to adapt their operating strategies to achieving this vision, which does not currently exist in Israel.

Israeli policy talks in terms of growth, not leadership, and in the 21st century that is no longer enough.

The author is the CEO of the Reut Institute

Ancient King’s Hat Holds Clues To Korean Alphabet

Ancient King’s Hat Holds Clues To Korean Alphabet

Agence France Presse | Feb. 27, 2013, 6:18 AM | 937 | 1


Park Ji-Hwan/AFP

A hat which belonged to South Korea’s most revered monarch King Sejong has been recovered more than 500 years after it was looted by Japanese invaders, a senior scholar said Wednesday.

Apart from its intrinsic value as an historical relic, the discovery has thrilled scholars after documents were found stitched inside the hat carrying explanations of King Sejong’s greatest legacy — the Hangeul alphabet.

The monarch known as Sejong the Great ruled from 1418-1450. His reign had a profound impact on Korean history with the introduction of the Hangeul phonetic alphabet that replaced classical Chinese characters.

Hangeul vastly increased literacy — previously restricted to the top scholarly class — and remains the official script of both South and North Korea. Read more of this post

Japanese Robot Suit Approved For Worldwide Rollout

Japanese Robot Suit Approved For Worldwide Rollout

Agence France Presse | Feb. 27, 2013, 7:35 AM | 2,355 | 3

japan-robot-suitjapan-robot-suit-1 (1)


A robot suit that can help the elderly or disabled get around was given its global safety certificate in Japan on Wednesday, paving the way for its worldwide rollout. Read more of this post

“To be Korean is to get plastic surgery. You must do it, or young people will think you’re weird.”

Gangnam, South Korea Is Becoming The Plastic Surgery Capital Of Asia

Geoffrey CainGlobalPost | 12 minutes ago | 251 | 

A crowd of young women wait nervously in the lobby of a popular plastic surgery clinic in Apgujeong, the affluent neighborhood at the heart of Gangnam.

Photographs of Korean pop singers and actresses line the walls, winsome customers who smile next to their cosmetic surgeons.

“It’s painful, but I really want a face like those Korean actress girls,” says a Chinese patient leaving a check-up — with her nose wrapped in a surgical bandage.

Many customers have traveled to this neighborhood — home to some 400 cosmetic surgery hospitals — all the way from ChinaJapan and Southeast Asia. They’re hoping to take home a little “Gangnam style” for themselves.

That isn’t just a Psy reference. Gangnam is popular from an Asia-wide trend made famous over the past decade: the popularity of Korean television shows and pop singers known as the “Korean Wave.”

Plastic surgery is a lucrative trade in South Korea, with citizens edging out Greece, Italy and the US as the most cosmetically enhanced people in the world. Read more of this post

The coming R&D crash

The coming R&D crash

By Brad Plumer , Updated: February 26, 2013

One of the few things Republicans and Democrats have been able to agree on in recent years is that the government should be spending more on basic scientific research — the sort of research that, in the past, has played a role in everything from mapping the human genome to laying the groundwork for the Internet.

“Government funding for basic science has been declining for years,” Mitt Romney wrote in his 2010 book No Apology. “It needs to grow instead.” In his most recent State of the Union address, President Obama sounded a similar note: “Now is the time to reach a level of research and development not seen since the height of the space race.”

So it’s notable that the exact opposite is, in fact, about to occur. Thanks to budget pressures and the looming sequester cuts, federal R&D spending is set to stagnate in the coming decade. The National Institutes of Health’s budget is scheduled to drop 7.6 percent in the next five years. Research programs in energy, agriculture and defense will decline by similar amounts. NASA’s research budget is on pace to drop to its lowest level since 1988.

As a result, scientists and other technology analysts are warning that the United States could soon lose its edge in scientific research — and that the private sector won’t necessarily be able to pick up the slack. Read more of this post

Why language is the key to winning India’s mobile market

Why language is the key to winning India’s mobile market

By Leo Mirani — February 26, 2013

“I’ve only just returned from work.”Reverie Language Technologies

“I’ll be late coming home today”Panini Keypad

MUMBAI—India has the world’s largest mobile phone market after China. Yet the amount of money mobile networks make per user is among the lowest in the world: around $2 per month. Chinese carriers such as China Mobile make five times as much. AT&T rakes in $65 per user per month in the US.

The most obvious reason is that Indian carriers operate on razor-thin margins, charging customers $0.01 per minute. Smartphone users spend more butpenetration remains low. Half of Indian smartphone owners don’t have a data plan anyway, according to Prashant Singh of Nielsen. But there are other things that make India unique.

Unlike many markets, Indian carriers derive most of their revenues the old-fashioned way: from people making calls. Non-voice revenue is just 11% of the total. That’s about half as much as in Britain and just under a third of American and Chinese operators’ non-voice revenues (pdf). Only one in two Indians send text messages, much lower than the 62% in its class of what the World Bank defines aslower-middle-income countries. Considering the zeal with which Indians have taken to mobile phones, what explains their reluctance to embrace their use for other things?

A big obstacle is language (bhasha or vasha in Hindi). Most phones sold in India come with English-language operating system software. Despite India’s reputation as an Anglophone nation, only a tenth of its 1.2 billion people count English as their first, second or third language. In any case, one out of four Indians cannot read or write. But unlike linguistically homogeneous Russia or China, India’s 22 official languages (and several hundred unofficial ones) in 11 different scripts make it a difficult market to crack. Read more of this post

80% of Chinese gov’t office purchases above market price, with 70% of purchases at least 1.5 times higher

80% of Chinese gov’t office purchases above market price: report

Staff Reporter


Around 80% of office products and equipment purchased by Chinese government departments last year were above average market value, with 70% of purchases at least 1.5 times higher, reports the Guangzhou-based 21st Century Business Herald. Read more of this post

The bizarre new Chinese trend of using rubber as loan collateral

The bizarre new Chinese trend of using rubber as loan collateral

By Naomi Rovnick — 10 hours ago

Chinese commodities consumption is often weird. Quartz has reported how, last year, many individuals and companies purchased copper in order to have some so-called “collateral” to pledge to banks as security for loans. The trend was a huge driver in world copper demand.

The same is now happening with rubber, Reuters reports, with Chinese borrowers sending the rubber price up to a ten month high.

The Chinese buy commodities to use as loan backing for two reasons. First, they need to tick the “yes” box on loan forms that says “do you have collateral”. In the US, factory owners might pledge their freehold land in exchange for a loan. But the Chinese government officially owns all land and can seize it from leaseholders any time, which can make banks understandably reluctant to take it as collateral.

Second, Chinese borrowers hope the commodity will rise in value so they can sell it at the end of their loan term for a profit. That all depends on car sales, since the rubber is used in tires.

An important question, though, is why on earth Chinese banks are accepting rubber, a commodity that has a short shelf life,  as loan security in the first place. According to Reuters, rubber can only be stored for around six months.

If China’s rubber-backed borrowers default on their loans, then banks will end up owning the rubber.  And while bank managers could probably sell off any factory equipment—or even copper—seized from borrowers who failed to repay loans, if the rubber isn’t bought up by tire-makers before it deteriorates, it quickly loses its value. And what would the banks do with it then?

In China, rubber-for-loans bet at risk from economy, car sales

Tue, Feb 26 2013

By Lewa Pardomuan and Rujun Shen

SINGAPORE (Reuters) – Chinese investors have been piling up rubber as collateral for financing, recently driving prices to 10-month highs, in what could be a risky bet as warehouses in the world’s top user fill up with a commodity that can only be stored for a limited time.

Copper, zinc and steel have been used as financing tools in China in the past few years, but the move into rubber to back loans has raised concerns about the potential impact on the rubber market from such large inventory overhang. Read more of this post

China property controls seen in Ping An Bank shift; Local Gov’ts Begin to Face Fiscal Crunch; Chinese Banks’ Bad Loan Ratio to Hit 3Pct in 2013: S&P Report; More Chinese cities ready for property tax pilots

China property controls seen in Ping An Bank shift

2013-02-27 09:29:24 GMT2013-02-27 17:29:24(Beijing Time)

A move by China’s Ping An Bank (000001.SZ) to ban its regional branches from approving mortgages may signal that Beijing is set to tighten controls on the property market to calm record prices, market sources said on Wednesday. Read more of this post

HK’s US$160m milk powder market to face severe clamp down

HK’s US$160m milk powder market to face severe clamp down

Staff Reporter


Hong Kong will no longer be a safe haven for the baby formula buying craze of mainland Chinese customers. Starting as early as March 1, Hong Kong will limit the amount of baby formula taken from the island city to two tins per person or 1.8kg, following a string of measures proposed in early February to ease milk powder shortages, Guangzhou-based 21st Century Business Herald reports. Read more of this post

Korean chaebol face structural overhaul; Large firms urged to decentralize management control

2013-02-26 18:31

Chaebol face structural overhaul

Large firms urged to decentralize management control
By Kim Tae-jong

President Park Geun-hye Monday reaffirmed her will to facilitate “economic democratization” during Monday’s inauguration speech. To some corporate owners, this is obviously a warning sign, as she is expected to take a hardline stance on unfair business practices among the nation’s family-controlled conglomerates or chaebol.

Experts say that the chaebol need to reform their management structure in accordance with the new government in order to survive.

“Things have changed, and conglomerates should also adapt to such changes,” said Hansung University professor Kim Sang-jo. “They can’t go against this new trend.”

He suggested that conglomerates should decentralize their management by reducing their dependency on the owner or his or her family members.

“Since 1997, a number of companies have faced owner risks, as their chairmen were found to be engaged in irregularities. But those that successfully overcame them and reformed their traditional management structure have prospered,” he said. Read more of this post

The Boats that Did Not Sail: Asset Price Volatility and Market Efficiency in a Natural Experiment

The Boats that Did Not Sail: Asset Price Volatility and Market Efficiency in a Natural Experiment

Peter Koudijs 

Stanford GSB
February 2013
NBER Working Paper No. w18831

Financial markets are thought to be inefficient when they move too much relative to the arrival of information. How big is this inefficiency? In today’s markets, this is difficult to determine because the arrival of information is hard to identify. In this paper, I present a natural experiment from history in which the flow of information was regularly interrupted for exogenous reasons. This allows me to study volatility in the absence of news, and to identify the degree of inefficiency. During the 18th century a number of English securities were traded on the Amsterdam exchange. Relevant information from England reached Amsterdam on mail boats. I reconstruct their arrival dates. When no mail boats arrived, virtually no other relevant information reached the Amsterdam market. I measure price volatility during periods with and without news. Even in the absence of new information, security prices moved significantly. Between 50 and 75% of overall volatility did not reflect the arrival of news. A significant fraction of this residual is driven by the incorporation of private information into prices. Once this is taken into account, 20 to 50% of the overall return variance is unexplained by information. This suggests that the Amsterdam market moved more than can be explained by the arrival of news but that the majority of price movements was still the result of efficient price discovery.

Deflating shadow credit in China

Deflating shadow credit in China

Kate Mackenzie

| Feb 27 08:59 | 6 comments Share

First, a reminder of the degree to which China’s growth has been increasingly fuelled by credit over the past few years:


The chart above doesn’t quite show it, but non-bank credit growth outpaced bank loans last year. The rise of China’s shadow banking scene has happened very rapidly — much of the growth only happened since 2009.

Shadow banking in China is not all necessarily shadowy; in fact some of it, such as trusts, are legal and regulated at least to a degree. A chunk of shadow loans are also originated by banks (Anne Stevenson-Yang of J Capital Research reckons about 30 per cent).

But it does also include a number of ever more complex and opaque products such as wealth management products. The underlying assets are hard to determine and usually turn out to be property or financial in nature. Investors often assume banks and the state are guaranteeing the principle because of the way they are marketed. Read more of this post

The Starbucks Index – Coffee Price Parity

The Starbucks Index – Coffee Price Parity

Tyler Durden on 02/27/2013 09:44 -0500


Despite Abe’s protestations, it would appear – from WSJ’s index of Starbucks coffee prices around the world – that Japan’s currency ‘value’ is similar to the US while it is Mr. Hollande (in France) that has more reason to hope for a currency devaluation in his country. With India and Mexico showing the lowest price for a grande latte (suggesting undervalued currencies), it appears Europeans (from Madrid to Paris to Athens) pay significantly more for a latte than even the New Yorkers. Forget the Big Mac Index, forget Purchasing Power Parity – the Scandinavians are suffering from over-priced currencies and significant divergence from Coffee Price Parity.

February 21, 2013, 4:49 p.m. ET

On Currencies, What’s Fair Is Hard to Say

Countries’ Heated Rhetoric Points Out Lack of a Universal Measuring Stick


What’s the fair value of a euro? That depends on whether the answer comes from Berlin or Paris. Read more of this post

Developing Corporate Governance Research Through Qualitative Methods: A Review of Previous Studies

Developing Corporate Governance Research Through Qualitative Methods: A Review of Previous Studies

Terry McNulty 

University of Liverpool

Alessandro Zattoni 

University of Bocconi – Strategic and Entrepreneurial Management 

Thomas Douglas 

affiliation not provided to SSRN

March 2013
Corporate Governance: An International Review, Vol. 21, Issue 2, pp. 183-198, 2013

Manuscript Type. Review. Research Question/Issue. The article is concerned with the prevalence, character, and development of qualitative research within the field of corporate governance. The paper provides an overview of published qualitative research in the field of corporate governance based on a structured literature search of papers published in scholarly peer‐reviewed journals between 1986 and 2011. Research Findings/Insights. A fine‐grained search based on key words resulted in a sample of 78 qualitative corporate governance studies. A review and content analysis of these studies show that qualitative studies in governance have grown in number since the 1990s, but remain a small fraction of the published work on corporate governance. Studies are mostly developed by UK and European scholars, published in European journals and tend to explore boards of directors more than other governance related actors and mechanisms. These studies utilize a range of disciplines, predominantly management, adopting a wide range of methods, the most prevalent being that of the interview, often in combination with other methods to get a better account of the empirical phenomenon. Theoretical/Academic Implications. The search reveals an eclectic range of theories, spanning several disciplines, which is serving to generate, elaborate, and refine theorizing about corporate governance and the associated meanings, mechanisms, processes and relationships. There is much scope and need for more qualitative studies of significant rigor and relevance which explore the array of interactions and processes involved in corporate governance, across different levels of analysis and contexts. Practitioner/Policy Implications. After over two decades of research and reform of corporate governance, problems of practice remain, and corporate governance prescription via codes and other forms of regulation is increasing in search of better governance. Qualitative research can assist policy‐makers and practitioners to develop more efficient governance mechanisms, by shedding light on the efficacy of policy prescription. Qualitative research provides a basis for rethinking and challenging some of the dominant assumptions and meanings about how governance actors and institutions actually function.

Wealth Transfers via Equity Transactions

Wealth Transfers via Equity Transactions

Richard G. Sloan 

University of California at Berkeley – Haas School of Business

Haifeng You 

Hong Kong University of Science & Technology (HKUST) – Department of Accounting
February 15, 2013

Previous research indicates that firms issue (repurchase) shares when their stock is overpriced (underpriced). Such transactions transfer wealth from transacting stockholders to ongoing stockholders. We quantify the magnitude of these wealth transfers and analyze their implications. The wealth transfers are economically significant, averaging approximately 6% of pre-transaction market capitalization for equity issuers. They are particularly large for equity issuers with ex ante indications of overpricing, where they average 14% of pre-transaction market capitalization. We analyze the implications of these wealth transfers for equity valuation, corporate financial policy and value-oriented investment strategies.

Textual Sentiment Analysis in Finance: A Survey of Methods and Models

Textual Sentiment Analysis in Finance: A Survey of Methods and Models

Colm Kearney 

Monash University – Faculty of Business and Economics

Sha Liu 

Trinity College Dublin – School of Business
January 31, 2013

The study of sentiment in qualitative information has implications for both the efficient market hypothesis and the behavioural finance. It provides an alternative perspective to test market efficiency over and above quantitative information, and may help explain the ‘anomalies’ in the market. In this paper, we survey the textual sentiment analysis literature, compare and discuss the information sources, content analysis methods, and financial models that have been used. We then summarize the essential findings of the interrelations between textual sentiment and firm performance or stock market activities. We believe that textual sentiment is a potential pricing factor because it captures hard-to-quantify aspects of material information. We also suggest the promising directions for future research.

Stockholders’ Unrealized Capital Gains Position and the Market Response to Earnings Announcements

Stockholders’ Unrealized Capital Gains Position and the Market Response to Earnings Announcements

Eric Weisbrod 

University of Miami – Department of Accounting
February 4, 2013

I examine whether stockholders’ average unrealized capital gains position in the equity of a given firm affects their response to the firm’s quarterly earnings announcements. Stockholders’ unrealized capital gains can affect their individual trading decisions via the capital gains tax “lock-in effect” or the tax-irrational bias known as the “disposition effect.” Prior literature is unclear about whether these two effects are significant determinants of the market reaction to earnings news. I design new tests that incorporate trade-by-trade data as well as quarterly institutional holdings data, and find robust evidence supporting the disposition effect. However, I also find that this announcement-window disposition effect is mitigated when tax incentives are stronger or more salient. Finally, I demonstrate that the disposition effect has important implications for measuring the degree to which the market incorporates earnings news. First, the disposition effect moderates the degree to which both opinion divergence and the differential precision of pre-announcement earnings information are reflected in abnormal trading volume. Second, the disposition effect diminishes the price adjustment to earnings news during the announcement window.

Want to Change the World? Be Resilient.

Want to Change the World? Be Resilient.

by John McKinley  |   1:00 PM February 26, 2013

What’s the difference between someone with a good idea and a person who can transform their ideas into real impact? To tackle the world’s biggest problems, we need to be able to identify and support the people who are capable of creating lasting change. At Acumen Fund, we spend a lot of time trying to find and train aspiring and established leaders from around the world who have the right mix of talent, ideas, and passion.

And what we’ve found time and again is: Resilience matters most.

Resilient leaders have three key characteristics:

  1. Grit: Short-term focus on tasks at hand, a willingness to slog through broken systems with limited resources, and pragmatic problem-solving skills.
  2. Courage: Action in the face of fear and embracing the unknown.
  3. Commitment: Long-term optimism and focus on big-picture goals.

Read more of this post

Is traditional leadership on its way out? Today leadership is about Creativeship, which he defines as “the creation of sustainable cultures and business models.”

Is traditional leadership on its way out?

Ray Williams | Feb 26, 2013 5:47 PM ET
In an earlier article in the Financial Post, I argued “If management is so good at predicting outcomes through analytical and scientific methods why have so few public companies performed well?” The leadership of today’s business institutions has increasingly been put under the microscope.

“Companies that are managed the traditional way — by executives developing analytically driven strategy and shaping the organization to meet the needs of the business as they see them — are obsolete. Management as we have known it, is too cumbersome,” argues Thomas Hout in an article in the Harvard Business Review.  That sentiment is also held by Alan Murray, who in an article in the Wall Street Journalwrites that management, as an innovation, won’t survive the 21st century.

Barbara Kellerman, author of The End of Leadership, contends that the leadership industry is a $50 billion a year business, that has been unable to produce true leaders and in essence, failed. Kellerman argues while leaders once dominated and controlled followers, now followers are more educated and independent, and leaders must now rely on influence and persuasion.

Bob Kelleher, author of Creativeship: A Novel for Evolving Leaders contends the definition of leadership as “the ability to lead people, build fellowship and make money” is archaic and so “yesterday.” Read more of this post

Are IPOs Good for Innovation? A Stanford scholar says going public often slows innovation

Are IPOs Good for Innovation?

by Edmund L. Andrews | Feb 27, 2013

A Stanford scholar says going public often slows innovation

For many entrepreneurs, it is a dream on par with finding the Holy Grail: an initial public stock offering that can turn a startup into the next Google and a 20-something founder into the next mega-millionaire.

Yet, for all that money and drama, do initial public offerings — IPOs — speed up technological innovation?

Not necessarily. An eye-popping new study by Shai Bernstein, an assistant professor of finance at the Stanford Graduate School of Business, finds that innovation slowed down by about 40% at tech companies after they went public.

In a meticulous analysis of patent data from nearly 2,000 companies, Bernstein found that newly public companies became noticeably more incremental and less ambitious with their in-house research than comparable firms that stayed private. Read more of this post

Getting Cities Right

Mahmoud Mohieldin, Zoubida Allaoua

Getting Cities Right

26 February 2013

WASHINGTON, DC – The developing world is experiencing rapid urbanization, with the number of city dwellers set to reach four billion in 2030 – double its 2000 level. But unplanned and uncoordinated urban development is risky, threatening to replace migrants’ hopes for a better life with unsanitary living conditions, joblessness, and high exposure to natural disasters.

In many respects, urbanization is rational. After all, cities are the hubs of prosperity, where more than 80% of global economic activity is concentrated. And their density facilitates the delivery of public services, including education, health care, and basic services. Indeed, it costs $0.70-0.80 per cubic meter to provide piped water in urban areas, compared to $2 in sparsely populated areas.

But the high concentration of assets and people, especially in coastal areas, is an economic liability, with around $3 trillion in assets at risk from natural hazards. Vulnerability will increase further over the next two decades, as cities triple their built-up land, to 600,000 square kilometers, often without basic infrastructure or policies to prevent construction and settlement on disaster-prone and vulnerable sites.

To get urbanization right, policymakers must take urgent action to build sustainable cities. Read more of this post

Will Programmers Rule?

Raghuram Rajan, Professor of Finance at the University of Chicago Booth School of Business and the chief economic adviser in India’s finance ministry, served as the International Monetary Fund’s youngest-ever chief economist and was Chairman of India’s Committee on Financial Sector Reforms. He is the author ofFault Lines: How Hidden Fractures Still Threaten the World Economy.

Will Programmers Rule?

26 February 2013

NEW DELHI – Marc Andreessen made his first fortune writing the code that became Netscape Navigator, the Internet browser. He is now a venture capitalist who evangelizes about the growing importance of software in business today. Indeed, he proclaims that software is taking over the world – that it will be the primary source of added value – and offers the following prediction: the global economy will one day be divided between people who tell computers what to do and people who are told by computers what to do.

Andreessen’s aim is to shock his listeners – not just for effect, but to get them to do something about it. To stop the world from being divided between a few alpha programmers and many drones, he wants the potential drones to stop taking easy liberal arts courses in college. Instead, he wants them to focus on courses in science, technology, engineering, and math (STEM), where the good jobs will be. But will this solve the problem that he poses?

Perhaps not. Two attributes of software creation allow a few talented programmers to corner the market and take all the associated profits. Read more of this post

Doubts Over Returns Hit Fundraising in China

February 26, 2013, 5:36 PM

Doubts Over Returns Hit Fundraising in China

By Chao Deng


Investors are growing skeptical that private equity in China can keep giving them high returns, and local funds are bearing the brunt of their reluctance to pump in more cash.

The reasons: China’s market for initial public offerings has stalled, making it harder for private-equity firms to cash out of investments, and investors are growing disillusioned with the idea that China’s economy is in line for continued spectacular growth. Growth has already slowed slightly from previous years. Read more of this post

Finding the Just-Right Level of Self-Esteem for a Child

Updated February 26, 2013, 7:35 p.m. ET

Finding the Just-Right Level of Self-Esteem for a Child


Is high self-esteem the key ingredient to your child’s success? New research reveals heaping on the praise doesn’t necessary lead to happiness down the road. WSJ Work & Family columnist Sue Shellenbarger, and parents Jason and Cara Greene, join Lunch Break to discuss. Photo: Jason Greene.

A wave of recent research has pointed to the risks of overpraising a child. But for parents, drawing the line between too little praise and too much has become a high-pressure balancing act.

Cara Greene, a mother of three children ages 1 to 8, is wary of deliberately pumping up her kids’ egos, for fear of instilling the sense of entitlement she sees in young adults “who have been told they’re wonderful and they can do anything.” But she also wants them to have healthy self-esteem. Read more of this post

Mao’s $300 Red Army Liquor Suffers Before China Congress: Retail

Mao’s $300 Red Army Liquor Suffers Before China Congress: Retail

By Bloomberg News  Feb 26, 2013

Kong Guoqing hasn’t seen a quieter Chinese New Year in the 12 years his family has been running their small liquor and tobacco shop in downtown Shanghai.

They didn’t sell a single bottle of the high-end spirit made by Kweichow Moutai Co. (600519) that has become synonymous with banquets and gift-giving during China’s national holiday. Kong blames the vanished sales on incoming President Xi Jinping’s crackdown on extravagant spending by officials: Moutai’s sorghum spirit can fetch $300 a bottle — about a third of an average weekly wage in China’s financial hub.

“Demand for the most expensive liquors and cigarettes this New Year seemed to have just dried up,” said Kong, pointing to red boxes of cigarettes costing about $10 a pack, or more than six times the price of regular brands. “People are afraid to accept gifts.” Read more of this post

CBC Raises Deposit Rates, First Among Big State Lenders; significant move reflects building pressures even on the powerful state-owned banks as they scramble for deposits to meet regulatory requirement following a lending spurt at the beginning of the year

CBC Raises Deposit Rates, First Among Big State Lenders

02-26 19:25 Caijing

The significant move reflects building pressures even on the powerful state-owned banks as they scramble for deposits to meet regulatory requirement following a lending spurt at the beginning of the year.

Read more of this post

Why Do Incumbents Sometimes Succeed? Investigating the Role of Interorganizational Trust in the Adoption of Disruptive Technology

Why Do Incumbents Sometimes Succeed? Investigating the Role of Interorganizational Trust in the Adoption of Disruptive Technology

Michael W. Obal 

Temple University – Department of Marketing and Supply Chain Management
February 11, 2013

Previous research has noted that new firms traditionally have more success with the diffusion of disruptive technologies than do incumbent firms. For the development of disruptive technologies, newer firms appear to be advantageous as they are generally more flexible in resource allocation. However, exceptions can be found in various industries in which incumbents have been able to succeed with their own disruptive technologies. One possible explanation for these exceptions is the influence of pre-existing levels of trust already developed between incumbents and potential buyers of disruptive technologies. In order to explore this further, this article provides a link between interorganizational trust and the adoption of new, disruptive technologies in industrial markets. We show how pre-existing, interorganizational trust impacts the perceptions a potential buyer has towards a disruptive technology and how these perceptions influence a buyers’ intention to adopt a new, disruptive technology. Beyond trust, we use perceived ease of use, perceived value, perceived usefulness and financial stability to create a predictive model for intention to adopt. Holistically, this article provides insight on how buyer-supplier relationships generally favor incumbent firms and can impact a buyers’ perception of a new, disruptive technology.

‘By a Silken Thread’: Regional Banking Integration and Pathways to Financial Development in Japan’s Great Recession

‘By a Silken Thread’: Regional Banking Integration and Pathways to Financial Development in Japan’s Great Recession

Mathias Hoffmann 

University of Zurich – Department of Economics Library; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Toshihiro Okubo 

University of Geneva – Graduate Institute of International Studies (HEI)
January 31, 2013
CESifo Working Paper Series No. 4090

How do financial development and financial integration interact? We focus on Japan’s Great Recession after 1990 to study this question. Regional differences in banking integration affected how the recession spread across the country: financing frictions for credit-dependent firms were more severe in less integrated prefectures, which saw larger decreases in lending by nationwide banks and lower GDP growth. We explain these cross-prefectural differences in banking integration by reference to prefectures’ different historical pathways to financial development. After Japan’s opening to trade in the 19th century, silk reeling emerged as the main export industry. The silk reeling industry depended heavily on credit for working capital but comprised many small firms that could not borrow directly from larger banks. Instead, silk merchants in Yokohama, the main export hub for silk, provided silk reelers with trade loans. Many regional banks in Japan were founded as local clearing houses for such loans, and regional banks continued to account for above-average shares in lending in the formerly silk-exporting prefectures long after the decline of the silk industry. Using the cross-prefectural variation in the number of silk filatures in 1895 as an instrument, we confirm that the post-1990 decline was worse in prefectures where credit constraints were tightened through low levels of banking integration. Our findings suggest that different pathways to financial development can lead to long-term differences in de facto financial integration, even if there are no formal barriers to capital mobility between regions, as is the case in modern Japan.

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