Research at Cambridge Judge Business School – from AI dysfunctions to privatisation debate
In the latest of an occasional series, Charles Goldsmith, head of media relations at Cambridge Judge Business School, summarises some of its recent research, covering topics from craft to entrenchment.
Avoiding artificial intelligence ‘dysfunctions’
There are some tricky “dysfunctions” associated with artificial intelligence that managers need to steer clear of in the workplace, says Stella Pachidi, university lecturer in information systems at Cambridge Judge.
“As AI technology is still maturing, awareness regarding the new management challenges it poses and the implications it raises for the workplace and the organisation are still emerging,” she writes in the journal MIS (Management Information Systems) quarterly executive.
Specifically, Stella identifies four areas relating to AI that managers need to pay extra attention to: algorithmic bias that can put certain groups at a disadvantage; unexplainable decision outcomes owing to many layers contributing to such outcomes; blurring accountability boundaries when both machines and humans influence outcomes; and invaded privacy resulting from AI’s huge amount of data.
While AI holds great potential to transform workplaces for the better, the article says that now – with the technology still at an early stage – is the time to develop systems to avoid such potentially damaging pitfalls.
Are privatised firms more efficient? It depends
Governments around the world have raised $3.5trillion over the past 40 years by privatising state-owned businesses, with politicians often claiming that such moves make organisations more efficient. But is this really the case?
A study co-authored by Kamal Munir, reader in strategy and policy at Cambridge Judge, challenges such an assumption and comes up with a far more nuanced conclusion: efficiency through privatisation depends on such factors as the regulatory framework involved, managerial experience level, and whether the enterprise faces competitive pressures.
For example, banks and manufacturers that operated prior to privatisation in a competitive marketplace generally show significant efficiency improvement after becoming private – while public service firms such as water and electricity providers show more mixed results.
“Considerable variation can be observed, across countries as well as industries, in the impact of privatisation on the governance, structure, systems, strategy, culture, and performance of state-owned enterprises”, concludes the study in the Journal of Management.
“If a more balanced perspective is not taken, we can end up in a situation where profits are privatised while losses are socialised.”
Crafting a new approach
The concept of “craft”, in many minds, conjures up a nostalgic view of a simpler yesteryear. Yet craft is actually a timeless concept that can make modern life less rubbish, argues a new study.
The research published in the journal Academy of Management Annals says that craft can help soften “purely mechanistic approaches” to work reflected in such developments as machine learning and artificial intelligence.
Craft attaches importance to “human touch”, and is “increasingly being associated with alternative approaches to work and organisation in contemporary society”, says the article.
“Rather than implicitly assuming that mechanical alternatives are naturally superior and inevitable, our study provides a framework that enables us to critically reflect on when, why and how we should embrace craft approaches to contemporary forms of work,” says lead author Jochem Kroezen, university lecturer in international business at Cambridge Judge.
Predicting energy use in buildings
Emissions from cars and planes are often forefront when policymakers discuss climate change, but in many countries, including Britain, the largest single source of greenhouse gas emissions is energy use in buildings.
Given this, a new model to predict the future amount of residential building stock has been developed by University of Cambridge researchers including David Reiner, university lecturer in technology policy at Cambridge Judge.
The study, in the journal Applied Energy, examines building stock in China, where building energy consumption has been increasing and which had one-third of all floor area of new buildings in the world in 2018.
The new model suggests that total building stock in China will peak around 2065, and then decline due to a projected decrease in total population and slower increase in urbanisation.
“The lack of authoritative data for something as basic as residential building stock creates a barrier for policymakers in forecasting energy use and related carbon impacts, so we hope this new model will provide a tool for a range of forecasting in situations where firm data is hard to come by,” says David.
Staggering to entrenchment
Many companies have “staggered” terms for their boards of directors, with only some directors up for re-election in any given year. But there has long been disagreement as to whether this helps shareholders through greater management stability or harms them by entrenching old-guard managers.
Research co-authored by Dr Oguzhan Karakas, university senior lecturer in finance at Cambridge Judge, tackles this issue through estimating the value of voting rights in companies. The research then finds that staggered boards lead to entrenchment as a company matures, and particularly if the firm is in an uncompetitive industry.
The study in The Review of Corporate Finance Studies examines large US public companies from 1996 to 2018, focusing on 321 companies that changed their board structure to destagger their boards and 29 firms that changed to a staggering system.
“Our finding that staggered boards are, on average, perceived by the market as entrenching management could make investors generally more wary of staggered boards and more willing to express opposition to them,” says Oguzhan. “However, investors should still be cautious about a ‘one-size-fits-all’ approach towards staggered boards.”