

Business School thought leadership
Surrey Business School is home to world-class research. We are committed to both academic excellence and ‘real world’ impact and our research demonstrates practical importance and a solution driven approach. Our thought leadership guides business leaders, policymakers and stakeholders with rigorous and empirically robust insights that inform debate and lead to innovative outcomes.
Highlighted papers
By Tom Lawton, Professor of Strategy and International Business, Surrey Business School
What’s the best way for a parent company to save a struggling business? Experts suggest that businesses should reject a one-size-fits-all approach and consider a more fluid strategy used by Audi AG to save the super-car manufacturer, Lamborghini.
When Audi (a subsidiary of the Volkswagen Group) rescued the ailing Lamborghini business in 1998, it followed the old parent company playbook by insisting that many Audi processes were followed, including those in manufacturing, procurement and quality control. However, by the 2007 launch of the Lamborghini Aventador, this picture had changed and even reversed.
Using research data spanning 21 years Surrey Business School found that Audi had given the smaller unit more autonomy and let it innovate, offering a potential model for how other companies can successfully balance efficiency-driven controls with innovation. By varying the freedoms enjoyed by the companies they buy, parent organisations can unlock the hidden potential in the companies they acquire – sometimes allowing them higher levels of organisational autonomy, and sometimes reining them in. The experience of Lamborghini suggests that fluctuating levels of autonomy can lead to the ‘Holy Grail’ of efficiency and innovation.
The research was conducted through interviews with 50 Lamborghini and Audi executives, observations at facilities, and analysis of company documents, including presentations, sales figures, organisational charts, annual reports, press releases, social media content, media coverage and more. Conducted over nearly a decade, but examining 21 years of company history, the period covered the creation of new models like the Urus and Huracán.
By investigating what factors led to shifting levels of organisational autonomy at Lamborghini and the way managers in both parts of the business bargained for power, the researchers created a new process model for the dynamics that determined the levels of freedom offered to a subsidiary by its parent. The model contributes fresh ideas to conversations about organisational autonomy and is applicable to both merger and acquisition contexts and broader business settings involving subsidiaries.
The research offers businesses ideas for creating and maintaining competitive advantage and customer value when working with subsidiaries. By understanding how internal bargaining processes work, it’s possible to use them to drive success. Parent companies should no longer assume the eventual aim after a merger or acquisition is either full amalgamation or separation. There’s a middle road offering a dynamic way forward and one where we could all follow a trail blazed by Lamborghini.
To access the full paper, read “The Dynamics of Organizational Autonomy: Oscillations at Automobili Lamborghini”, Administrative Science Quarterly, DOI https://doi.org/10.1177/00018392221091850
By Tazeeb Rajwani, Professor in International Business and Strategy, Surrey Business School
In the current competitive landscape, it is essential for firms to effectively manage their relationships with nonmarket stakeholders such as politicians and communities. Firms pursue various nonmarket strategies, undertaking activities that shape the political and social aspects of the nonmarket environment in order to contribute to competitive advantage.
However, the majority of research has explored how institutional, industry and firm-level factors drive nonmarket strategy, focusing on economic or financial motives such as improved performance, access to critical resources and increased shareholder's value as the ultimate goals of nonmarket strategy. This focus offers less depth about the nuances in nonmarket antecedents across firm types, and until now little has been offered in relation to family firms - the most common organizational form around the world
New research considering the ubiquity of family ownership and its significant role in the business as well as the importance of nonmarket strategies for the competitive advantage of any organization, offers new insight into an important yet overlooked topic—the role of family motives in nonmarket strategy. Researchers examined the impact of family ownership on the likelihood of firms adopting the International Organization for Standardizations' ISO 14001 criteria – a recognised and respected framework used by organisations to measure their environmental impact.
According to Professor Tazeeb Rajwani, co-author of the study, the desire to preserve socioemotional wealth and the firm's own survival through generations drives family-owned firms to pursue legitimacy by conforming to institutional expectations, such as the ISO 14001 criteria.
Drawing on institutional perspective, the research suggests the desire to preserve socioemotional wealth and survival through generations drives family-owned firms to pursue family legitimacy through conforming to institutional expectations. Using data from 161 Chinese firms, it shows that family ownership exerts a positive impact on ISO 14001, and that this effect is stronger when firms are located close to large cities. Similarly, a more pronounced impact of family ownership on ISO 14001 occurs when family name is part of the firm's name. Given the prevalence of family firms and the underdevelopment of formal institutional channels in emerging markets, family ownership, location, and firm name can provide valuable cues regarding sustainability and could be added to other evaluation criteria or proxies for sustainability rankings or for making sustainable financing and purchase decisions
The research also has practical implications for investors, demonstrating the rising importance of nonmarket strategies and nonfinancial goals. This insight is crucial for investors in family-owned and family-managed firms. These investors, whose interest is profit maximization, must be aware of the influence of non-financial objectives on strategic decisions in family firms. Family members with controlling stakes in the firm may push strategic decisions that resonate with their socioemotional aspirations but are not directly associated with profitability.
To access the full paper, read “Does family matter? Ownership, motives and firms’ environmental strategy’, https://doi.org/10.1016/j.lrp.2022.102216
By Dr Hanxiong Zhang, Senior Lecturer in Finance, Surrey Business School
Corporate governance literature is abound with studies examining the personal characteristics of Chief Executive Officers (CEOs) and which of them drive decision making and influence firm performance. The idea that the experience, demographic and psychological characteristics of managers' shape their values and strategic decision making is commonly accepted. One life experience that has received limited attention however is the education of a CEO.
The higher education received by a CEO is an important determining factor on the personality and skills of an individual as this may be the last formal education they receive before they enter the work place. Recently published research in this area examined CEO educational qualifications for FTSE 350 firms, the types of degrees held by all CEOs and whether the awarding institution is among the top 100 ranked universities in the world (according to the QS‐ranking system).
Findings from the study suggest that CEOs with undergraduate, postgraduate or MBA level education offer little explanatory evidence when explaining firm performance. However, CEOs with PhDs exhibit significantly higher firm performance compared with their peers without a PhD education. This suggests that CEOs who conduct a lengthy research‐based degree acquire skills and knowledge that enable them to perform better as a CEO compared with their peers – notably in areas such as controlling costs and cash flow management, and that those firms with a PhD CEO have statistically significant improved profit margins.
One claim often suggested is that the importance of CEOs network is a contributory factor to firm performance – the suggestion being that better connected CEOs are more active bidders in takeovers, more likely to move firms and conduct more M&A activities. However, the results of the research show that the CEO network is largely insignificant in determining firm performance, certainly compared to the CEO education factor – which remains statistically significant.
Neither can it be said that the impact of a PhD CEO is short-lived. The research examines how firms perform over a 3‐year window surrounding CEO turnover, with findings demonstrating that a firm with a PhD CEO improves performance at the 3‐year period and beyond indicating that the effect of PhD CEOs is also long lasting.
So just how much can a CEO with a PhD add to a firm? Factor analysis in the research suggests that a one standard deviation increase in PhD education is associated with a 1.20% increase in industry‐adjusted ROA, and that a CEO with a PhD improves performance by 3.03%, while a CEO with a PhD degree from a top 100 university improves firm performance by as much as 4.65%. This result is also present in transition firms, where firms that hire a CEO with a quality PhD improve performance by 4.20%.
From any number of perspectives, research findings suggest that CEOs who have completed a research degree have acquired the skills and knowledge that enable them to perform better as a CEO and deliver long-lasting benefit to firms. Firms profiling their future CEOs would be well advised to look for a PhD in the future.
By Sabine Benoit, Professor of Marketing, Surrey Business School.
The gig economy is global and growing exponentially. In the US alone, millions of buyers and freelancers contribute $1.2 trillion in value to the economy. Often in relatively anonymous interactions via text-based messages, buyers first post call-for-bids for their gigs, and in turn, interested freelancers submit bids to offer their services.
Yet, while 59% of U.S. companies use a flexible workforce to some degree, more than one-third of the opportunities are never filled or completed.
Recent research published in the Journal of Marketing suggests that ‘uncertainty’ during these interactions leads to high rates of gigs that go unfulfilled, reduced bid success, or less-than-optimal pricing for freelancers. So, what can be done to improve the success rate for both buyers and freelancers?
Research points to several key principles buyers should use to entice freelancers to bid:
- Moderate length: Successful buyers keep their calls for bids succinct.
- Task information: Buyers should avoid excessive task information – too much information makes the gig appear overwhelming, restrictive, and prescriptive.
- Limit personal information: The less buyers describe themselves (and instead focus on describing the task), the more freelancers apply.
- ‘Concreteness’: Research points to only a moderate to level of ‘concreteness’ as attractive to freelancers, and if buyers are too concrete in their calls for bids, the task appears narrow, reducing the gig’s appeal.
- Limit affective intensity: Affective intensity reflects the proportion of emotive terms included in a message. However, calls for bids are more effective if they are formulated relatively impassively. Overly enthusiastic project descriptions, for example, raise freelancers’ suspicion that the project is too good to be true.
Buyers also face uncertainty when deciding whom to hire and how much to pay. By managing these uncertainties through their bids, freelancers can affect their chances of winning bids and their price premiums. Freelancers are not necessarily natural marketers, but here is what the research suggests they can do to increase their marketability:
- Stars matter, communication too: Online reputation systems are useful, but they also create entry barriers to new freelancers who are starting out. Fortunately, winning gigs and achieving price premiums also depend on freelancers’ communication.
- Mimicking the buyer: In line with the mantra of adaptive selling, the call for bids provides a starting point, and mimicking the buyer’s task information and affective intensity increases freelancers’ success - even if the buyer seems impassive.
- Personal information and ‘concreteness’: Freelancers should always offer personal information and be concrete. Freelancers’ chances of success and price premiums increase if their bids contain more personal information and are at least somewhat concrete.
- Build relationships: The strongest predictor of bid success is a pre-existing buyer relationship. Freelancers should focus on developing buyer relationships.
This research shows that buyers and freelancers in online freelance marketplaces should carefully manage uncertainty in their communications to improve their chances of achieving success in the gig economy.
By Ali Emrouznejad, Professor in Business Analytics at Surrey Business School.
Big data is a major source of change in today’s world. It is without doubt a source of immense economic and social value with the potential to impact individuals, organisations and society alike in ways that are yet to be fully explored. On the other hand, blockchain is poised to play the role of foundation technology to store big data, ensuring that the data remain trustworthy, immutable and traceable. In this sense, then, blockchain will make big data even more valuable. Altogether, big data and blockchain are two complementary technologies that are expected to radically transform the way organisations are run in the upcoming years.
Organisations are constantly collecting a variety of data, such as standard tables, text, pictures and videos, of unprecedented sizes (millions or billions of records / variables) and from various sources, with the aim to use such data to improve their operations/services and create competitive advantage. There is a collective assumption that if organisations can learn to harness big data and blockchain technologies, then their operational capabilities would be transformed. In this context, both academics and practitioners interested in service operations could benefit from big data and blockchain technology to enhance operational performance.
Recent research published in ‘Big Data and Blockchain for Service Operations Management’ provides the necessary background to work with big data blockchain; introducing novel applications in service operations across a variety of industries, and covering the theory, research, development, and applications of big data and blockchain in the fields of mathematics, engineering, computer science, physics, economics, business, management, and life sciences.
By Tazeeb Rajwani, Professor in International Business and Strategy at Surrey Business School.
Sustainable business practice has moved out of the footnotes in corporate social responsibility reports and by-lines in shareholder statements to become not only key indicators of the long-term prospects of a business but also a new operational ethos. And yet the trade-off between corporate greening and corporate growth — that is, the arduous issue of obtaining growth while being really sustainable – is a significant challenge. For decades, it has been assumed that the more a corporation can expand, the more profitable it will become. Consider the phenomenal growth rates of Coca-Cola, Microsoft, Amazon or Alibaba to see how the ability to grow aggressively has been critical for a company to become a leader in its field.
Nonetheless, an increasing portion of society is now more concerned than ever about how sustainable the current status quo is and the impact of the relentless pursuit of environmentally degrading growth. Consequently, research focused on corporate social responsibility (CSR) attempts to reshape and transform business thinking through concepts such as ‘corporate citizenship’ and ‘shared value’ - a new form of capitalism where companies enhance their competitiveness while advancing communal socio-economic welfare.
Take for example the recently published study of leading luxury fashion brand, Brunello Cucinelli. The study introduces the idea of ‘gracious growth’, a management approach which enables the green-growth trade-off and directs businesses in the pursuit of substantial rather than symbolic sustainability. It provides ideas that can help business leaders enhance their organisations’ economic and environmental performance while also avoiding the legitimacy risks associated with greenwashing.
This ‘gracious growth’ approach, coined by the founder Brunello Cucinelli, positions the company as a custodian of creation - setting sustainable and fair objectives for growth and profit. It also means that the economic value produced for shareholders is in equilibrium with the value created for society and the planet. Instead of one-off large CSR initiatives driven by profit-orientated publicity, it concentrates on making value chain activities truly sustainable, allowing companies to focus on profitability while also acting as genuine custodians of the environment.
With gracious growth, sustainability is treated as a product. But unlike traditional products whose values are reflected in price tags, this sustainability is valued by the extent of harmony it creates in earth’s ecosystems. Consequently, gracious growth emphasizes modest expansions, generating profits but respecting humanity and protecting the natural world.
There is no doubt about the importance of sustainability when organisations are under pressure to usher in a new era of ecosystem-friendly operations. However, questions remain concerning the legitimacy of company sustainability measures when it comes to growth ambition. Gracious growth may offer the answer to these questions, by supporting environmental balance, innovating, reorganising, and humanising business. In creating the ‘gracious growth’ idea Brunello Cucinelli may provide a blueprint to move us away from sustainability as a fad and towards a future where true sustainability may be achieved.
By Justin O’Brien, Professor and Executive Director for Postgraduate Programmes, Surrey Business School, UK and William Lanham-New, Senior Teaching Fellow in Entrepreneurship, Surrey Business School, UK.
How do we deal with the challenge of student engagement in our business schools? With approximately only 20 per cent of business school students engaging with the pre-assigned pre-class reading, the pervasive influence of technology, media, and apps competing for students attention tutors and the problem of low social interaction in the learning space. Could a ‘discovery case study’ approach provide some clues to how this might be addressed?
Recent research (‘Introducing the discovery case study: Brompton folding bikes’, Journal of Applied Learning and Teaching) suggests situating a learning challenge in a real-world context, and using case-based pedagogies can help learners prepare for jobs that do not yet exist by developing versatile problem-solving skills and experience. Often written using an empathetically compelling story of a business conundrum, case-based dilemmas can uniquely be told through the lens of an individual, giving a reasonably realistic sense of management in practice.
A discovery case study is distinctive from a traditional case study in that students are confronted by the questions first (rather than last) and then introduced to a modest range of resources that may help them, working together as a cohesive team, address the set questions. Again, different from traditional case studies, where all the necessary information is included within the confines of the case documentation, successful groups need to collaboratively mine their information sources (and perhaps use their own initiative to find others) whilst simultaneously putting in practice effective group working skills to build a clear picture from their informational jigsaw pieces. In framing the problem initially in the form of questions, students can be motivated to research with purpose, and within their group benefit from rapid peer feedback during discussions. With the tutor able to provide feedback, observations on the group processes, along with hints and tips on how to overcome any hurdles, their interventions can satisfy any needs for instant gratification and encouragement.
One of the most important benefits of a case study-based pedagogy is that it develops the ability to absorb and analyse an array of informational elements in a more lifelike format and context. Working in groups, students also can develop their soft skills (e.g., listening, persuasion, negotiation, and team-working) that are often cited as major employability shortcomings from traditional university programmes. It is important to note that the ‘real-world’ does not usually, systematically, serve up bite-sized executive summaries that highlight all the salient information, with a clear problem statement and compelling solution. So, another happy path is needed, one that removes the roadblock of pre-reading, but retains the more profound benefits afforded by case learning pedagogies.
By Christos Mavis, Senior Lecturer of Finance, Surrey Business School.
Research articles suggesting that individuals are affected by various behavioural biases, particularly overconfidence, have received significant attention from both psychologists and finance researchers since early hubris theory and numerous articles linked overconfidence with various corporate crises. Overconfidence is especially relevant in relation to outcomes individuals believe to have under their control, such as mergers and acquisitions. CEOs have significant influence over such high-risk decisions and are actively involved in their process. In fact, CEO overconfidence has been established as one of the most common explanations behind value destruction in acquisitions.
A particular challenge, in research terms, is the lack of direct measurement when collecting data for CEOs. Given this limitation, researchers have developed several measures from secondary data to assess executive overconfidence. The most used measures of managerial overconfidence are CEO stock options, the number of press articles in leading business publications describing the manager as “confident/optimistic”, excessive compensation, acquirers involved in serial deals in a very short period, and premiums paid for target firms in mergers and acquisitions.
A recent study (Ismail and Mavis, 2022) proposes an alternative measure of CEO overconfidence directly related to the event in question (i.e., acquisition). It establishes a direct comparison between a forecast regarding operating synergies made by the CEO prior to the deal and the actual realised operating synergies after the acquisition deal in what is termed the synergies forecast error (SFE). The higher the forecasted synergies relative to the actual synergies the more overconfident the CEO is. Applied to the forecasted synergies for each deal from the U.S. Securities and Exchange Commission, the study offers a direct measurement method of CEO overconfidence, directly linking to the corporate decision in question using the CEO's estimations of synergies toward a specific deal, rather than outsiders' views. The forecasted operating synergies are subsequently assessed against the actual realised operating synergies; in other words, generated synergies approve or disapprove estimated-forecasted synergies made by the CEOs themselves.
Using this new measure of CEO overconfidence (SFE), research suggests that overconfident CEOs pay higher takeover premiums and destroy more value for the acquiring firm. More specifically, CEOs with higher SFE are shown to translate this into $294.29 million value destruction for the average acquiring firm in the sample, incur higher capital expenditures, generate equity issues, and lead to lower levels of innovation.
By Dr Christos Mavis, Senior Lecturer in Finance and Accounting, Surrey Business School.
Are firms that sell assets more likely to make subsequent acquisitions? Recent research suggests firms which decide to do this joint selling-to-buy asset restructuring can see a double benefit effect on operating efficiency and improvement in their capital liquidity (i.e., disposing unwanted assets and using liquidity to acquire assets that improve efficiency).
This increase in capital liquidity from asset sale proceeds can also become a significant source of allocable capital for firms, suggesting that selling-to-buy restructuring can be especially vital for financially constrained firms. The liquidity injection provides these firms with the opportunity to undertake positive net present value projects and further improve their operating efficiency.
How and by how much do financially constrained firms benefit from this selling-to-buy activity? Particularly for financially constrained firms, research suggests that selling assets unrelated to their core business and then using the liquidity to buy assets related to their core industry improves three-year operating performance by 5.72 per cent, thus, benefiting from the double benefit effect.
Does the market react to these selling-to-buy decisions, and if so, which decisions does it value the most? At the announcement of the asset sale the market reacts more favourably for financially constrained firms that increase their focus in the core business relative to firms that buy unrelated (to their core business) assets. These firms experience 4.69 per cent higher cumulative abnormal returns at the asset sale relative to their counterparts. In economic terms, the selling-to buy-decision leads to an increase in the value of a mean size acquirer at the asset sale announcement, reaffirming that the market rewards joint asset restructuring activities that offer a double benefit.
Overall, the importance of asset sale proceeds as an additional funding source for corporate investments in undeniable. Managers should consider selling-to-buy activity as a core component in their asset restructuring-investment agenda as it appears that firms that engage in these activities reap substantial rewards.
For a full version of the research paper, ‘Selling to Buy: Asset Sales and Acquisitions’ please contact: sbs@surrey.ac.uk.
By Henry Lopez-Vega, Senior Lecturer in Digital Innovation and Entrepreneurship, Surrey Business School.
The rise and decline of well-known emerging market multinationals (EMNEs) is a phenomenon which has garnered interest from the business community the world over, not least in how these firms build and destroy innovation capabilities. Even though investments in research and development, manufacturing, and the acquisition of global innovation capabilities played a crucial role in the rise of global EMNEs (e.g., Huawei, Wipro, Cemex), some emerging markets prematurely promote a process of deindustrialisation toward sectors not regarded as knowledge intensive or technology dynamic. Hence, the situation for EMNEs can be somewhat paradoxical - they need to build and accumulate innovation capabilities to remain or become globally competitive, but the knowledge and robust national institutional setting (e.g., research infrastructure, supply chain networks, patent protection) they need to support technology creation may be absent or in decline.
The recently published study (‘Tapping into emerging markets: EMNEs' strategies for innovation capability building’, Global Strategy Journal) identifies the complementarity conferred by collaborative market and nonmarket strategies, linking the local emerging market and global market context that help EMNEs build innovation capabilities. Using the Brazilian EMNE Natura & Co as a case in point, the research formulates both local and global open innovation strategies and processes, highlighting how and why collaborative nonmarket strategies help EMNEs build innovation capabilities.
The benefits of global open innovation processes prevail only when EMNEs also implement local open innovation processes that identify mutually beneficial forms of collaboration with local actors, continuously developing new ‘home-country’ partnerships. Moreover, EMNEs’ innovation capability building requires difficult-to-imitate open innovation process that cannot be copied by foreign multinational enterprises (MNEs) interested in the opportunities present in the emerging market. As the case of Natura & Co demonstrates, implementing nonmarket strategies to overcome disadvantages (in this instance the Brazilian institutional setting), creating opportunities to benefit from local natural resources for innovation and developing local relationships, while addressing societal concerns, provides a robust response to challenges and fosters innovation-driven change.
Findings from the research recommend innovation leaders devise processes to allow for continuous evaluation of open innovation strategies in the vicinity of their existing portfolio and potential local and global market resources and develop nonmarket strategies to respond to local institutions and global system changes and challenges (e.g., sustainability).
For EMNEs to thrive they must mobilise their local institutional setting by involving local actors (e.g., customers, universities, suppliers) to address the needs of both the emerging market and those at the supranational level. Over time, EMNEs will need to use different strategies to do this, and create an ‘ecosystem’ of both formal and informal nonmarket strategies to establish structural initiatives and influence the local innovation environment as a whole.
By Professor Glenn Parry, Department of Digital Economy Entrepreneurship and Innovation, Surrey Business School; CoDirector DECaDE: EPSRC Centre for the Decentralised Digital Economy
In the last decade, digital has become part of almost every debate and discussion around strategy and often, the central focus. The reason is simple. Powerful and interconnected technologies today, including the cloud and AI, mean any business going through digital infrastructure transformation will be considering lucrative opportunities. The possibilities for new products, services and business models promise to substantially impact almost every sector of the economy even those where digital has already brought important changes.
However, whilst new digital economy (DE) business models have created enormous wealth, that wealth remains held by a very small number of countries, companies and individuals. Governments face the challenge of creating policies that allow the potential benefits of the DE to be realised by more people.
Recently published research in this area gauges the attitudes of different stakeholders who influence DE policy. This is important because if influential stakeholders, academics, and/or policymakers diverge in opinion, or believe the benefits of DE investments are reducing, the existing inequalities linked to digital accessibility will inevitably increase.
Findings from the study uncover the perceptions, process, needs, and priorities associated with DE, using key stakeholders, academics, and policymakers across New Zealand. New Zealand is a particularly relevant case study it leads the world by the focus of their national budget on delivering population wellbeing - with many of their policy initiatives focussing directly on DE.
A key finding from the study is that whilst there are important differences in stakeholders' perspectives, overall they currently remain sufficiently aligned to support investments in digital infrastructure and training. Stakeholders see internet access as a means to support the social economy, with concerns raised that parts of the population will be left behind if digital access is not prioritised and rolled out uniformly. However, as with any alliance, this alignment may splinter in future as stakeholders disagree over who prospers, who is most at risk of being left behind, and crucially, who should pay for upgrading digital skills. Further differences are also notable in terms of how investments in DE connect to wellbeing and identity, whether ‘fake news’ is significant, and the long-term impact of DE investments.
The research shows that whilst the reasons behind policy recommendations and decisions made by governments may be justified by very different narratives and understandings of the world, great care is also required to understand these narratives as a mean reinforce the importance of digital inclusion in delivering broader prosperity in the future. Although the long-term impacts of DE promise to be deep and far reaching, the path to this future for industries, companies and consumers is proving far from linear or predictable. A carefully considered, strategic response is invaluable in approaching digital transformation so that the widest possible eco-system of interests remains sustainable and agile in this ever-changing environment.
To access the full paper, read ‘Investment in digital infrastructure: Why and for whom?’, Region: The Journal of ERSA, https://doi.org/10.18335/region.v9i1.415