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Faculty news update

A regular update on articles, awards and other developments involving Cambridge Judge Business School faculty and fellows.

Article on scaling up inclusive markets co-authored by Jaideep Prabhu appears in the Stanford Social Innovation Review.

Professor Jaideep Prabhu

Jaideep Prabhu

An article on scaling up inclusive markets co-authored by Jaideep Prabhu, Professor of Marketing and Jawaharlal Nehru Professor of Indian Business at Cambridge Judge, was published in the Spring 2016 issue of the Stanford Social Innovation Review.

Pressure is mounting on the private sector to expand efforts to improve the welfare of the poor, the article argues – not only by creating jobs but also by developing affordable and beneficial products for less fortunate populations in sectors such as financial services, health, education, energy and housing.

South Asia is paving the way by working with social enterprises, and established corporations are creating business models that aim to achieve both social impact and financial return. However, it can be difficult to “scale up” to meet the needs of the millions who could benefit.

The article co-authored by Jaideep and Mumbai-based Harvey Koh of non-profit FSG addresses the scaling-up barriers that face corporations both internally and in the ecosystem that surrounds them – and points out that when inclusive businesses have scaled up, they have done so because governments and NGOs worked alongside them to remove those barriers.
Read the article “Scaling up inclusive markets” on the Stanford Social Innovation Review website

National Infrastructure Commission report Smart Power draws on research carried out by the Energy Policy Research Group (EPRG) at the University of Cambridge and Imperial College, London

Professor Michael Pollitt

Professor Michael Pollitt

The National Infrastructure Commission (NIC) was asked to consider how the UK can better balance supply and demand of energy in its report Smart Power.

The report suggests that the UK could save up to eight billion pounds a year by using electricity better and the NIC envisages a smart energy revolution with more cables linking the National Grid to mainland Europe. The NIC also says the UK needs to store much more energy from intermittent renewable like wind and solar.

Using “smart” household appliances such as dishwashers, washing machines, fridges and freezers could hold the key to an energy revolution. For example, at a time of peak demand, an energy firm’s computer could contact your smart freezer to ask if power can be switched off for a few minutes to allow your neighbour to use some of the energy to cook dinner. Your well-insulated freezer will stay cold without electricity for a while, so it could power down in return for giving you a credit on your energy bill.

The NIC report is supported by a study entitled Delivering future-proof energy infrastructure that was carried out jointly between Cambridge Judge Professor Michael Pollitt and academics at Imperial College, London. Pollitt, who is also Assistant Director of the Energy Policy Research Group (ERPG) at the University of Cambridge, co-authored the report with Goran Strbac, Ioannis Konstantelos and Richard Green from Imperial.

The academics see the UK’s ambitious climate targets creating exceptional challenges for the electricity system. They document the key role of flexibility in the electricity system from energy storage, interconnection and responsive demand in the face of increasing amounts of intermittent renewables. They also call for changes in system operation, commercial arrangements and regulatory practice to support the flexibility required in order to mitigate rising system costs.

Read the The National Infrastructure Commission Report on the government’s website
Read the Smart Power report on the Government’s website
Read the Delivering future-proof energy infrastructure: Goran Strbac et al report

Blog post on product obsolescence co-authored by Stelios Kavadias is published by Manufacturing & Service Operations Management journal

Stelios Kavadias

Professor Stelios Kavadias

A blog post co-authored by Stelios Kavadias of Cambridge Judge in Manufacturing & Service Operations Management journal examines the issue of planned product obsolescence for high-end products.

Manufacturers of basic products have long designed them to wear out quickly and induce replacement purchases, and that’s usually fine for consumers because the price is right. But the article outlines how this strategy doesn’t work for luxury items such as a BMW automobile (“holds its value like it holds a corner”), so companies need a different approach “in the presence of snobbish – rather than indifferent – consumers.”

The blog details findings of a study in the journal by Vishal Agrawal, Beril Toktay and Stelios Kavadias, Margaret Thatcher Professor of Enterprise Studies in Innovation & Growth, and Director of Research at Cambridge Judge.

“The study is the first to address durability choice in the context of conspicuous consumption, by analysing a firm’s joint durability and pricing decisions in the presence of snobs,” the blog post says.

“While designing for planned obsolescence by Kodak and Xerox worked for products like printers or copiers sought by consumers for functionality and not exclusivity, this high-volume, low-price strategy backfires for conspicuous products by imposing an indirect cost: consumer desire for exclusivity results in a utility loss due to the high volume,” the authors say.

There is therefore a need for greater alignment between product design choices and consumer behaviour when it comes to high-end goods – so managers need to focus their attention on consumers and their desires earlier in the design process, the article argues.

Read “How should a firm plan for its product obsolescence?” on the Manufacturing & Service Operations Management Review blog

David De Cremer examines business relationships with China in the European Business Review

David De Cremer

Professor David De Cremer

A renewed focus on the Silk Road Economic Belt between China and Europe makes it more important to understand “what makes business tick in China,” according to an article in European Business Review co-authored by David De Cremer, KPMG Professor of Management Studies at Cambridge Judge. The article also appeared in the new issue of All China Review.

Like everywhere else, doing business in China is about knowing the right people and building relationships. But in China there’s the added dimension that personal connections will be bounded by an implicit psychological contract to follow what’s known as “guanxi” – an informal obligation that includes networks of relations built around mutual commitment and loyalty.

“Guanxi represents a firm’s interactions with the broader environment including the norm and social characteristic in which individuals, firms, and governments draw on a web of connections to secure favours in personal and organisational relations,” says the article, entitled “Why Guanxi matters in business relationships with China”.

“Guanxi has implications for firm performance in China, in that it affects the flow of resources from key stakeholders, such as the government. It is widely recognised that western firms need to understand and engage in guanxi in order to develop and improve their business relationships with the Chinese counterparts.”

Read the article “Why Guanxi matters in business relationships with China”, in the European Business Review