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Professor Eddie Anderson tells us why a creative approach to analytics is crucial to managing the energy sector.

Professor Eddie Anderson Professor of Analytics and Operations Management Department of Analytics, Marketing and Operations - 51�Թ�� Business School

4 minute read

Why your business goals are holding your team back

Guy Voichek — Wed, 15 Jan 2025 12:14:02 +0000

Why your business goals are holding your team back

Guy Voichek Wed, 15/01/2025 - 12:14

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19 February 2026

Article at a glance

Setting concrete goals can backfire by locking people into sub-optimal ways of working, according to research by Assistant Professor of Marketing Guy Voichek

Making progress towards a goal increases perceived effectiveness of established approaches, reducing openness to better alternatives

Leaders can counter this bias by building in structured reflection

Targets matter, but so does the means of pursuit

Every year we make resolutions. Every quarter we set targets. Everywhere we measure progress. Setting concrete goals can motivate people to stay on track towards becoming healthier, wealthier and happier. But sometimes the track we choose is not the best way to get there and our focus on achievement can backfire because we undervalue alternative routes.

Dr Voichek’s paper reveals a surprising way in which setting goals can go wrong. When people aim for a specific goal and begin pursuing it via a particular path, early progress inflates the perceived effectiveness of that path, making people less likely to adopt a superior, alternative route.

Progress creates a bias in effectiveness

Through a series of studies spanning diverse areas such as health, finance and work, the authors saw a consistent pattern of behaviour. In one study, participants committed to earning a specific amount of money before beginning a task. After making initial progress using one type of task and earning some money, they became less likely to switch to an easier, higher-paying task, compared to participants who did not set a goal before beginning work. Making progress towards a concrete goal led participants to view the initial approach as a more effective way to earn money, and alternative tasks as less effective. As a result, participants with a concrete earning goal ultimately earned less than those without a specific goal in mind.

Thankfully, there is a simple way to overcome this: rather than focusing only on whether your current actions advance your goal, also consider how different paths might advance it. A reminder to consider the advantages of both current and alternative ways of working mitigated the entrenchment caused by concrete goals, one study revealed.

Once people made progress, they judged their chosen approach as more effective.

The risk of overly specific targets

Once progress metrics are embedded into dashboards, performance reviews and incentives, flexibility becomes even harder. Teams that are “on target” are rarely encouraged to question how they got there. Yet markets, technologies and competitive conditions change constantly. The danger is not only poor goal setting but rigidly sticking to the old methods that have worked in the past for acquiring those targets.

What can business leaders take from this?

Organisations often become more rigid than the people that create them. It's a powerful tendency: when we are satisfied with how things are going, we don’t question our methods.

This research adds an important dimension to our understanding of how concrete goals can produce entrenchment.

How organisations can counteract this:

Institutionalise reflection: Build in regular checkpoints that require teams to explicitly evaluate alternative ways of achieving their goals. Instruct employees to ask not only whether they are on track, but whether they are on the best track.

Reward course correction: Incentivise employees to change direction when doing so makes sense, rather than implicitly reward persistence for its own sake. Consistency should not be confused with efficiency.

Maintain high-level goals: remind people that most goals can be pursued in multiple ways, and that any given method is a means – not an end.

Find out more about the research

Read Guy Voichek's paper

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Working towards concrete goals can leave employees resistant to exploring superior ways of achieving results

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3 minute read

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Professor Christopher Tucci on AI, innovation and the next generation of learners

Shamita Harsh — Wed, 15 Jan 2025 12:14:02 +0000

Professor Christopher Tucci on AI, innovation and the next generation of learners

Shamita Harsh Wed, 15/01/2025 - 12:14

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26 August 2025

Professor Christopher Tucci recently took on the role of Interim Vice-Dean (Education) at 51�Թ�� Business School. This will see him focus on pedagogical development and innovation, including leading on how the business school adapts its offer in an increasingly AI-driven world. We spoke to Professor Tucci to find out more about what this involves, and how his experience feeds into the role.

What does your new role as Interim Vice-Dean (Education) involve?

Broadly, the role involves responsibility for all educational programmes at the Business School, including our 18 master’s programmes, four PhD programmes, and current and upcoming bachelor’s programmes.

This includes thinking strategically about the whole portfolio of educational activities to deliver a great experience for students, faculty, and programme managers. For example, we position courses into suites—the MBA suite, the finance suite, the management suite, and the specialised suite. And we’re constantly evaluating how much overlap there is between and within them, and whether our groupings match changes in the real business world.

That requires us to understand changing employer needs, evolving student interests, and shifts in cohort demographics. I know from my experience working on 51�Թ��’s I-X initiative that there’s a rapidly growing interest in digital technologies, especially AI. Employers want people who understand these technologies and the ability to use them, not just as tools to boost productivity, but on a strategic level.

Academics are being squeezed on a number of fronts, so we’re working out how we can automate some of the back-office tasks such as organisation of marking, allocating teaching assistants, and tracking project supervision requests. These are often time-consuming, manual processes that could be simplified, giving academics more time to focus on face-to-face teaching, student support, and research.

I am a big proponent of active learning and project-based learning (for our students) – learning to deal with the ambiguities of what you’re exposed to and trying to solve problems as they come up.

What experience will you bring to the role?

I recently worked at NEOM University (in Saudi Arabia), helping to develop the curriculum for a brand-new institution that hasn’t even opened its doors yet. That gave me the freedom to focus on cutting-edge business needs, thinking about the skills and experience employers want from graduates now and in the future.

Things are very different at an established institution that already has a strong reputation, but the experience gave me valuable insight into some of the less tangible things that are important in the modern business world – soft skills, curiosity, creative mindsets, problem-solving abilities.

I also have industry experience in computer science research, which fuelled my interest in R&D management and innovation management. I think that gives me a lot of empathy for employers, how they think, how they work, and what they want from graduates.

How are you future-proofing students for a world where AI is rendering some jobs obsolete?

We’ve always had job replacement, and we always will – preparing students for this has always been part of our responsibility, and it’s part of my role now. For example, in response to current trends such as AI, we need to ensure that we impart critical thinking skills: how to evaluate and question AI output rather than just relying on it, so it’s a tool students can use to their advantage, rather than something that rivals them.

Along the same lines, we can do more to help students understand the weaknesses of these technologies, not just the strengths, so they have a rounded, critical view. This is important because in business, if you’re managing a portfolio of products and services, and you’re trying to come up with something new that would resonate with your target market, that’s not something that can be easily delegated to AI. Computers aren’t very good at running companies!

Instead, I am a big proponent of active learning and project-based learning – learning to deal with the ambiguities of what you’re exposed to and trying to solve problems as they come up. This gives our students rounded skill sets rather than learning just one way of doing something.

As long as we’re teaching students in this way, helping them see the bigger picture, and we’re teaching them to think critically and understand the pros and cons of emerging digital technologies, then I think our graduates are in a strong position in terms of vulnerability to job replacement.

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Interim Vice-Dean (Education) at 51�Թ�� Business School reveals how technology is driving a more personalised and impactful student experience.

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3 minute read

Left vs. Right: How polarised are our everyday lives?

Sanaz Talaifar — Wed, 15 Jan 2025 12:14:02 +0000

Left vs. Right: How polarised are our everyday lives?

Sanaz Talaifar Wed, 15/01/2025 - 12:14

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Today, much of life seems increasingly politically divided.

But little is known about the mundane details of everyday life and how politics seeps into these ‘smaller’ activities – the minutiae of how we spend most of our time, such as when and where we socialise, work or travel. Do political leanings shape how we live our everyday lives?

For our research - Lifestyle Polarization on a College Campus: Do Liberals and Conservatives Behave Differently in Everyday Life? - we wanted to find out more about how people live across the political divide. We went to a large US state university in Austin, Texas and more than 1,200 undergraduates helped us by declaring their political identity – whether and how strongly they felt they were liberal or conservative.

Rather than relying on self-reported surveys to measure behaviour at a single point in time as much previous research has done, we used data collected by these students’ smartphones to track what they were doing over time – were they texting or jogging or in the bar? Did they exercise more at weekends, were their mornings spent online? Using phones, we were able to gather data on some 60 different behavioural tendencies to a level of detail not possible through more traditional methods.

Political identities impact the choice of third spaces and leisure activities

Political identities structure people’s non-political actions and the way they live, relax and move about. Conservatives tended to spend time in social places such as bars, parties and noisy places. They also engaged in more physical activity. Liberals by contrast were more likely to spend time at home, use more social media, or work more. If we had to sum it up, conservatives made the most of their local surroundings, while liberals explored more distant places – and were less likely to socialise closer to home.

Even though liberals and conservatives behaved differently in everyday life, the differences were not obvious to members of the campus community. In a separate study, we asked undergraduates if they could estimate differences in how their fellow liberal and conservative classmates lived and spent their time. This was to gauge how accurately people estimate differences in lifestyle among members of their own community. Our participants got nearly 75 per cent of behaviours wrong -- they tended to see lifestyle differences when there were in fact none.

Opportunities for interactions at the crossroads of ideology are minimal

Back in the 1950s, political differences between Democrats and Republicans, both in terms of platforms and demographics, were so subtle that political scientists considered this problematic - a lack of differentiation between the parties did not give voters enough choice. This no longer appears to be the case. As our research shows, students living on the same campus have different lifestyles according to their political identities. Research has shown that the divide between those on the right and left is growing in terms of policy preferences and disdain for those on the other side. But our work reveals that politics has penetrated even nonpolitical areas of everyday life.

Why does this matter? When people from different political sides get together, they might find they share more than they realise. Face to face contact is a way of breaking down barriers, understanding each other and bridging the political divide. Socialising helps to dispel prejudice on both sides and allows people to discover what they have in common.

If people have little chance of crossing paths with those of a different political identity in everyday life, divisions within society may become even deeper.

Our second survey, which asked students about their perceptions of people linked to their politics, revealed some good news – the political divide in everyday life isn’t as extreme as people believe, and this offers scope to build on what they share rather than how they differ.

But in fact, our work asks more questions than it answers. Our innovative use of smartphone data could be developed to tell us more about the wellbeing of people on different sides of the political spectrum. For instance, prior research finds that liberals tend to be unhappier than conservatives. We could look more closely at whether differences in the things liberals and conservatives do each day could explain this partisan wellbeing gap. Smartphones could be used to measure the social media apps people use and when, alongside different measures of wellbeing such as anxiety or loneliness at different times of the day and night.

By looking at the nonpolitical – the fabric of everyday – we’ve unearthed another source of growing political division in society. As US film director John Cassavetes remarked back in 1971, “there is only one level of agreement. And that is lifestyle. If your lifestyle is like my lifestyle, then we like each other. If your lifestyle is not like my lifestyle then we can see nothing in each other.”

Our research hints at a troubling possibility - that the lifestyle differences of those on the left and the right mean that they can see nothing in each other.

Edited 27 May 2025: This article’s headline was changed from “Left vs. Right: Are our everyday lives more polarised than we think?” to better reflect the findings of the research.

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From work to screen time: The subtle ways politics shapes our daily lives

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4 minute read

What's holding back the green transition?

Mirabelle Muûls — Mon, 11 Nov 2024 12:21:54 +0000

What's holding back the green transition?

Mirabelle Muûls Mon, 11/11/2024 - 12:21

12 November 2024

New research from 51�Թ�� Business School reveals what’s stopping businesses from taking action to protect our overheated planet.

A wide commitment to reach net zero climate goals by 2050 requires a concerted effort from industry and business to make drastic cuts to emissions, consume less and introduce cleaner ways of producing. But this requires major investments.

While multinationals such as Apple have already set zero emissions goals, smaller companies can find it harder to commit. Modest as their individual impact is, combined, they make a substantial difference.

Switching to cleaner ways of doing business requires money and expertise – and we wanted to discover what exactly is hampering progress. How easy is it for smaller firms to find the funds for cleaner technology and methods? How crucial are managers when implementing greener strategies? How important is it for firms to set goals to limit their use of energy and water, and reduce pollution?

Better environmental investments

Our early analysis revealed that firms differ significantly in how much money they can borrow, and the competence of their environmental leadership. Both these factors affect corporate carbon footprints: less money means fewer green investments and better management makes for better environmental investments.

We’ve looked in depth at nearly 11,000 companies in 22 European emerging economies, collaborating with the European Bank for Reconstruction and Development. Our information came from a vast wealth of records including the European Pollutant Release and Transfer Register, which holds information on emissions and pollution for industrial facilities, as well as bank data. Crucially, face-to-face surveys with business managers yielded detailed insights into firms’ investments in green technology, the quality of environmental management and availability of credit.

We delved deep into the data and used econometric tools to show that it was indeed credit access and green management practices that prompted a shift in environmental performance.

Nearly all growth in energy demand and greenhouse gas emissions in the coming three decades will come from less developed economies

In order to measure the availability of finance at the level of individual firms, we looked at where banks’ branches are located, and what constraints they were placed under, particularly during the credit squeeze that followed the 2008 global financial crisis.

We also looked at whether corporate knowhow about greener practices tends to spread within regions. Managers in areas that have experienced extreme weather such as flooding, heatwaves and fierce storms tend to be more switched on about the need to improve their businesses’ climate performance. They are also more open to better management, and these insights trickle down among firms.

This work reinforced our initial findings. If businesses can’t borrow the money, they’re less likely to invest in more climate-friendly, but costly, green machinery and vehicles, our analysis shows, or in more efficient heating, lighting and cooling. Only 12 per cent of businesses invested in generating their own green energy. We found too that access to finance is less crucial for “low-hanging fruit” improvements such as energy-efficiency measures.

Weak and ineffective green management appears to hamper most types of green investments.

Why focus on emerging markets?

Nearly all growth in energy demand and greenhouse gas emissions in the coming three decades will come from less developed economies, research shows. These are the countries that desperately need investment to clean up their polluting industries – green investment at this stage could ensure a cleaner transition in the future. It’s a cost-effective way to help fight climate change.

Our analysis also warns against false claims. Although economic decline can herald a short-term drop in emissions, thanks to less activity, the picture is bleaker in the longer term. This is true of the global financial crisis and also of the pandemic – the economic fallout from the crisis damaged longer term green investments because cash was hard to find.

Firms differ significantly in how much money they can borrow, and the competence of their environmental leadership

In areas where banks were hardest hit by the global financial crisis, we showed that carbon emissions were 5.6 per cent higher than they would have been, had banks not deleveraged in the wake of the event. We also find that companies’ weak green management has resulted in emissions 2.3 per cent higher than they might have been with better expertise. And the scarcity of credit in some areas means emissions have been 4.5 per cent above where they would be, had they been able to borrow more cash.

Investing in the environment

Our results provide hope. Some actions are relatively cheap to implement and could lead to businesses cutting emissions – if they set out and stick to an environmental strategy, for instance, and fix clear green targets. Competent managers can also help raise their firms’ green investments and have an impact across a wide range of issues such as emissions, pollution and cleaner practices.

Weak and ineffective green management appears to hamper most types of green investments

These results offer environmental policy makers a broader mix of options beyond the established carbon taxes and carbon markets. Targeted policies could include further requirements to measure and declare emissions and environmental impacts. Development banks could boost credit lines for green investments – more access to finance ensures that businesses invest significantly in the green transition.

Not only should businesses invest in innovative new tech, but also adopt cleaner production technologies that already exist. And stronger environmental leadership within companies would help businesses make more progress towards green goals. These are opportunities that developing economies can’t afford to miss.

This article draws on findings from "Managerial and Financial Barriers to the Green Transition" by Ralph De Haas (European Bank for Reconstruction and Development), Ralf Martin (51�Թ��), Mirabelle Muûls (51�Թ��) Helena Schweiger (European Bank for Reconstruction and Development).

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Do consumers really care about sustainability?

Consumers may care about sustainability in theory, but how much does it impact their spending habits? And what can policymakers do to encourage us all to make more eco-friendly choices?

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How to use analytics to play darts like a pro

Martin Haugh — Mon, 21 Oct 2024 11:47:42 +0000

How to use analytics to play darts like a pro

Martin Haugh Mon, 21/10/2024 - 11:47

21 October 2024

For the first time, new research from 51�Թ�� Business School demonstrates how to calculate the optimal darts strategy.

From expected goals in football to biomechanics in cricket, sport is undergoing an analytics revolution. No discipline is untouched by a newfound focus on statistics, and this includes darts – a game which has undergone a rapid journey from pub activity to global primetime.

In darts, two players alternate taking turns of three successive throws. The goal is to get from 501 points to zero before your opponent, with the final throw hitting a double. To date, however, analysis of darts has focused on the individual getting from 501 to zero in as few turns as possible, which isn’t quite the same thing. Our research is the first to account for this subtle difference by modelling darts as a dynamic zero-sum game.

Strategic play

In other words, when computing a player’s optimal strategy we ought to take the opponent’s score into account. This is particularly important towards the end of a game, when a player could choose to aim for the double bullseye – a region worth 50 points that counts as a double, but is considerably more difficult to hit than other doubles.

Whether choosing this high-risk, high-reward option is optimal depends on the opponent’s score. If the opponent is likely to win next turn, it’s more likely to be worthwhile. Conversely, if the opponent has a high score remaining and is unlikely to win next turn, it might be better to take a safer option and aim for an easier double on the next turn.

By analysing data from professional players, we were able to develop a model to calculate a player’s optimal strategy for this type of situation. To illustrate this, we compared two hypothetical situations. In both situations Player A is on a score of 50 with one throw left in their turn. In the first situation Player B is also on 50 and in the second Player B is on 150.

No discipline is untouched by a newfound focus on statistics

We can calculate Player A’s win-probability as a function of where on the dartboard they target the final dart in their turn. In one situation we assessed, for example, it is much more advantageous for Player A to be aggressive and aim for the bullseye, as it gives a win probability of 46.8 per cent compared with much smaller win probabilities for any other region of the board.

In the second situation we looked at, however, a defensive approach offers a superior win percentage of 78.6 per cent if Player A aims for single 10, as this leaves them with three throws at the easier-to-hit double 20 on the next turn. This is because Player B is far less likely to win on their next turn, so Player A is likely to have another turn and therefore another chance to win.

We found that playing strategically in this way gives the typical professional player an increased chance of victory of between 0.2 per cent and 0.6 per cent in a single game (also known as a "leg"), compared to using a strategy that ignores the opponent’s score. Over a longer match (e.g. best of 35 legs), however, this can be as high as two to three per cent – a significant edge for professional players.

Skill factor

However, this does not take into account variations in skill between different players. In practice, skill levels vary with the target region (e.g. players practise targeting triple 20 more, so can hit it more easily than other triples) and the individual player (e.g. one player might be better at hitting certain regions than others).

As we did not have data for every player–target combination, we applied empirical Bayesian methods to fill the gaps, allowing us to fit a skill model for each player. We then used this to analyse real-world situations.

For example, in a 2018 match between Gerwyn Price and Peter Wright, Wright was on 18 and Price was on 20. It was the beginning of Wright’s turn and the most obvious strategy was to aim for double nine to win the leg. Instead, he aimed (successfully) at single two, then needed to hit double eight with one of his next two throws. He missed both of those, and Price then won the leg.

When computing a player’s optimal strategy we ought to take the opponent’s score into account

Commentators questioned Wright’s decision not to use all three throws to aim at double nine. However, according to our skill model, what he did was indeed the optimal strategy for him, with a win percentage of 71.4 per cent when targeting single two with his first dart versus 70.5 per cent if he targeted double nine.

Interestingly, when we applied the same situation to a different player – Michael Smith – our model recommended the double nine approach, with a win percentage of 77.8 per cent compared to 70.3 per cent. This is because Smith is more adept at hitting double nine than double eight, while the opposite is the case for Wright.

This suggests experienced players are well aware of their own relative strengths and weaknesses. Our skill model effectively makes this instinctive knowledge visible, unlocking one of the key mysteries of the game – how and why the top players play the way they do.

This article draws on findings from "Play Like the Pros? Solving the Game of Darts as a Dynamic Zero-Sum Game and An Empirical Bayes Approach for Estimating Skill Models for Professional Darts Players" by Martin B. Haugh (51�Թ��) and Chun Wang (Tsinghua University).

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Can managers really learn anything from sport?

Sporting metaphors are everywhere in business but aren't always liked. Dr Jan-Michael Ross joins the game to show such language is not down and out, if you keep your eye on the ball

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Do carbon markets work?

Mirabelle Muûls — Thu, 06 Jun 2024 14:13:49 +0000

Do carbon markets work?

Mirabelle Muûls Thu, 06/06/2024 - 14:13

7 June 2024

In 2005, the European Union created the world's first and largest market-based carbon policy. Here, we look at the impact it has had, so far.

Ever since the EU created its market-based carbon policy, governments and businesses have been keen to see an impact. But analysing how effective policies can be on a noisy economic and global stage is complex – and hard proof that carbon markets can achieve what they set out to do is scarce.

What is the EU Emissions Trading Scheme?

The EU’s Emissions Trading System was launched to kindle innovation and give firms flexibility in how they could limit emissions – under the policy, firms buy a tradeable permit per tonne of carbon they emit.

By detailed examination of industrial data, we have reliably shown that creating a European carbon market prompted an overall 14 to 16 per cent fall in emissions over an eight year period, equivalent to 5.4 million tonnes of carbon each year – without any dent in firms’ profits or performance.

This is proof of success – carbon markets charge companies for the amount of carbon dioxide they emit – with a view to discouraging dirty and polluting industry and encouraging firms to invest in cleaner technology.

Emissions are not being transferred because global emissions have decreased

But how were we able to show the fall in emissions between 2005 to 2012 was a direct result of this market-based policy – and not down to other factors, such as fluctuating economic fortunes, outsourcing polluting production beyond Europe’s borders, or simply closing down emitting facilities?

We cross-referenced detailed information on French manufacturing firms gathered by French authorities since 1996 – long before this carbon market was conceived. We looked at a range of factors, from manufacturers’ use of fuel through to imports, staffing and economic performance, and were able to compare how firms within the carbon market performed compared to those outside, and observe differences as carbon markets kicked in.

Even though emissions have been declining in the manufacturing sector in every advanced economy regardless of carbon markets, we show that the 14 to 16 per cent reduction accounted for a third of the overall fall in emissions. Encouragingly, we found the emissions reduction hasn’t come at the expense of profits – production and turnover remained stable – nor do we observe any job losses.

Carbon emissions beyond Europe

There was also no evidence of "carbon leakage" – that the firms had simply imported more polluting goods instead, shifting the emissions beyond their borders – eemissions are not being transferred because global emissions have decreased.

And, although in this instance we haven’t measured whether firms were investing in new facilities beyond Europe, our separate study revealed last year that multinationals that belong to the European Trading System don’t increase their share of emissions beyond Europe.

Perhaps most encouragingly, we discovered – where we had the relevant data – that companies were investing in cleaner production technologies. This is the ideal scenario: a carbon market that not only cuts emissions but also generates investment and paves the way for cleaner industry practices and systems.

We can’t ignore the impact of the global financial crash, which happened during the period we examined – could these energy-intensive firms have been hit by the fallout? Or were some regions hit harder than others, and did this skew results? We were able to identify that this wasn’t the case. The reductions we have seen in these results are real and verifiable.

The best way to cut emissions from industry is through market-based policies rather than direct regulation

Our work raises new questions. Our investigation took place during a stretch when the price of carbon credits was relatively low – at around €15 between 2008 to 2012. Today the market has evolved: European prices peaked last year at around €100 and are still more than €70. Do these higher prices deter manufacturers from investing in new European facilities? Do they shift production beyond Europe when the price is too high at home?

What will be the impact of the new mechanism to charge a carbon levy on imports from beyond Europe – the Carbon Border Adjustment Mechanism – on emissions within Europe? We’re now working with partners in the UK, Germany, France, the Netherlands, Italy and beyond on a pan-European data analysis of the impact of the carbon market upon emissions. We also want to understand more about the impact of carbon trading on supply chains which aren’t directly part of the scheme. What impact does the market have on wider innovation?

Climate change caused by greenhouse gas emissions is one of the greatest challenges the world must tackle. Economists around the world largely agree that the best way to cut emissions from industry is through market-based policies rather than direct regulation. Our work gives the message that if well designed and well implemented, carbon markets are an effective policy tool – they can deliver change.

This article draws on findings from "Does Pricing Carbon Mitigate Climate Change? Firm-Level Evidence from the European Union Emissions Trading Scheme", by Jonathan Colmer (University of Virginia), Ralf Martin (51�Թ��), Mirabelle Muûls (51�Թ��) and Ulrich J. Wagner(University of Mannheim).

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Are carbon credits worthless?

Over the past few years, the voluntary carbon market has been thriving. But is it saving the planet, or simply giving organisations the right to pollute?

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How alternative finance models can help small businesses grow

Simon Quinn — Thu, 30 May 2024 14:46:10 +0000

How alternative finance models can help small businesses grow

Simon Quinn Thu, 30/05/2024 - 14:46

31 May 2024

Many small businesses struggle to get the funding they desperately need to expand – particularly in low-income economies. But new research shows that larger loans for fixed asset purchases could help solve this widespread problem, explains Dr Simon Quinn.

Entrepreneurs who wish to acquire an asset often face the daunting challenge of accumulating a large lump sum. In low-income economies, this usually isn’t possible through traditional microcredit: the debt-based cash loans offered by microfinance institutions are generally too small, and the terms too rigid, to allow business owners to make an expensive investment. Nor is it feasible to expect business owners to put aside enough cash to make the purchase – particularly when funds are tight, when there are more pressing expenses, and when real interest rates are low (perhaps even negative).

I was privileged to run an experiment with three co-authors from Lahore University of Management Sciences and the University of Oxford to test whether larger loans can help small businesses to expand. We partnered with Akhuwat, a large Pakistani not-for-profit lender, to provide loans of about £1,500 to "graduated borrowers": clients who had repaid at least one previous regular loan, and who had specifically identified a fixed asset they would like to purchase for their business. Of the clients in our sample, about a third wanted to purchase an auto-rickshaw, while other items included sewing machines, cameras and light machinery.

Alternative microfinance models

We identified around 750 clients and divided them into three groups: in the first, each client was offered a £1,500 fixed repayment loan, members of the second group were offered a flexible repayment loan, and those in the control group were offered a standard £375 microfinance loan. All contracts had an 18-month repayment period, and none charged interest, following Akhuwat’s usual practice. The loan uptake was 53 per cent in the first group, 59 per cent in the second, and only 13 per cent in the control group.

Debt-based cash loans offered by microfinance institutions are generally too small

Following the clients over two years, we observed striking results. Entrepreneurs in the first two groups enjoyed an average 11 per cent increase in profits compared to the control group. This profit boost led to an eight per cent rise in household income and a six per cent increase in household consumption, driven primarily by a 25 per cent rise in education spending, particularly for girls. Importantly, Akhuwat successfully recouped its cash.

These results are very exciting: together, they show that it is viable for microfinance lenders to strongly back graduated borrowers, while the benefits of the consequent investments generate sustainable improvements for clients and their households.

Performance-based microfinance

There are many interesting avenues for research on alternative models of microfinance – in particular, financial models that try to build a better sense of "mutuality" between lenders and clients. For a project in Kenya, I was one of a team of academics working with a large multinational to finance fixed capital investments within the supply chain – specifically, providing bicycles for local "micro-distributors". A key innovation in the project is that some of the clients agreed to have their loan repayments tied to their purchases through the multinational: if a client’s business has a bad month, they owe a smaller repayment.

This project suggests exciting possibilities for "performance-contingent microfinance" – something that will be increasingly relevant as more and more small businesses digitise their transactions. Similarly, I am working with my co-authors to pilot a scheme in Lahore that enables women to borrow in order to buy auto-rickshaws to transport female passengers; in due course, we would like to link each woman’s required repayments to her earnings from the vehicle.

The future of microfinance research

There are many possibilities for innovative research on these topics; it’s an area that draws together themes from development economics and finance. What’s more, the results should be of interest to a wide range of different audiences: bank lenders, academic researchers, non-government organisations, and even companies looking for ideas in corporate social responsibility.

At 51�Թ�� Business School, we offer an undergraduate BSc in Economics, Finance & Data Science – and, later this year, I will be privileged to teach econometric methods to the students. The students will have the opportunity to work hands-on with a variety of datasets including the data from this microfinance study. I hope this experience helps them think about how finance can bring tangible improvements to the lives of poor households, and to recognise some of the ways that data can help decision-making for businesses, large and small.

This article draws on findings from "Asset-Based Microfinance for Microenterprises: Evidence from Pakistan", by Faisal Bari (Lahore University of Management Sciences), Kashif Malik (Lahore University of Management Sciences), Muhammad Meki (University of Oxford) and Simon Quinn (51�Թ��).

Economy

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What academics need to know about teaching

Danielle Lyssimachou — Wed, 22 May 2024 11:03:15 +0000

What academics need to know about teaching

Danielle Lyssimachou Wed, 22/05/2024 - 11:03

22 May 2024

For most academics, teaching makes up a large part of their role, and by working as a team with their students they can create a positive learning experience that lasts, says 51�Թ�� Business School's Dr Danielle Lyssimachou.

Think back to your fondest memories from school. Did you have a teacher who was special to you? What was it about them that stood out? It is often the educators who go above and beyond to serve, empower and enthuse their students who win over their audience and pass on a love for their subject. This requires building a sense of anticipation and excitement about what is coming next, adapting the learning process to fit the needs of their students, and treating them with respect and humanity.

As an academic in higher education, I wonder how many of us are aware of the role our connection with students plays in their learning success. We are experts in our fields, but our pedagogical training is usually patchy. We are expected to learn on the job. Yet, teaching constitutes 40 per cent or more of our role and has a significant impact on the thousands of students we meet in our career.

What we often fail to realise is that our duty as educators is to lean into our students

Most of the emphasis as a teacher is on covering the syllabus to help students master a set of learning outcomes. In the learning design process, the teacher must carefully consider how to break down and deliver the syllabus across a set number of lectures and how to cram in all these important concepts – and we rarely have enough time.

In this process, a pedagogically minded educator should consider that their audience will be made up of people with individual learning styles, requiring a variety of methods and activities. For example, some learn best by doing, whereas others prefer reflecting. Most of us tend to stop there.

What we don’t consider, or know much about, is the psychology of learning. Without a full appreciation of this, we are unlikely to reach our full potential as educators. We are led to believe our students should show up to class ready and prepared to learn, engage with our learning activities and make the most of the valuable time they spend with us.

We are experts in our fields, but our pedagogical training is usually patchy

What we often fail to realise is that our duty as educators is to lean into our students, to appreciate where they have reached in their learning journey and how best to support their practical learning needs. Then we need to design an educational experience, with this audience at the centre and us as facilitators, to provide memorable experiences that evoke a positive long-lasting relationship with the subject area.

Let’s consider the feelings evoked among learners in two very different learning settings.

The traditional learning environment

Traditional learning environments are often based on a strict teacher/learner divide and the educator may knowingly or unknowingly apply control and fear tactics to engage with them, with narrow end targets such as scoring well in an exam. These learning settings do not promote learning – quite the contrary; they obstruct it and risk damaging the learner’s aptitude.

Some learners may feel forced to comply in the short term, but they will not develop positive associations with the subject and will suppress or forget the information in the long run. It needs to be an enjoyable experience that carries deeper meaning. Other learners will flat out refuse to engage, as they do not feel safe in this type of environment. Ultimately, the educator fails in their educational mission in this type of setting.

Working together as a team

In this set up, learners should be at the centre with the educator acting as a learning facilitator, investing time and effort in building a strong bond. Their students gradually feel a strong sense of trust and connection with the learning facilitator and become receptive to learning. This can be achieved in multiple ways:

The educator can be explicit about their role as champion of their students’ learning success, show respect and appreciation for students’ contribution and engagement, displaying vulnerability and approachability on a human level.
They can reach out to their students, converse casually with them, understand what works and what doesn’t work in the learning process.
They can also remind students that each one of them is on their own learning journey, setting their own learning targets that transcend short-term assessments but translate into meaningful development.

Understanding all of this can feel like a breakthrough. I have learnt to appreciate the small casual interactions and wins during the learning journey far more than the destination. I know that most of the subject-specific details I teach may be forgotten in time, but what I hope stays with my students is a positive feeling about the subject area, and the role I hope to model of how a successful learning team should operate.

Education and Learning

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