Music superstar Pharrell Williams is among the celebrities who’ve taken part in the World Economic Forum.Kevork Djansezian/Getty Images
The Globe's roundup of research from business schools.
Each January hundreds of luminaries such as Pharrell Williams, Sheryl Sandberg and Angela Merkel descend on the Swiss ski resort of Davos to discuss pressing global problems at the annual meeting of the World Economic Forum. If nothing else, it makes for some entertaining press.
Last year, Bono, a Davos regular, brazenly told a panel on corporate disclosure chaired by British Prime Minister David Cameron, "Some of the criminals around here are not wearing ski masks, they are wearing skis."
But beyond the headlines, what does the meet-up really achieve?
A lot more than you might think, according to a new study by Markus Giesler, marketing professor at York University's Schulich School of Business in Toronto, and Ela Veresiu, a visiting doctoral student at York.
"People often say what happens in Davos stays in Davos," says Dr. Giesler. But the forum has had a profound impact on redefining and reshaping societal problems, he says.
Take global warming as an example. The World Economic Forum was instrumental in shifting the discourse about how to reduce rising global temperatures away from corporations and governments to individual consumers and the choices they make, such the kind of light bulbs they use or the cars they drive. These are important factors but they ignore the legal and regulatory mechanisms also required to affect change, the study argues.
"In the end what we want is a combination of things," Dr. Giesler says. "A responsible consumer but also responsible corporations and governments that are accountable for having to solve these problems."
Dr. Giesler and his co-author spent eight years attending the forum and analyzing its annual reports, white papers and case studies. They also interviewed forum participants. The study found that the discussions taking place at Davos went on to affect policies and decision-making at the United Nations and other international institutions.
Another change that Dr. Giesler has noticed in the years he has attended the meeting is the close relationship that has developed between the World Economic Forum and the media, so much so that journalists covering the event have become almost a public relations arm for the forum, he says. "It's becoming more and more difficult to find critical coverage."
That, too, has an impact, he argues. To demonstrate his point he jokingly adds that his mother has always looked askance at his professional accomplishments until the day he called her from Davos – then she was impressed. "One conclusion from our research is that we as citizens should be more critical toward what these institutions do and how they impact our lives," says Dr. Giesler.
The study was published in the October of 2014 issue of the Journal of Consumer Research.
Does microcredit help or hurt the world's poor?
Participants at the most recent World Economic Forum meeting included Muhammad Yunus, the Bangladeshi-born economist who pioneered the use of microcredit as a means of alleviating poverty in developing countries. He has won many accolades for his work including the Nobel Peace Prize in 2006. The number of microcredit borrowers has surged in recent years, reaching more than 205 million by 2010.
The idea is that providing small, unsecured loans to individuals who would otherwise be denied access to credit allows them to start a business and improve their financial well-being. Yet, the practice remains controversial and many academic researchers and media reports have raised questions about the impact of microcredit lending. Some have even claimed that it amounts to little more than loansharking given the high interest rates that the loans can carry.
There are other implications, too. The loans are often made to groups of individuals. Those who fail to repay the loans can come under intense social pressures and can lose face within their communities, explains Nina Rosenbusch, professor of policy at the Laurier School of Business and Economics in Waterloo, Ont. There have been reports of some borrowers taking their own lives after failing to repay loans.
To assess the benefits of microcredit loans, Dr. Rosenbusch and her colleagues reviewed the findings of 90 previous studies. The analysis concluded it had mixed results.
"What we found is that it really helps people improve their financial well-being," she says.
The loans give borrowers the means to start their own businesses in places where there are few alternative jobs available. Microcredit also has a profound effect on the empowerment of women by providing them with the ability to contribute to their families' finances. "They get more of a voice and that's very important," says Dr. Rosenbusch.
However, microcredit doesn't solve all problems. The study found that microcredit lending had just a marginal effect on improving health and nutrition levels and on educational attainment. In some cases, it many even have an adverse effect as parents may be tempted to take their children out of school to work in the family business, Dr. Rosenbusch explains.
Still, microcredit lending shouldn't be done away with, she argues. "It's definitely a good measure but it needs to be supplemented with other things," especially when it comes to health and education, she says.
The article is available online and is expected to be published in a forthcoming issue of the Journal of Business Venturing.
Social media efforts prove good for a firm's bottom line
The marketing arms of many companies have embraced Facebook, Twitter and other social media sites. But do these efforts help a firm's bottom line?
Yes, according to a new study by a group of researchers at McGill University's Desautels Faculty of Management in Montreal. The four researchers – Sunghun Chung, Animesh Animesh, Kunsoo Han and Alain Pinsonneault – analyzed data from the Facebook pages of 63 publicly-traded South Korean firms from 2010 through 2012.
The study found that the firms' social media efforts had a positive impact on their financial performance. The volume of messages a firm posted was less important than the quality of the information and responsiveness to customers' messages. "Thus, social media managers need to focus on delivering useful, richer information and actively responding to consumer comments," the authors write. "Merely providing a large amount of uninformative messages is not an effective strategy."
Managers should also tailor their social media strategies to drive traffic to the company's website, the study recommends.
The findings were presented at the International Conference on Information Systems held in Auckland, New Zealand, in December of 2014.
Rosanna Tamburri can reached at tamburrirosanna@gmail.com