In the Ranks of the Insane

by Nomad

The Bottom Line: A New Reason Why it Pays Corporations to be Socially Responsible

  by Nomad

A recent study suggests that corporations that take an active interest in social cause may increase the work performance of the employees.

Some economists are still asking whether corporations should be getting themselves involved in social issues at all.

Albert Einstein once said that it was "every man's obligation to put back into the world at least the equivalent of what he takes out of it."

Duty and obligations aside, a new study by the University of Southampton, may give business owners an even more practical reason to work on social causes. It can increase productivity by up to 30 per cent.

The Selfish Benefits of Giving

Dr Mirco Tonin, the lead author of the study, said that  while the use of bonus and stock options have long been used as an incentive to improve worker performance, there's another lesser-known motivating factor.When workers are given a social incentive such as a charitable donation linked to their job, says, Tonin,  performance increases by an average of 13 percent, rising to 30 per cent among those who are initially the least productive.

"Our results provide empirical support for the growing recognition that some workers are also motivated by advancing social causes through their efforts."

The study also found that  performance was enhanced to a greater degree when workers could decide how much of their wages they wished to contribute.   More than half of the study participants chose to give a proportion of their pay to the charity they choose when the donation were optional.

"We find that offering subjects some discretion in choosing their own payment scheme leads to a substantial improvement in performance," says Dr Tonin. "This suggests that firms willing to introduce corporate giving programs may want to consider giving employees the opportunity to 'opt in.'"

The study Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment will be published in the forthcoming edition of Management Science.

The Little Spark of Celestial Fire

  by Nomad

The Browder Affair and the Death of Russian Economic Reform 2/3

 by Nomad

Part One of this series

In Part two, we pick up the story of the crusader investor, William Browder. As an activist shareholder whose business model was based on exposing corruption, Browder was about to meet his Waterloo with the Russian global energy giant, Gazprom.

The Payoff and the Payout

William Browder's mission to expose and clean up corruption within Russian corporations was not based on any altruistic motives. On the contrary, it was an application of basic capitalist principles. simply a way of increasing the value of the companies in which he owned stock.

A corporation cleared of corruption was bound to be more efficient and in practical terms, more accountable to its shareholders. Furthermore, it was bound to be more profitable.

However when it came to Gazprom, Russia's oil giant, that practical idea was to hit a snag. When Browder's investment fund  Hermitage Capital Management (along with other minority shareholders) launched its anti-corruption campaign, it would turn out to be, in fact, an indictment against the whole Russian way of doing business.

A Washington Post article in December 2000 reports the growing concern by foreign shareholders. Accountability was, they discovered, an illusion.

The huge natural gas monopoly Gazprom, one of Russia's largest enterprises, has transferred hundreds of millions of dollars in assets outside the company in recent years while signing lucrative deals with a firm largely owned by Gazprom's current and former directors, executives and their relatives, documents show.

(The article- though predictably complex- lays out a pretty good case for widespread corporate abuse that would have made Enron executives blush.)

Destiny in the Making: President Obama Made History 25 years Ago Today

by Nomad

A quarter of a century ago, one soft-spoken student with a sense of destiny took his first steps into the public spotlight. His name was Barack Obama. 

Twenty five years ago, Barack Obama was elected the Harvard Law Review's first black president. Here is the New York Times announcement.

(Hat-tip to my long lost cousin, Angel.)