A new SKOLKOVO research about high performance firms in China and Russia

In their recent monthly report SIEMS studies High Performance Firms in China and Russia. In the paper you will find the methofology of the survey, the final top list of high performance firms and the analysis of their success drivers. Here is the short overview of the report:

"All Roads Lead to Rome: High Performance Firms in China and Russia"

One of the primary goals of managers is to achieve and maintain high performance. The popularity of best-sellers such as “Built to Last” and “Good to Great” demonstrates the current enthusiasm for high performance firms. After decades of research, what do we know about high performance firms? What measures should we adopt to evaluate firm performance, especially in emerging markets? And finally, which are the high performance firms in emerging markets, such as China and Russia, and what can we learn from their success stories? The objective of this report is to provide managers with guidance to evaluate firm performance in emerging markets and suggestions on how to achieve and maintain high performance.

Comparison Measures

Chapters I and II of the report are devoted to selecting the comparison measures for evaluating and ranking the companies’ results. The authors carefully consider the factors that are usually applied for similar research and outline several of them being of the highest importance for evaluating the operations efficiency of the companies working on emerging markets. The authors conclude that there are three factors crucial for such alalysis: Sales growth, Market share and Profitability.

Comparison Method

The next question is how we compare firm performance using these measures. We need a method that can compare multiple measures of different scales simultaneously. Frontier analysis was chosen to be applied for the survey. Frontier analysis is a way to understand the efficiency of decision-making units (DMUs) with specific inputs and outputs. A DMU could be any unit with inputs and outputs, such as a production line or a firm. Data envelopment analysis (DEA) is one simple form of frontier analysis. You can find the detailed description of the method in Chapter III of the report.

Companies Selection

In suggesting DEA as the method for evaluating firm performance, the authors assume that efficiency is a firm’s primary goal. This may not always be true because certain firms, such as State-owned enterprises (SOE), may pursue other goals like administrative tasks. Therefore, the report only focuses on private manufacturing firms that are efficiency driven and grow and prosper in emerging markets indigenously. Appendix 1 summarizes how private Chinese and Russian firms are selected.

Frontier analysis was applied to the top 500 Chinese and Russian firms in each year. The table below reports year, the number of observations (less than 500 due to missing values), mean, and standard deviation of efficiency scores.

 

Overview of the SKOLKOVO Open Lecture on Negotiations by Moty Cristal

Please make yourself comfortable and grab your notebooks, you will be now guided through the Lecture on Negotiations held at SKOLKOVO business school on May 28.

Moty Cristal started simply with saying, “For the following 4-5 hours we will be talking about negotiations,” but the lecture was planned for 2 hours as a max, so you could hear bewildered whispering over the rows… Moty explained then that it was not more than a trick – after such an estimation even a 2-hour lecture will race by. Yet it seemed that a good many of the audience would have sit through 5 hours and more listening to Moty, such an experienced and artful negotiator. He was eager to share his professional secrets with the full house of fascinated listeners.

The lecture was masterly built; Moty illustrated his points with not only some real-life examples but also with the new element of the open lectures – video pieces from various movies, commercials, news items, etc. Those were great for defusing atmosphere and made an effect of a coherent performance by several virtuosic actors.

That was a real show!

Advice on business literature from Helen Edwards

Here comes the latest business literature overview from our Library Project Manager Helen Edwards. We do know which books are worth taking along on your vacation!

1. The social animal: a story of how success happens
David Brooks
Short Books, 2011.
xviii, 424 Pages
ISBN: 9781907595448

How do unconscious abilities lead to success? New York Times columnist David Brooks believes that an overly simplistic view of human nature has led to many policy failures. He looks at scientific research to understand people's real motivations. Written in the form of a novel and introduced by the author as "the happiest story you've ever read", the book follows a couple through their lives to explore key issues in education, business and the wider community. Gaining meaningful work; starting, succeeding and then failing in business; starting over; life in the corporation, in government and as a freelancer are portrayed as personal experiences while simultaneously being underpinned by reference to research studies.

2. 23 things they don't tell you about capitalism
Ha-Joon Chang
Allen Lane, 2010
xviii, 286 pages
ISBN: 9781846143281

This book presents 23 controversial statements and explains why they are true. Thing 4: "The washing machine has changed the world more than the internet has" explains that recent changes tend to be regarded as more revolutionary; discusses the significance of domestic appliances releasing women into the workforce; and looks at the reality of actual productivity gains made by the internet. Thing 12: "Government can pick winners". Many believe that governments pick industries to support for the wrong goals and incentives citing the spectacular failure of the British / French Concorde project. But South Korea has had huge success in revolutionizing industries with state support, as have Taiwan and Singapore; and overall the benefits of the public-private approach should not be ignored by over adherence to free market ideology.

3. Management consultancy
Joe O'Mahoney
Oxford University Press, 2010.
xxiii, 410 pages.
ISBN: 9780199577187

The management consultancy industry has increased by over 10,000 per cent by revenue in less than 30 years. It has also penetrated into new sectors: education, the arts, health and whole economies. This book is divided into four sections, each dealing with a different perspective on the consulting industry: descriptive: practitioner, critical, and career. This last section outlines the consultants life from application, through the career ladder and finally exit. There are also short pieces by leading industry commentators reflecting on their, often contradictory, view of management consultancy.

An article by Pierre Casse: "Tango in the Company: inner voice as voice of reason"

Here is the translation of the article by Pierre Casse, the SKOLKOVO professor, published last week in his personal blog on the Vedomosti Newspaper. The original text in Russian is available here.

Have you ever seen the real tango? It is far not the dance they show in the shiny halls at the World Championships. It is a tough rough dance where He can throw Her on the floor in high gear and catch at the very last moment. What the observers may think of as insanity or cruelty actually is showing the 100% trust between the two.

Real tango is rear to see in the corporate world: individual rule, one of the signs for mistrust for one’s subordinates, – is a distinctive trait of many companies, not only the Russian ones. For instance, we may look at the Apple corporation – where all the decisions are made by Mr. Steve Jobs himself and it is no surprise that there are more and more employees who are afraid or not willing to share their concerns with the director. Or we may remember the case with Ms. Sherron Watkins from the Enron Corporation. When in August 2001 she warned her CEO of the serious accounting mistakes in the company which could lead to a large financial scandal, he didn’t believe her. When she tried to draw his attention to the fact that the auditors from Arthur Andersen closed their eyes to the continuing fraud, she was simply fired. As we know, it didn’t take Enron long to go bankrupt. 

Staying ahead of trends in business

A new article written by SKOLKOVO Library Project manager Helen Edwards.

What is going on in business today? What are the trends and hot topics? Data analysis is fast becoming a cultural phenomenon as the richness in the vast amounts of data generated online is being exploited. Business information providers too are turning their attention to how they can make more sense of the huge volumes of data in business databases to surface this key information and help users stay ahead of trends. Over the last few weeks both factiva.com, the international news service, and Euromonitor, the market research company, have announced major revamps to their products aimed at adding value by including new trending functionality and interactive infographics for data visualization.

Until now most business databases have focused heavily on search. They expect users to know what they are looking for, and once found, to evaluate the content for themselves. Some products, following Google’s famous example, start with an empty search screen; others put new or featured content on the home page or provide navigational guides to help the user browse. But they have not provided any indication of how any particular piece of content fits into the larger picture. It’s true that search results themselves are open to interpretation for trends. If a would-be trend spotter has a hunch, search results can be used to confirm it. Results can be counted, arranged by date or by material type and can be compared with each other. Some products include tag clouds or “more like this” functionality aimed at helping the user explore the database further and perhaps chance upon further useful content.