Bogotá, Colombia

According to the research findings of a professor from the Fox School, business ownership doesn’t always equate to entrepreneurship.

Dr. Kevin J. Fandl, assistant professor in the Department of Legal Studies in Business, and his coauthor, Juana Paola Bustamante of the International Finance Corporation, analyzed a law passed in 2010 in Colombia to assess the impact of business streamlining laws on small, gray market firms. The law aimed to convince owners of gray market or legally non-compliant firms to become part of the formal marketplace, which entails steps such as acquiring licenses, registering with the local chamber of commerce, complying with labor laws, and paying taxes.

They found that a majority of business owners in Colombia had no interest in becoming entrepreneurs and scaling their firms. Instead, they preferred to operate within informal markets as a means of generating enough capital to support their cost of living, and not much more. In fact, in most cases, these firms utilized informality as a market advantage, securing economic advantages by avoiding the very things that make firms formal, like taxes and labor costs. Fandl’s research paper, “Incentivizing Gray Market Entrepreneurs in Emerging Markets,” was published in Northwestern Journal of International Law & Business, the world’s top-ranked international trade law journal, according to Washington & Lee.

Colombia’s 2010 formalization law, Fandl explained, was an attempt by the country to streamline the process through which businesses registered with the government. The law offered these “shadow” businesses a transition period during which they would pay no taxes, registration fees, or contributions to the government for the social security and health of their employees. The costs eventually would be phased in, according to the law, allowing businesses to be more successful in the immediate term and contribute to employee benefits at a later date. But this approach was based on an economic theory that high costs are the principal barrier to business formalization, a theory that Fandl appears to debunk in some cases.

Kevin J. Fandl

Fandl’s study explored the level of informality exhibited within Colombian firms and found practically no significant change before or after the law was enacted. While some larger firms used the law as an opportunity to take advantage of the benefits of formal operations at virtually no additional cost, most small firms targeted by the law chose to stay informal.

“The World Bank and a number of other institutions have studied this, and economists have generally concluded that firms operate informally as gray market firms, because it is too difficult or too expensive to formalize their operations,” says Fandl, who added that roughly 50 percent of firms in Latin America qualify as gray market firms. “It’s a huge problem, because, in essence, these firms are engaging in anti-competitive behavior that undercuts the formal market and allows them to lower their overhead costs, giving them an unfair advantage.”

Prior studies in this area relied heavily on anecdotal evidence, according to Fandl, and found that bureaucracy and escalating costs were cited as reasons for holding back owners of gray market firms, providing them with no incentives for registering their businesses. Fandl’s research, however, revealed the opposite.

“We found that while a few use the informal economy as a means to build businesses in a cost-effective manner, the majority of small firms operate informally only to accrue basic income. These inefficient firms are what we call ‘survivalist firms,'” he says. “They operate their firms to maintain a basic standard of living, and without the desire to become a successful entrepreneur.”

Since passing its 2010 law, Colombia and its Ministry of Commerce have developed pilot programs to educate the owners of these firms to become more entrepreneurial, teaching basic business skills such as accounting and management, helping them differentiate between strong and weak markets, offering mentorship, and providing collaborative opportunities with other survivalist firms. These efforts, Fandl says, are intended to find and spark the entrepreneurial spirit the Colombian government believes lies within some of these firm owners.

Fandl’s study concludes that there’s no single solution to Colombia’s efforts to legitimize its informal marketplace. The nation struggles to combat a high unemployment rate, which prompts its people to seek work and find a living any way possible, even if that means doing so by operating a gray market firm.

“’Forced entrepreneurship’ is the term we use in our paper, and until the unemployment crisis is addressed, this issue will not have a solution,” says Fandl, who adds that follow-up studies in this area are ongoing.

This story originally appeared in On the Verge, the Fox School’s research magazine.

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A map of global trade routes. (Credit: Jeff Warren/Flickr)

Is working remotely in your future?

For many, it already is. A 2016 poll from Gallup found that 43 percent of Americans are working remotely at least part of the time, up from 39 percent in 2012. According to a survey at the London Global Leadership Summit, executives anticipate more than half of their employees will be remote by 2020. With a workforce less attached to a physical office, how does this affect businesses?

Dr. Ram Mudambi, professor in the Fox School, seeks to understand this question and others like it, which play at the intersection of business, geography, and technology.

To do that, he launched International Business, Economic Geography, and Innovation (iBEGIN), a now-annual conference that aims to enhance research around the knowledge economy—based on intellectual capital and human talent—that sustains international business today.

“iBEGIN is based on the idea that connectivity across space is the ‘invisible web’ that underlies all human civilization,” Mudambi explains.

This past December, Mudambi and several of his fellow Fox School faculty and doctoral students attended iBEGIN at Ca’ Foscari University of Venice. The conference—sponsored by the Fox School’s Center for International Business Education and Research (CIBER) and the Office of Research, Doctoral Programs, and Strategic Initiatives, as well as Ca’ Foscari University—brings together experts from the fields of business, geography, and technological innovation to explore international connectedness in time, space, and economy.

“Innovation is the outcome of social interactions among people, through either organizations or personal relationships,” says Mudambi, “Studying such complex phenomena requires a holistic approach.”

This year, attendees sought to learn more about how employees who work remotely, away from their companies’ main offices or headquarters, impact how international businesses function and grow.

When remote employees spend time with their colleagues face-to-face, the parties are more likely to value their time together, increase their level of attention, and emphasize knowledge and information exchange. The conference attendees discussed how international businesses were using remote work, what forms of temporary co-location increased creative interaction and long-term relationships, and which mechanisms improved knowledge exchange.

iBEGIN expands upon the work of the CIBER, Temple University’s premiere program to promote academic research, curriculum development, and outreach programs in international business.

Funded by the Department of Education, CIBER plays a vital role in producing cutting-edge international business research, promoting international ideas within the community, and fostering worldwide learning among Temple students and faculty. As one of only 17 centers in the country, CIBER has received continuous federal funding since its inception in 2002.

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For some, outsourcing is a dirty word. But does it have to be?

According to Forbes, approximately 300,000 jobs are outsourced by the United States yearly. “Offshore” outsourcing, in particular, has become a widely used method in relocating office jobs to countries where labor costs are significantly lower. For example, Carrier, an Indianapolis-based HVAC company, made headlines for laying off 600 workers, sending those jobs to Mexico instead.

However, new research from the Fox School shows that choosing to outsource in a foreign country goes beyond a pros and cons list or a review of your bottom line—it is a strategic business decision.

J. Jay Choi, professor of finance, and Masaaki “Mike” Kotabe, professor of international business and marketing, embarked on a collaborative project in order to understand what motivates firms to seek options such as offshore outsourcing, in a way previous research has not.

Their paper, “Flexibility as Firm Value Drivers: Evidence from Offshore Outsourcing,” which was accepted for publication in the Global Strategy Journal, blends the researchers’ backgrounds strategy and finance to analyze outsourcing as an approach rather than a choice.

Choi and Kotabe found that firms chose to outsource in a foreign country in order to have flexibility in the face of uncertainty. An uncertain market can mean an upsurge in prices, a decline in demand, unforeseen competition, or an economic recession. Companies have to be flexible in order to adapt to these changes—which offshore outsourcing can offer.

“Our work fills an important gap demonstrating that flexibility adds value in more uncertain conditions, more so internationally than domestically,” said Kotabe. “Outsourcing provides firms the ability to adjust and evaluate their options in order to gain quality resources with limited costs.”

When firms are able to move their operations offshore, they essentially gain more freedom. Lower costs, more suppliers, and the ability to expand in more financially driven areas become widely available.

This level of flexibility is not as easily achievable when it comes to domestic operations.

However, Choi and Kotabe explain this approach may come with set-backs. “Offshoring allows firms to perform better financially, however, this relationship may be somewhat weakened by potential loss of domestic innovation and talent while dealing with foreign suppliers.”

Choi and Kotabe merged their respective disciplines in order to gain a unique perspective of outsourcing. “The key is to conduct business research as realistically as possible, so that we can provide relevant research findings to the business community,” said Choi.

The taboos that surround outsourcing may still exist, but with this new research, businesses and consumers alike can better understand when outsourcing will provide the best results.

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Ram MudambiFox School of Business Professor Dr. Ram Mudambi and his team of researchers received a prestigious grant from the National Science Foundation (NSF) to host the First International Business, Economic Geography and Innovation (iBEGIN) Conference at the Fox School. It was preceded by workshops in 2013 and 2014.

The two-day conference, held Nov. 13-14 at Fox’s Alter Hall, was sponsored by the NSF, with support from Temple’s Center for International Business Education and Research (CIBER) and the Fox School Institute for Global Management Studies. It was aimed, Mudambi said, toward using research from his team’s iBEGIN initiatives as the foundation for a long-lasting research community focused on the intersection of the three fields of international business, economic geography, and technology/innovation studies.

“In a very deep sense, all society is based upon human connections. We’re social animals,” said Mudambi, the Frank M. Speakman Professor of Strategic Management and Perelman Senior Research Fellow at Fox. “This conference applied that theory to the sphere, and business and economics. We developed the concept that the human experience is built on human socialization, and use it to understand how connections across space create value.”

The conference featured three keynote speakers, who addressed attendees Nov. 14 in an open-to-the-public setting. The keynotes included:

  • Dr. John Cantwell, Rutgers University, Distinguished Professor of Management and Global Business, and editor-in-chief of the Journal of International Business Studies
  • Dr. Harald Bathelt, University of Toronto, Canada Research Chair Professor in Innovation and Governance, and editor of Journal of Economic Geography
  • Dr. Mark Lorenzen, Copenhagen Business School, Professor of Innovation and Organizational Economics, and Director of the Danish Research Unit of Industrial Dynamics (DRUID)

“These three keynote speakers have been great supporters of our iBEGIN work, and I could not have been more delighted to host them,” Mudambi said. “John is the editor of the top international business journal, Harald is the editor of the top economic geography journal, and Mark is the director of DRUID, one of the world’s largest research networks in innovation studies. To have them under one roof at one conference was a truly unique opportunity.”

The iBEGIN Conference is being promoted as part of GlobalPhilly 2015, a two-month international exposition, featuring events geared toward the promotion of international arts, commerce, education, heritage, and more in Philadelphia. Mudambi said papers were submitted to the conference from all over the world, including from: Denmark, France, Italy, Japan, Korea, Spain, Sweden, the United Kingdom, the United States government, the United States Federal Reserve, and more.

Mudambi’s ongoing iBEGIN initiative is a collaborative effort with professionals in centers around the world, including: Denmark’s Copenhagen Business School, Italy’s Politecnico di Milano and University of Venice Ca Foscari, the Indian School of Business, Henley Business School at the University of Reading (UK), and many others.

The next research project on the horizon for Mudambi and his globally dispersed research team involves battery power, a progression of yet another long-running iBEGIN segment on renewable energy and sustainability. The team has documented the important role that emerging economies like China and India are playing in the innovative landscape of the wind turbine industry, but batteries are the key to unlocking the potential of these renewable energy technologies.

“Batteries are the steam engine of our age,” Mudambi said. “We have ways to produce energy, but we have no way to harness it and store it. Today, if we had to run our planet on stored battery power, we could run perhaps 1 percent of our power applications. Imagine if you could run the whole planet on batteries. It’s a problem that, once solved, will revolutionize society.”

–Christopher A. Vito

wmof-logo2mb-300x157Roughly 800,000 people flooded Philadelphia in late September for a visit from Pope Francis and the World Meeting of Families, a global gathering of Catholics.

So… now what?

An event jointly sponsored by Temple University’s School of Tourism and Hospitality Management (STHM) and Temple’s Center for International Business Education and Research (CIBER) considered that very question.

Gathering Philadelphia’s leading minds in tourism, international business, and government at its event, titled, “The World Meeting of Families is Gone: Now What?”, STHM and CIBER aimed to address how Philadelphia could leverage the international exposure and media focus it received from the World Meeting of Families in order to further its status as an elite host for future global events.

“This was our finest hour and it can be again,” said Pat Ciarrocchi, the event’s keynote speaker and a longtime Philadelphia news anchor who covered the World Meeting of Families.

“The World Meeting of Families brought Pope Francis to Philadelphia and, along with him, more than 15,000 reporters representing media outlets from around the world,” said Dr. Elizabeth H. Barber, STHM Associate Dean. “This event generated an unparalleled level of visibility to viewing audiences that wouldn’t have otherwise been exposed to what Philadelphia has to offer. In order to best capitalize on the tourism opportunity created by the World Meeting of Families, we as a city will need to maintain the open dialogue we’re initiating today through this event.”

In examining the future of a post-Pope Francis Philadelphia, Philadelphia Convention & Visitors Bureau (PHLCVB) CEO and President Jack Ferguson nodded to the efforts by Desiree Peterkin Bell, director of communications for the Office of Philadelphia Mayor Michael Nutter, the Mayor’s Office, and Visit Philadelphia in building upon the city’s strengths.

Photo of event at Mitten Hall.“We can dissect this forever, but what we will learn is what works,” Ferguson said.

In the days and weeks following the WMOF, Ferguson said he observed how the event boosted the reputation of the city’s businesses, for how well they worked with a large influx of tourist traffic. This positive interaction, Ferguson said, won over consumers.

To do that, Meryl Levitz said she designed a faith-based marketing strategy that invited those looking for love and family with the pope to experience it in Center City, too.

“We watched, we listened, and we helped tell Philadelphia’s story,” said Levitz, CEO and President of Visit Philadelphia of the campaign that featured local catholic organizations, bible studies and family-friendly events.

For Brian Said, executive director of the Tourism Division of PHLCVB, Bell’s efforts to remove the walls between the pope and those wishing to see him resonated with Philadelphia’s foreign visitors. Accessibility to Pope Francis, according to Said, was what put Philadelphia on the map as a global city that is welcoming to all.

“We cannot arm-wrestle New York, and we cannot arm wrestle D.C.,” he said. “We have to work together to show Philadelphia is both safe and fun.”

Zabeth Teelucksingh, executive director for Global Philadelphia, looks forward to that “next great event,” as Ferguson called it. Global Philadelphia works to show foreign travelers the city’s significance as a birthplace of democracy and innovation. Philadelphia has the potential to be the next World Heritage City, which Teelucksingh said is a highly marketable title in countries looking to experience a quintessentially America city. Should Philadelphia become the next World Heritage City, it will enjoy increased property value, stature and economic gains, Teelucksingh said.

All of the event’s panelists agreed that the city’s next steps must be geared toward reminding the world that Philadelphia has successfully managed a world-class event once, and is capable of doing so yet again.

“No one else could have been at the helm of this event,” Bell said. “We’ve done big events and we do big events well. We’re on the map.”

Fox’s Ram Mudambi hosts NSF-sponsored iBEGIN Conference


Discussed in this issue:
• NSF iBegin Conference
• Regulating Emotions
• Social Media Branding

The International Business faculty at Temple University’s Fox School of Business have earned prominent national and global rankings for research output.

According to the University of Texas at Dallas’ Top 100 Business School Research Rankings, Fox School’s International Business faculty rank No. 3 in the United States and No. 6 in the world for research productivity for publications in the Journal of International Business Studies over a four-year period, from 2012-2015. Fox shared its global ranking with Australian National University, which received an identical score.

“This is a proud moment for the International Business faculty at the Fox School of Business,” said Dr. Arvind Parkhe, Chair of Fox’s Strategic Management department, which houses the International Business program. “International Business is one of Dean M. Moshe Porat’s strategic pillars and one of Fox’s historic core strengths. Exceptional, research-active faculty and doctoral students continue to add to our growing reputation as a leader in this area.”

UT Dallas has published its Top 100 Business School Research Rankings since 1990. The rankings assess research contributions based on publications in the world’s 24 leading academic journals and across all major business disciplines. Schools receive full-point scores for research papers produced by single authors, according to the ranking’s methodology, with schools receiving fractions of a point for papers that feature multiple authors.

This marks the second time that Fox’s International Business faculty have earned a top-5 ranking for research productivity. Previously, Asia Pacific Journal of Management has ranked the program No. 3 in the U.S. and No. 4 in the world for research output.

In September, U.S. News & World Report ranked the Fox School’s International Business undergraduate program among the nation’s top-15 such AACSB-accredited programs for the fourth consecutive year.

Temple University’s Center for International Business Education (CIBE) has joined exclusive company.

Temple CIBE at the Fox School of Business is one of only 17 such centers in the country to have had its grant-renewal proposal approved for federal funding from the United States Department of Education. Temple is the only university in the Greater Philadelphia region and in Pennsylvania to have received funding for CIBE.

“This grant renewal demonstrates Temple University and the Fox School’s place among the country’s leading centers of international business,” said Rebecca Geffner, Director of Temple CIBE. “The education, outreach and research opportunities afforded by this grant are immeasurable.”

The international business institute is scheduled to receive federal funding for four more years. The grant, announced in September, allows for $250,000 annually. This represents the fourth such grant for Temple CIBE, a fixture at the university since its inception in 2002.

“Temple won the CIBE grant in the face of increased competition, and a shrinking government budget that saw the number of CIBE institutes cut from 33 to 17,” said Dr. Ram Mudambi, Executive Director and Principal Investigator of Temple CIBE. “This award is a testament to Temple’s excellent performance over the last three grant cycles, as well as a good current grant proposal.”

Temple CIBE has plans to implement more than 50 activities in areas such as the teaching of improved international business curriculum, critical language instruction, research in innovation, patents and new growth markets, study abroad, business outreach and partnerships with community colleges and minority serving institutions.  All of the activities are designed to improve American competitiveness in the world marketplace and to produce globally competent students, faculty and staff.

“The renewal of this prestigious grant continues to affirm the Fox School’s vital role in producing cutting-edge international business research, promoting international ideas within our community and fostering worldwide learning among our students and faculty,” said Fox School Dean M. Moshe Porat. “Once again, the Fox School and Temple are being recognized as destinations for global engagement.”

The latest grant will help support expansion of short-term study abroad programming into parts of Asia including South Korea and Japan, where the Fox school currently has partnerships, as well as other emerging markets. Additionally, the grant will create opportunities for junior and senior faculty at Fox to enhance and expand their research within the international business field, either through international collaboration or travel.  Finally, the Center will create knowledge in international business education through two main research initiatives: Temple Knowledge Maps, a project conducted by Dr. Ram Mudambi, which seeks to geographically map the locales of innovation around the world and the connectivity of global innovation networks; and Advancing U.S. Competitiveness in the Context of Emerging Innovation Models, spearheaded by Dr. Mitrabarun “MB” Sarkar, which studies how Western businesses shape their entry into emerging markets and how that entry in turn shapes them.

Grant renewal also will allow for continued external partnerships between Temple CIBE and the Philadelphia U.S. Export Assistance Center, the World Affairs Council of Philadelphia and the World Trade Center of Greater Philadelphia, among others, as well as with local community colleges.

“Our work with these and other partners in the region allows us to reach a large constituency to promote U.S. competitiveness overseas and international trade, to sponsor training programs on topics such as automated export compliance standards and intellectual property regulations and to develop impactful programming around current international business issues,” Geffner said, “This new round of CIBE funding will allow us to not only continue to foster those relationships, but expand upon them in even more meaningful ways.”

“The recent CIBE grant renewal for an additional four years both underscores and reflects Temple’s leadership in international business,” added Dr. Arvind Parkhe, Chair of Fox School’s Strategic Management department. “In international business research, teaching, external partnerships, and community impact, Temple continues to set the standard of excellence and innovation.”

Fox School’s EMBA program is ranked No. 2 nationally for international course experience by Financial Times, and U.S. News & World Report ranks Fox’s undergraduate program in international business No. 13 in the nation.

Dr. Amir Shoham
Dr. Amir Shoham (Courtesy Temple University)

The Academy of International Business (AIB) held its annual global business conference in Vancouver, British Columbia from June 23-26, and a professor from Temple University’s Fox School of Business did not leave empty handed.

Dr. Amir Shoham, Associate Professor of Finance at the Fox School of Business, received the SSE/WAIB Award for Increased Gender Awareness in International Business Research in recognition of his research paper entitled, “Do Female/Male Distinctions in Language Influence Microfinance Outreach to Women?” The Stockholm School of Economics (SSE) and the Women in AIB (WAIB) sponsored the award.

Shoham set out to find a different solution for cultural dimensions than the commonly used survey-based measures. He studied the structure of languages in general and gender marking, particularly in grammar.

“Today’s research that is conducted is mostly survey-based and it’s extremely problematic,” said Shoham. “I wanted to find an alternate way and did so based on language that focused on culture and gender.”

Shoham also collected data based off financial records released from Microfinance Organizations (MFOs) in various countries around the world. MFOs provide financial services to individuals or small businesses in low-income areas, where traditional banking is a scarce resource.

In conjunction with his three co-authors – Estefania Santacreu-Vasut, of France’s ESSEC Business School; Isreal Drori, of the College of Management and Academic Studies in Israel; and Ronny Manos, of Cranfield University in the United Kingdom – Shoham discovered that language influences hybrid organizations’ management of its dual missions.

“The empirical evidence from MFOs’ outreach strategy toward females helped to analyze whether language’s influence depends on MFOs’ profit orientation and the consequences this has for whether there is a tradeoff between outreach and sustainability or whether they are compatible,” said Shoham. “The main finding is that the sustainability and outreach tradeoffs depend on how organizations treat societal attributes when defining their outreach strategy.”

Nonprofit MFOs define a universal mission of outreach that does not selectively interact with social attributes, Shoham said. For-profit MFOs build outreach strategies that target female borrowers. This occurs more frequently, he said, in countries where gender roles are unfavorable toward women.

The SSE/WAIB award is extremely selective, so much so that the award was not bestowed upon anyone in 2013. When their names were announced, Shoham and his co-authors were proud to know that their hard work had paid off.

“When your work is recognized,” he said, “it’s a great feeling.”

Ash Vasudevan, PhD ’96, describes himself as being driven to make a difference and drawn to the unknown.

Case in point: He co-founded a nationwide talent search in India to find the next big-league-caliber baseball pitcher in a country where cricket dominates sports. Launched in 2007, that reality TV competition spanned a dozen cities and attracted 35,000 participants.

The theory behind the competition is that innate athletic ability can be applied across sports requiring similar skills, such as from cricket to baseball. It culminated in 18-year-olds Rinku Singh and Dinesh Kumar Patel—javelin throwers who disliked cricket and had never heard of baseball—becoming the first Indians to sign professional sports contracts in North America (both with the Pittsburgh Pirates).

By now the story might sound familiar. Disney’s Million Dollar Arm—based on the competition of the same name—premieres nationally May 16 with Vasudevan being played by Aasif Mandvi of The Daily with Jon Stewart.

The movie chronicles the first season of Million Dollar Arm, which Vasudevan launched with sports agent JB Bernstein (portrayed by Jon Hamm) and Will Chang, who has ownership stakes in a number of professional teams, including the San Francisco Giants and the D.C. United. Vasudevan, who co-founded Seven Figures Management with Bernstein and Chang, is managing general partner of San Mateo, Calif.–based Edge Holdings, which creates and funds ventures in technology, media and entertainment.

“Life really would be boring if you didn’t take risks,” Vasudevan said of his business philosophy. “I’m drawn to the uncertainty. It’s the tried-and-true methods I don’t find particularly appealing. I like trying something nobody has tried before.”

Vasudevan has been involved in ventures ranging from reQall, a global business focusing on personal-assistance technology, to Gigante, a documentary about Major League Baseball player Andres Torres, who has attention deficit hyperactivity disorder.

Going to India to find a star pitcher did not resonate with many of Vasudevan’s friends. Some suggested he and his colleagues should recruit in markets such as Japan or South America, which have produced numerous big leaguers, but Vasudevan countered that established scouting systems in those markets are much more likely to identify premier talent, leaving fewer gunslingers available to compete for reality TV.

Production of Season 3 of Million Dollar Arm is expected to start in the fall. Before that, of course, Vasudevan and colleagues will experience what it is like to inspire a feature film and to be portrayed in a movie shown around the world.

“The first time I watched myself on the screen, it was weird,” Vasudevan said of Mandvi’s performance. “To see Jon Hamm addressing my character, and reliving some of those conversations, is a lot of fun. We never imagined we would have such a wonderful global platform to tell our story.”