Worthwhile R&D Spending for firms

The Dec.2007 issue of Spectrum (a monthly published by IEEE) has this article http://spectrum.ieee.org/dec07/5742 related to R&D spending of various firms for the year 2006. Toyota tops the list for 2006. The R&D spending is shown in different formats ie absolute expenditure, R&D Intensity(relative to size of the firm in terms of sales) and R&D Expenditure per employee. It points out that not all R&D investments can be compared directly as some firms have to spend more than the others just to stay alive like the pharmaceutical. But still puzzling is that Apple or Google which are considered to be the best innovation firms hardly make into the list in any format. Even the effectiveness of R&D in terms of patents applied don´t seem to explain innovation. So the conclusion is that the only wisdom in R&D matters and which is not yet a column in the comparisons.

This research does not contain any emerging economy like China, India, Brazil and so on. Even Australia seems to have been not included(or may be no organisation in Australia made into the list). It would be interesting to know what approach the mega merger companies from the emerging economies like Tatas will have to do it to grow considering that the R&D capabilities are so poor in these countries (particularly India). Would they have their R&D section located in India or in US or Europe (which is lagging but is aware of its shortcoming).  

What would be interesting is to know where is the research and development going on , in these firms. For example what share of the R&D of Toyota is spent in Japan and what share in US. Many companies are using the emerging economies as the base for such activities particularly IT related developments in India. In short, it would be interesting to know the country-wise breakup also of this R&D expenditure. 

  

Wages and Prices – India Shining!!

The last salary survey by Towers Perrin (http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2007/200711/2007_Global_Compensation_Planning_Report_nl.pdf ) shows that globally salaries are on the rise. But the rise in India and Indonesia are phenomenally high. Though Argentina and Venezuala are higher, the comparatively high inflation offsets it). The main cause for the rise is the shortage in qualified personnel in service sectors like IT , Telecom etc. The manufacturing and similar sectors are lagging  far behind . Farming is not even counted in these surveys. But consequence of such a high salary rises have boosted up prices in the super markets and real estate. Hence discussions like this in the Indian Economy Blog http://indianeconomy.org/2007/12/30/indias-retail-revolution-question-2/. Or is it the other way round? 

Poor English – One Reasons for lack-lustre performance in Academic Research in Non-English Europe

In an article in VOX, Luc Bauwens,Giordano Mion, Jacques-Francois Thisse show that apart from low research budget and poor governance of academic institutions, lack of  proficiency in English is also important factor for the poor performance of European academic research. http://www.voxeu.org/index.php?q=node/834. They explain this citing example of the better performance in the European countries where English proficiency is high like Sweden, Netherland and Denmark compared to countries where it is low like Germany, France and Italy. It even goes on to point out that the former English countries like Australia,Canada,New Zealand, Singapore,Israel Ireland etc. performed much higher when measured in terms of Highly Cited Research (HCR) counts per million. Of course this study is based more on the Thomson Database only. But seems the researchers are quite right in their assumptions.

As usual there is no mention about Indian  or Chinese research capabilities. But a look at the site based on which the data is derived shows India has only 9 HCRs while Chinese have around 19 HCRs of which most of them are from Hong Kong (another former English Colony).

For the Education Departments in European countries this should be another wakeup call to be proactive. They are already under pressure to increase the emphasis on English because of the dilution of the other languages after the expansion of EU.

Overwork-Japanese Culture of Hardwork

Registered users of  The Economist can read this article about overworking in Japan http://www.economist.com/world/asia/displaystory.cfm?story_id=10329261.  This highlights the issues of KAROSHI (the Japanese have a way of glorifying everything with terms) where somebody dies out of overwork. The article picks up an example of a third generation employee of Toyota who worked 80 hrs more unpaid overtime for the last six months apart from the normal working hours. Japanese are slightly less than Americans on their working hours. (1780 hrs compared to 1800 hrs per year). In Germany this is 1440 hrs.   Family members affected by Karoshi are payed compensations by the company.  In fact the widow of this person mentioned commented that Toyota´s dominance is more due to such flexible manpower rather than often quoted efficiency of working. Given the cultural loyalty and the hardworking habits of Japanese I tend to agree with her. The issue of of Karoshi is so pressing that there is even a website for it http://karoshi.jp/english/index.html.

Comparing this with the living conditions in Europe where total working hours are so low and then people are forced to take vacations just to get rid of the accumulated extra hours and days of holidays. Many of them argue that the efficiency of work is not good enough when higher hours are spent. Comparing it with countries like India and China it might be so. But Japan and South Korea have been consistently doing better than the Europeans in all aspects like education, health care etc. This shows that Europe cannot just keep watching. Either they have to work hard or increase efficiency to stay alive with their current conditions. But when I see that we will have public transport strikes in the next few weeks., it appears that the urgency for such changes is not yet being felt by the Europeans

Supply Chain Management Papers wins EFMD

It is mostly agreed that the Indians Education system is not very conducive for writing papers and thesis and so has a big problem in contributing towards long term development. Well, when someone does manage to write looks like they hit the limelight. The European Foundation for Management Development has awarded their 2007 Emerald/EFMD Outstanding Doctoral Research Award to Mr.Narsimha Kamath of IIM Calcutta. Details here. http://www.businessworld.in/content/view/3188/3282. This award is for his paper ‘Supply Chain Management of Perishable Items: Channel Dynamics And Integrated Decision Making’. Congrats

No of working hours for US and Europe.

About general discussion on how the numbers of hours put in by workeres influences the overall GDP, here is a policy paper published by cepr http://www.cepr.org/pubs/PolicyInsights/PolicyInsight12.pdf.  The general conclusion  is  that ” GDP per capita is today 30% higher in the US than in France or Germany, while GDP per hour worked is roughly equal. This means that Americans are today richer than Europeans simply because they work more, not because they are more productive “.  But then as mentioned in earlier posts the hours spent by Europeans at other activities like building and fixing their own houses (however inefficient) does not reflect in the GDP as this does not get accounted. This isvery much identical to the black economy which also does not reflect in GDP. 

MBA, Management Studies Ranking – FT

Financial Times has published its annual ranking of management institutions and degrees http://www.ft.com/businesseducation/mba . USA dominates in all section lesser though for customised executive education (for most US executives easily take sabbatical to take the course they want full time). Other than UK ,European Management courses  fall pretty short of expectations. UK of course follows the anglo-saxon corporate management which gives a lot more importance to management and so valuation of these courses are higher. But this shows that the European corporate closed style is not going to change drastically in the near future. The politicians demand for salary caps is going to make things worse and   I guess they will be succcessful in implementing the caps in Germany. So I don´t expect any big change in the ranking in few years to come.

But the usual story Indian IIMs find no place even where South African and Nigeran business schools can find one. 

Tiger That Isn´t – or how to read numbers

For me, statistics was not one of the easiest subjects to get through during my studies. It seemed so abstract and contrary to what I was seeing. But now nearly everyday I come across statistics in magazines and newspapers. Most of them seemed to be used to drive home the message and to give the article some degree of authenticity. Well, I just finished one book which exposes the truth behind these numbers. This book is “The Tiger That Isn´t” by Michael Blastland and Andrew Dilnot http://www.profilebooks.com/title.php?titleissue_id=453. It seems they present the same information in Radio series called More or Less (BBC Radio 4). Anybody who enjoyed Freaknomics and The Undercover Economist books will surely enjoy this book. In fact I think it is even more simpler than the other 2 books. The authors have tried to show how common public should weigh and find the  real value of the statistical numbers quoted in newspapers (I would say successfully).    

PISA study – German Reaction

Inspite of the good news, most magazines and newspaper have prefered to take a cautious approach to the results of the PISA 2006 survey. I could find only one English article by Deutschewelle http://www.dw-world.de/dw/article/0,2144,2988185,00.html. The message pretty much the same in all reports. The main focus is that the improvement in the ranking may be a result of the restructuring of the testing system. Also the poor performance of immigrants  has also got the eye o of storm. If natives alone were considered Germany would be far ahead. Actually immigrant population is very less in the top performing countries like Finland , Japan etc. Another point of discussion is also that educational background of parents affect the student performance. As I mentioned in a previous blog, this will be the case where the working hours are less and student teacher interaction time is less. The parents take over part of the responsibility and thus influence the performance of the student.

Science Study(or the lack of it) in India and its long term implication

I was trying to look for an equivalent study of the PISA Study for Indian Education. All I could find was this study http://www.insaindia.org/India%20Science%20report-Main.pdf . It appears this was a study in response to an article written by Garg, K. C. and Gupta, B. M.,  in the Current Science .Vol 84,   2003, Pg 1198–1201 about the fall grass-root level decline in Science education. It appears the final report though does not refute the original paper it tries to maintain a bureaucratic balance  by saying..”yes..there is something..but it is not a big thing”. But the numbers when looked in depth show that there is definitely a drop in support and enthusiasm in Science once the job -secured engineering and medical profession splits out into a separate curriculum. Worse is in the tertiary level education. The fact that 62.8% of the post graduate science students are unemployed should be a reason enough for the loosing any interest in further education in this line.

Most agree that the innovation is the main driver for a country´s continuous growth. China has recognized it and has been trying hard to catch up with the developed countries in these areas. But there seem to be no sign of any action from the Indian government or Education Policy makers. Everybody seems to be content in being “the cyber coolies” and think that based on this fact alone  India will maintain its current growth rate and will catch with the bigger economy within the next generation. It takes a generation to bring about a change in mindset and to realise benefits on educational investments. But for English speaking countries  with low wages(like some in Africa) to catch up in the “cyber coolie” business they need very less time. Also service industry in which India excels does not need much investment and can be rapidly developed if a country decides to go into it. All Foreign Investors will directly jump up to support them. Also China , Russia and many Eastern Bloc countries are pushing English a lot and with that India can loose its competitive edge.