John Van Reenen has established an international reputation as a scholar of the economics of consequences and causes of innovation. He works on the applied econometrics of industrial organization and labor economics, especially areas relating to productivity growth, management and organizational practices, R&D, anti-trust, intellectual property, policy evaluation and investment decisions.

John Van Reenen has been a full Professor of Economics at the London School of Economics, and Director of the Centre for Economic Performance since 2003. He graduated with a First from Cambridge University (Queens College) with the highest mark in a decade before completing a Masters degree (with distinction) from the LSE, and doing his PhD at University College London in 1993. He has been a Visiting Professor at the University of California, Berkeley, and a Professor at University College London. He has published over 40 refereed papers in international journals, including the American Economic Review and the Quarterly Journal of Economics. He has also been an editor of many journals, including the Journal of Economic Literature, Journal of Industrial Economics, and the Review of Economic Studies. He has served as a senior advisor to the UK Prime Minister, Secretary of State for Health, and the European Commission. Formerly, he was a partner in an economic consultancy company, Lexecon, and Chief Technology Officer in a software start-up. He frequently appears in newspapers, radio, and TV.

John Van Reenen, Professor of Economics and Director of the Centre for Economic Performance at the London School of Economics, and the Denning Visiting Professor in Global Business and the Economy at Stanford’s Graduate School of Business, offered an FSI Director’s seminar on March 4, looking at “Management Matters: Firm Level Evidence from Around the World.” Finding a dearth of empirical evidence on international management practices, and how they affect business performance and productivity across firms and across countries, Van Reenen and colleagues Nick Bloom, Christos Genakos, and Rafaella Sadum set out to remedy that deficit.

Van Reenen and colleagues developed a new methodology to measure global management practices, scoring firms in three areas: how well they track what goes on inside their firms, how they set targets and trace outcomes, and how effectively they use incentives to address and reward performance. Drawing on interview data from 5,000 firms in 15 countries across the Americas, Asia, and Europe, the researchers found that better performance is correlated with better management.  U.S. firms had the highest average management practice scores followed by Germany, Sweden, and Japan.

Asking why management practices vary so much, they found that multinational firms and firms operating in highly competitive markets have better management practices, while family owned firms and firms facing extensive labor market regulation have the worst. These four factors accounted for half of the variation in management practice scores across firms and across countries.

What makes some governments perform better than others? With rising levels of decentralization and local democracy, the focus of "good governance" is increasingly shifting from national to subnational levels. While much of the existing development literature remains preoccupied with formal institutional and society-centered explanations, there is growing evidence that local policy reforms are strongly affected by informal norms and elite-centered processes.

Post-Suharto Indonesia, a country with one of the most pronounced shifts to democratic decentralization anywhere in recent history, is a case in point. Drawing on empirical comparisons across ten districts (comprising 1000 business surveys and 150 interviews), Dr. von Luebke argues that societal pressures are often less significant in explaining policy differences than the quality of local government leadership. In the early transition to democracy, local firms, associations, and district councils continue to be constrained by collective action and political incentive problems. Local government leaders, on the other hand, have wielded historically strong formal and informal powers and stand, for better or worse, at the gateway to local policy reform. Motivated by direct elections and prospective donor funding, some district heads have become catalysts for better governance by introducing informal public-private dialogues, innovative monitoring instruments, and meritocratic promotion schemes. In response to current development debates, these findings highlight the importance of government leadership as an often underestimated policy determinant that can compensate for weak societal checks in periods of transition from authoritarian rule.

Christian von Luebke is completing a book manuscript titled “Heterodox Governance: The Political Economy of Local Policy Reform in Post-Suharto Indonesia.”  He has been awarded a 2009-2011 German Science Foundation Fellowship for a follow-up project incorporating cases from the rest of Southeast Asia and China.  In 2001-2006 he worked in rural Indonesia as a technical advisor for the World Bank and the German Development Agency. He holds a Ph.D. in public policy from the Crawford School of Economics and Government at the Australian National University.

This daylong discussion, attended by roughly 40 scholars and practitioners from universities, labor organizations, corporations and NGOs, focused on how companies can move beyond monitoring and compliance to build socially and environmentally responsible supply chains.

At two workshops in 2008, the group discussed a few key strategies, leading Josh Cohen and Rick Locke to seek funding for a new research center. These included:

1. Scaling up codes of conduct
2. Reinvigorating national regulation
3. Combining labor standards and trade rules

The event on January 29th covered the following topics, summarized below:

Panel 1.   Recent research on ethical consumption

• Michael Hiscox, Jens Hainmueller, Sandra Sequeira (Harvard)
• Margeret Levi (University of Washington)
• Yotam Margalit (Stanford University)
• Dara O’Rourke (GoodGuide, UC Berkeley)

Selected findings:

• The Average “Fair Trade” effect is 9%, based on a coffee experiment with Whole  Foods
• Consumers are willing to pay some premium for social labels (7.3-13.1%)
• Berkeley: Personal health and wellness and the environment outrank labor concerns for consumers of products listed on GoodGuide.com

Panel  2.   Best practices in the environmental area that might be carried over to labor/trade

• Edgar Blanco (MIT)
• Bonnie Nixon (HP)
• Erica Plambeck (Stanford)
• Charles Sabel (Columbia)

Selected discussion points:

•  Compliance-based regulation no longer works; there are new roles for NGOs, government, and public-private partnerships in creating incentives for suppliers
• Suppliers care most about volume and length of contracts; since not everyone is Wal-Mart, buyers may need to come together to encourage ethical behavior

Panel 3.   New regulatory strategies in labor markets in emerging economies

• Salo Vinocur Coslovsky, Massachusetts Institute of Technology
• Mary Gallagher, University of Michigan
• Andrew Schrank, University of New Mexico
• Rick Locke, Massachusetts Institute of Technology

Selected discussion points:

• Evidence from Brazil shows that law enforcement operates in parallel with private auditors in monitoring suppliers, becoming “shock troops of sustainable development”; some issues require state regulation
• There may be trade-offs between bureaucratic efficiency and equity in a compliance system, as in the Dominican Republic
• In some cases, the state’s role is to delegate work so private sector can police more effectively

Panel 4.   Looking Forward

• Caitlin Morris (Nike)
• Marcela Manubens (Phillips-Van Heusen)

Selected discussion points:

• Key issue is how to tie labor and environmental agenda together; for some companies, environmentalism is self-interest—materials like bamboo often resonate with designers. But who makes the bamboo shirt is less of an issue. One option is to derive cost savings from environmental policies and direct that money to programs for workers.
• Big question: in an entry-level sector, how far across the spectrum from minimum or entry-level to living wage do we go? How do we measure progress? Is it a 3% increase in labor value /product each year?
• Another issue in need of further exploration: where upgrading doesn’t reach lower down in the supply chain. There’s got to be a virtuous circle where technical upgrading and labor issues can be joined
• Environmental issues have won the battle because regulatory environment incents companies to care about it, and consumers care, too—it’s become hip. Maybe what’s needed is to institutionalize the “triple bottom line” approach to business such that companies with good labor policies get tax breaks.

» Notes and Presentations (password protected)

Co-sponsored with the Global Supply Chain Management Forum

C. Holland Taylor is an expert on Islam and the process of Islamization in Southeast Asia, having lived, studied and worked in the Muslim world, from Iran to Indonesia, over a period of more than four decades.  

Mr. Taylor established LibForAll Foundation (www.libforall.org) in 2003, together with former Indonesian president Kyai Haji Abdurrahman Wahid, whom the Wall Street Journal has called "the single most influential religious leader in the Muslim world" and "easily the most important ally the West has in the ideological struggle against Islamic radicalism." Under their leadership, LibForAll has grown into the leading NGO developing and operationalizing successful counter-extremism strategies worldwide.

Their inspiration lay in the heroic example of President Wahid's own 16th century Javanese ancestors, whose deft use of soft and hard power defeated Muslim extremists, and guaranteed freedom of religion for all Javanese, two centuries before the Bill of Rights led to the separation of church and state in the U.S.

Based on lessons derived from this struggle, LibForAll is forging a Global Rahmatan lil ‘Alamin ("Blessing for All Creation") Counter-Extremism Network of top Muslim opinion leaders in the fields of religion, education, pop culture, government, business and the media, who are joining to proclaim, with one voice, that radical Islam has no theological validity, and thereby mobilize the "great silent majority" of moderate, peace-loving Muslims to reject the extremists' ideology of hatred and violence. 

This strategy has resulted in a number of world-class achievements, causing Wall Street Journal foreign columnist Bret Stephens to proclaim: "LibForAll is a model of what a competent public diplomacy effort in the Muslim world should look like."

In his presentation, Mr. Taylor will explain key elements of LibForAll's ground-breaking strategy and present examples of world class achievements, including: a "musical jihad" against religious hatred and terrorism; development of the first part of a unique 26-episode counter-extremism television/video series (Ocean of Revelation); and convening an historic religious summit where top Muslim leaders condemned the evils of Holocaust denial - generating worldwide publicity that effectively countered the December 2006 Holocaust denial conference in Tehran.

Mr. Taylor's work with LibForAll follows a career as a successful entrepreneur and global telecom executive, during which he served as CEO of USA Global Link, and was credited by numerous leading publications as one of the essential catalysts in the deregulation of the global telecommunications industry.