The Hindu Business Line : Be sure of the knowledge you use

I THINK it is time I stopped reading about the next new finding in the field of medicine and instead devoted that time to a good long walk. In any event, either those who summarise these research results do not understand it enough to explain it to us, or the gnome in the back office chops up the report before it is published with the result that what we read raises more questions in our minds than provides answers.

In the recent past, research studies have informed me that it is harmful to take Cox-2 inhibitors (a form of pain killers) because it can lead to a heart attack, but it is good to take it for your arthritis. It is bad to be overweight since it can strain your heart and worsen your diabetes. But being slightly overweight helps you live longer according to another study. It is good to drink a couple of glasses of wine a day. Oh, by the way, it is bad to drink wine regularly. All this is perhaps just the yin and the yang of life.

I should perhaps read the original studies to find out more about the research results rather than rely on a news report that summarises a press release. But my ability to understand the stuff is limited and I would be hard pressed to spare the time.

However, those whose task it is to convey that information have an important responsibility to either present it in a cogent and usable manner or not at all.

Management research is also a subject, not unlike medicine, with its own jargon, and which tries to understand complex inter-relationships and present the findings in a usable manner.

Fortunately, very few newspapers take management research studies seriously enough to report the findings. You will never, for instance, see a headline like this: `Related diversification in pharmaceuticals generates high returns.'

But management textbook writers have a special responsibility towards their readers about the knowledge they choose to convey and how they convey it. For students who read such material would like to make use of the information gleaned.

Sample this: A textbook on strategy has a chapter dealing with corporate governance issues. The authors are discussing the implications of concentration of ownership, that is, when large blocks of shares are held by one or a few owners. When this concentrated ownership is also managing the firm, the alignment of interests is to everyone's benefit. The authors make the argument that when there is concentration even outside the firm the group that owns the large block of shares tries to influence the strategy of the firm. One sentence in the chapter reads: "Research evidence shows that ownership concentration is associated with lower levels of firm diversification (footnote 1) and also related to higher firm profitability (footnote 2). Thus with high degrees of concentration, the probability is greater that managers' strategic decisions will increase shareholder value." On checking out those citations, one found that contrary what the sentence said, `research evidence' was done on just 145 firms in Singapore and the authors warned in their study that the market for corporate control is not well developed in Singapore.

Under these conditions, should not there be the caveat that `one' research study `suggests,' instead of the universal `research evidence shows?'

Moreover, the second study cited was done elsewhere, in the US, using different definitions, and variables. The textbook's authors decided to combine the two and give the reader a questionable conclusion.

No doubt the authors' intentions were honourable; they were trying to bring the findings of research to the public domain.

But in a social science like management where we are dealing with an uncertain and constantly changing environment and with the complex inter-connections that is human behaviour, one must be extra careful when making prescriptions about cause and effect relationships. Most certainly, at least the textbooks must include all the usual caveats of the imprecision of the research findings.

One of the scandals that has not yet bubbled to the surface to become a governance issue in Corporate America is the differential holding of equity and voting stock.

In several corporations, promoters of the company, their successors, and other influential friends, hold a higher percentage of specially issued voting stock compared to their share of the equity.

This gives them significant control over the affairs of the corporation even with low ownership. One chapter in the book had no mention of the significance or implications of this issue.

So here we have a textbook that in some areas at least presents information selectively. The way scholarly research has come to tentative conclusions in a limited geographic area has been reported as though it was the universal truth.

Meanwhile, other information that has a more significant implication for the topic being covered has been left out. Sure, the authors cannot be expected to cover all topics relevant to the subject, and they did provide citations for further information. But how many students read these management textbooks and think they've learnt to manage.

However, it is not enough to gripe about the providers of the information. A good share of the responsibility for the use of that knowledge also rests with the potential user.

In a world with ever increasing boundaries of knowledge and constant challenges to what was thought to be already `known,' it is tough to remain an expert for long. The water is muddied further by the fact that the access to this knowledge is now within everyone's reach.

There is little doubt that no research paper anywhere in the world is written today without the help of know-all `Google'.

Also, `I did not know' is no more a reasonable excuse for a bad decision. Thus, while our scribes and textbook writers must certainly take pains to be careful about what they are transmitting, the reader also needs to do his or her own homework before accepting the received wisdom as the truth.

When I go to see my doctor and he looks at me sternly with the report about my cholesterol in his hand, I protest and quote him another study that says that people with low levels of cholesterol perform poorly on a variety of cognitive measures. All he can do is to shrug his shoulders and say `he will look it up!'

(The author is professor of international business and strategic management at Suffolk University, Boston, US. He can be contacted at cgopinat@suffolk.edu)

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