New research will look at the financial impact of corporate management of water resources
Two researchers at the Telfer School of Management will address the financial implications of corporate use of water resources.
For many firms, water is a key factor in the production of goods and services. However, as water availability and quality continue to decline, investors, creditors, and regulators have begun to place greater pressure on firms to disclose how they manage water resources, how their practices impact their businesses, and how these firms mitigate risks related to corporate use of water.
However, very little is known about the impact of corporate use of water resources across firms, industries, and countries. Do firms pay a very high price for poorly managing water resources?
What’s this research about?
To answer this question, Professors Mohamed Chelli and Walid Ben Amar will examine the impact of corporate management and disclosure of water on market value and the implied cost of equity capital. The researchers have been awarded an Insight Development Grant by the Social Sciences and Humanities Research Council.
Who gains?
Insights gained from this research project will contribute to the timely debate in accounting research that focuses on climate change and corporate responsibility.
Moreover, by better understanding the impact of risks associated with how firms use water resources, Professors Chelli and Ben Amar will provide relevant evidence to support investors, policymakers, and regulators in their efforts to improve corporate transparency.
Ultimately, these research insights can help firms make better and more sustainable decisions.
Update on the subject
March 2021
Water shortage and quality deterioration expose businesses in the private sector to material water-related risks with significant financial and operational implications to the company and its supply chain. The 2020 CDP Global water report has revealed that the costs of inaction are much higher than required resources to address these material risks.
While stakeholders and investors request decision-useful water-related information, several companies are still not reporting about their exposure to water challenges and opportunities. In a cross-country comparative study, we find that voluntary water-related disclosures to the CDP differ across industries, national cultures and country legal regime. Our findings highlight the urgent need for increased pressure to improve corporate water-related communication. We also call for regulatory actions to standardize and enhance the comparability of water-related information across countries. The lack of consistent and quantifiable data about corporate exposure to material water-related risks hinder investors’ ability to effectively allocate capital to companies taking proactive actions towards a water-resilient economy. Our ongoing research investigates the financial impacts of water transparency and effective water-related risk management practices.
The Telfer School of Management is committed to developing cutting-edge research in a variety of topics in management. As our faculty continues fostering research excellence, the Telfer School community and partners also benefit from valuable insights with impact. Find out how to apply for a SSHRC Insight Development Grant.
Telfer research aims to address mental health conversations in the workplace
A team of researchers at the University of Ottawa’s Telfer School of Management has launched a research project aimed at guiding employer–employee conversations around mental health.
The Mental Health Commission of Canada reports that each year, one in five working-age Canadians will deal with depression, anxiety or other forms of mental illness. This accounts for about 30% of short- and long-term disability claims, which add up to over $6 billion annually in lost productivity, absenteeism and turnover.
Professors Laurent Lapierre, Silvia Bonaccio, Jane O’Reilly, Magda Donia and Ivy Bourgeault will take a deep dive to assess workplace conversations around mental health. The team has been awarded an Insight Grant by the Social Sciences and Humanities Research Council of Canada for this research initiative.
“Our main goal is to understand how managers can create a climate that makes it easier for employees to talk about their mental health struggles, thus enabling them to receive the necessary support or accommodations,” explains Laurent Lapierre, the research lead. “We also hope to help employees better manage their mental health so they can sustain, if not improve, their interpersonal relationships and productivity at work.”
Learn more about this research project: workandmentalhealth.ca
Corporate Partnerships in Emerging Countries: The China-Africa Case
Meet our new faculty: Abdoulkadre Ado has recently been hired as an Assistant Professor at the Telfer School of Management at University of Ottawa. We interviewed Professor Ado to learn more about his research on corporate partnerships in the context of emerging countries.
During your PhD studies at Laval University, you were a visiting scholar at the United Nation’s Office of the Special Adviser on Africa (OSAA). How did your experience advocating for studies on international development inform your research?
My research at the OSAA was an opportunity to learn about their work and contribute to their advocacy for African development. The experience certainly influenced my award-winning PhD thesis, which was in line with the African Union’s Agenda 2063. For example, I developed a policy paper about the need to upgrade Africa on the global value chain through knowledge transfer.
Why are you interested in understanding China-Africa corporate partnerships among many other emerging countries?
Since 2010, Africa’s export to China has reached more than $400 billion while imports from China surpassed $500 billion. China is now Africa’s largest trading partner, with major investments in Africa’s promising sectors like infrastructure, natural resources, agriculture, services, and manufacturing.
Chinese organizations often invest in Africa through corporate partnerships, but what exactly do African organizations gain from their partnerships with China? This is exactly what my research focuses on. African political and business leaders increasingly believe that the industrial development of the continent depends on knowledge to be gained from high-tech partners such as China. They also hope such partnerships with Chinese organizations can be profitable.
Tell us about your research on Sino-African business alliances. Can you give us examples of well-known businesses alliances and tell us about their economic impact?
China-Africa alliances have a significant impact on Africa, transforming what were once net import countries into successful net exporters. Major alliances include Lekki FZDC (Nigeria), SORAZ (Niger), and Djarmaya Refinery (Chad), three examples of companies that have enabled Africans to attract more foreign investments, transfer knowledge, and refine oil locally, hence reducing Africa’s dependence on imported goods.
How can your research influence/impact the business communities in Canada?
Canadian organizations in the public and private sectors are increasingly looking for opportunities in African countries. My research offers key insights into the African business environment and identifies strategic ways through which foreign organizations can develop successful partnerships, especially if they would like to establish win-win alliances with Africans.
Passing on the torch—strategically—in family businesses
By Lidiane Cunha
Family-owned firms play a major economic role worldwide. Only in Canada, family firms employ over 6 million people and contribute more than 60% of our GDP according to the Family Enterprise Xchange.
You probably know many family firms, from the small grocery store around the corner to some of the world’s largest companies. BMW, IKEA, Walmart, and, closer to home, Bombardier are just a few examples.
While some family firms thrive for several generations, others are short-lived. “On average 30% of family firms are passed to the 2nd generation, and only 12% of them make it to the third generation,” explains Telfer School of Management Professor Peter Jaskiewicz.
Professor Jaskiewicz and his research team wanted to understand why such a significant group of family firms fails so early. He started looking for answers by examining the unique nature of family firms. Unlike the owners of nonfamily firms, those who run a family business often wish to pass it on to next-generation family members.
“We wanted to find out if this particular desire to keep the business alive for several generations, what we call the transgenerational intention, was good for firm performance, and our results were really intriguing.”
It appears that when families strongly desire to pass on the business to their children, family-firm performance declines. Their findings have been published in the top journal Entrepreneurship Theory and Practice.
“My kids are the smartest and best looking of all”
It is common for parents to consider their children the smartest and best looking of all. Unfortunately, in the context of family firms, when the current owners are very eager to pass on the business to the next generation, a bias towards their children does not usually lead to the best business decisions.
When involving their own children in the firm, current owners should ask themselves if their desire to pass on their business is clouding their judgement and ability to make the right decision for the firm. Are their children as competent as a highly educated and experienced professional manager who is not a member of the family? If their children underperform or prove unsuited for the position, will they be fired?
“These biased decisions might put current owners at odds with strategic decision-making,” adds Professor Jaskiewicz.
The threshold: when family managers can hurt the firm
Professor Jaskiewicz and his team show that future firm performance tends to be lowered when more than 25% of the executives are family members and the current owners have a strong desire to pass on the firm to the next generation.
“In family-owned firms with a strong desire to pass on the business to the next generation, increasing the number of family managers from one to two in a three-person management team is likely to reduce the firm’s future profitability by about 20%,” says Professor Jaskiewicz.
When the desire to pass on the torch has a positive impact
Professor Jaskiewicz and his team recognize the benefits of transgenerational intention in family firms. “When planning to pass on the business to their children, family owners are more likely to make careful, long-term investments so that the business will be in good shape 20 or 25 years down the road,” he explains.
Interestingly, his study further shows that family-owned firms with a majority of nonfamily managers are most likely to achieve the best performance when family owners desire to pass the business to the next generation.
Advice for the current owners of family firms
Professor Jaskiewicz advocates for transgenerational intention as long as it goes hand in hand with a non-family executive suite that manages strategic decisions along the way.
“Current owners of family firms need to realize that, when non-family executives are encouraged to make long-term investments, they are definitely an asset. Non-family managers are better positioned and less biased in making decisions that involve the owners’ family members,” says Professor Jaskiewicz.
He also advises family-owned firms to “keep a balance between a transgenerational intention and the rational decision-making that non-family managers can offer.” This way, the family firm is likely to be passed on in good health to the next generation(s).
Hoffmann, C., Jaskiewicz, P., Wulf, T., and Combs, J. (2017). The Effect of Transgenerational Control Intention on Family-Firm Performance: It Depends Who Pursues it. Entrepreneurship Theory and Practice.
Financial literacy: An essential tool for Canadians
Financial Literacy
Canadians are now living longer than ever, so they need to provide for longer retirement. Systemic changes, such as the reduction of employment benefits and a move away from defined benefit pension plans towards defined contribution plans, will also affect Canadians in the future. We will need to acquire the knowledge to take even more responsibility for our personal financial well-being. However, research has found that financial knowledge is surprisingly low.
Financial literacy is particularly essential for self-employed Canadians and owners of small- and medium-sized enterprises (SMEs). Many business owners do not have access to employer pension plans, are financially dependent on professional earnings and savings, and are not financially well-diversified. Moreover, research shows that poor financial decisions are a key factor underlying job-destroying failure of Canadian SMEs.
What’s this research about?
“Financial knowledge has a positive impact on the welfare of business owners, of their employees, and on the positive and negative economic prosperity effects of firm growth and failure; however, research has not considered the state of financial knowledge among business owners or what forms of remediation might be needed if Canadians are to thrive,” explains Professor Allan Riding, the lead researcher of a project that has received an Insight Grant by the Social Sciences and Humanities Research Council of Canada (SSHRC).
To address this knowledge gap, Professors Riding, Barbara Orser, and Miwako Nitani from the Telfer School of Management (University of Ottawa) will assess the state of financial knowledge among the 2.2 million Canadians who are self-employed.
In order to do so, the researchers will:
- compare the level of basic financial knowledge among self-employed Canadians with that of employees;
- identify and measure domains of financial knowledge deemed most essential to SME owners;
- correlate financial knowledge with financial practices; and
- develop a benchmarking tool to guide remedial education of business owners.
Who gains?
Professor Riding and the team also believe that their research insights will complement the strategies and innovations of the Financial Consumer Association of Canada, the Chartered Professional Accountants Associations, and other private and public sector organizations that promote financial literacy in Canada.
The Telfer School of Management is committed to developing cutting-edge research in a variety of topics in management. As our faculty continues fostering research excellence, the Telfer School community and partners also benefit from valuable insights with impact. Over the next weeks, we will give an overview of the eight research projects that received the prestigious SSHRC Insight Grant in 2018. Click here to learn more about how to apply for a SSHRC Insight Grant.
