Wednesday, May 9, 2012

"A Thoughtful, Systemic Approach"

How Scholarship Can Help Alleviate Extreme Poverty

The disturbing reality that an estimated 1 billion people in the world live on less than $1.25 a day—and another 2.5 billion on less than $2 a day—has for decades fueled efforts from governments and nonprofits to help tackle global poverty. Businesses, large and small, are getting on board, too, to address this pressing global problem. And at a two-day Stanford Graduate School of Business conference in March, researchers from across disciplines grappled with a key question about how to harness and drive all this energy: Can research and teaching — not just in business, but across disciplines—support efforts to help the poor help themselves in some of the most economically challenged areas of the world?

The answer was an enthusiastic yes. But scholars and students, along with a handful of business and nonprofit leaders, said doing so would require a thoughtful, systemic approach that takes into consideration cultural and environmental factors, as well as thorny questions related to regulation and politics. Significantly, it would require collaboration across disciplines such as business, design, health care, and education that traditionally have operated as isolated silos in academia. “Without an operating framework, any project in the developing world will be for naught,” said James Wolfensohn, former head of the World Bank and the keynote speaker at the research forum.

The key, he said, is ensuring that the use of academic research to solve problems is part of a comprehensive approach. Attempts to manage one poverty-related issue at a time can quickly run into problems. Early in his career, Wolfensohn said, he saw a school built in Ghana with foreign aid and the best intentions. Two years later, it stood as a gutted shell. The reason: The organizations involved hadn’t figured out how to run it so that the children attended and stayed healthy. Enlisting parent participation was very difficult too. As a result, the school ended up of little use to the local population; they did what was logical: “recycling” the physical resources of the building.

A better approach would comprehensively consider how to develop entire local markets, which means simultaneously providing education, health care, and jobs, said Christopher Tang, a professor at UCLA’s Anderson School of Management. He pointed to success stories such as Grameen Bank, which helps women in Bangladesh, in particular, lift their financial profile through “microcredit”—tiny loans that enable them to start or expand modest businesses. VisionSpring, he said, empowers small-scale entrepreneurs in several developing countries to sell affordable eyeglasses to people who earn their living with their eyes, such as teachers and garment workers.

Nicholas Bloom, an associate professor of economics at Stanford, pointed to the important role that business research can have in supporting poverty alleviation. “Business growth is important for economic growth, and management drives business growth,” he said. Dean Karlan, a Yale economics professor, agreed that “firm growth is helpful,” and also advised listeners not to “lose sight of the real goal: poverty alleviation. Firm growth may reduce poverty, but it does not necessarily do so. Therefore, we should not consider it the end-all, and we should test when it does—and does not—help in this regard.”

Karlan advocated that social, environmental, and regulatory issues also be put on the research table. Jeremy Weinstein, associate professor of political science at Stanford, noted that research interventions should address how politics, in particular, can better serve the economic ecosystem.

The discussion was an important one, as the conference was aimed at setting out a preliminary strategic agenda for the Stanford Institute for Innovation in Developing Economies, informally known as SEED, established in November by a $150 million gift from Bob King, MBA ’60, and his wife, Dottie, to enable Stanford to develop research and teaching on how managerial, technological, and institutional innovations can be applied to poverty alleviation. SEED is housed at the business school but the institute emphasizes collaboration with researchers throughout the university and beyond.

Hau Lee, a professor of operations, information and technology at the GSB who leads SEED’s research program, affirmed that the institute “should not run research as an isolated pillar.” Instead, SEED needs “to include students, build relationships with people on the ground, and create hubs in various locations to facilitate research and dialogue.” The vision set out from the two-day summit was thus one of cross-pollination at work.