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Category: Globalization

Overcoming discord means getting beyond survival instincts

Posted by MIT Sloan Executive Education - 11 days ago

MIT Sloan Lecturer Tara Swart TEDx

Recent national votes in the U.S., Britain, and elsewhere have exposed bitter divisions based on things like country of origin, economic status, political persuasion and other factors. MIT Sloan Senior Lecturer Tara Swart, a neuroscientist, leadership coach, medical doctor and executive advisor, has a theory about how some of our basic survival instincts have resulted in this widespread political rancor—and how to get beyond it.

In a TEDx talk on neuroscience and nationalism at the London School of Economics, Swart explains that humans have evolved and thrived in group settings. Survival required people to cooperate to obtain food, keep warm, and protect each other. “When we lived in caves, being cast out of the cave meant certain death,” she says. “We became the most successful animals on the planet because we could exist in large groups.”

However, the flip side of our social tendencies is an “us vs. them” mentality. The group has to protect itself from threats from other groups—and “others” are those who look, speak, and act differently from us. In prehistoric terms, “engaging with someone outside your tribe could prove fatal,” and over time, differences began to be defined not just by race, language or gender but also by social class, education, religion, and more,” Swart says.

“It’s not about your or my opinion, or being right or wrong, or even our political choices. It’s about the evolution of the human brain from tribal origins through ethnic and geographical diversification to the creation of the nation-state all the way up to modern nationalism,” Swart says. “It’s about why we created ‘in’ and ‘out’ groups in our societies, whether we’re hard-wired to act on stereotypes or whether we can change, and how we regulate our fears and other emotions.”

The human brain evolved to give “survival emotions”—fear, anger, disgust, shame—a lead role in shaping our behavior. As a result, “it’s easy to motivate people based on fear or disgust,” Swart says. In political terms, this may mean that Candidate A highlights Candidate B’s scandals and potential threats rather than focusing on the positive things he himself has to offer. Loss aversion—the fear that someone outside your tribe could take away what you value—is another form of safety wiring in the brain, and all these emotions in turn result in unconscious biases.

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All the world is China's stage

Posted by MIT Sloan Executive Education - 1 year and 10 months and 21 days ago

China's slowdown

China's stock market has been on a wild rollercoaster ride in recent weeks. More than $3 trillion in market value has been lost, and roughly half of China's 2,800 listed companies have suspended trading. Unfortunately, this extreme market volatility is also paired with sluggish economic growth. Last week, a key gauge of China's manufacturing activity tumbled to its lowest level in 77 months.

There are several drivers of this chaos. Over the past year, China's central bank had used the Chinese Securities Finance Corporation (CSFC) as a conduit to help Chinese people buy stocks with borrowed funds, helping to prop up stock market prices. Investors poured more and more into Chinese stocks, even though economic growth and company profits were weak. This effort had not stabilized the market as hoped, and recently the CSFC stopped injecting funds into the stock market. A classic bubble had developed, and burst.

And then there is the yuan (also called the Renminbi). Since 2009, rapid growth in the Chinese economy has pushed the value of the yuan up relative to the dollar. But then the slowing Chinese economy started to push the yuan downward. China's central bank intervened in foreign currency markets to maintain the yuan's value, but on August 11 it decided to let the currency drop by about 3 percent. This move may have been China's attempt to improve the credibility of its currency (the International Monetary Fund has been pressing the Chinese government to loosen its control over the exchange rate). For whatever its purpose, this devaluation should have, in theory, provided a boost to the Chinese economy by making Chinese exports more affordable to foreigners. And yet this wasn't enough to prevent further declines in the stock market.

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U.S. Taxes: Try a carrot instead of a stick

Posted by MIT Sloan Executive Education - 2 years and 9 months and 15 days ago

In late September, the U.S. Treasury Department proposed new regulations to help curb corporate inversions—the merging of a U.S.-based company with a foreign company so that the foreign company becomes the parent of the combined operations, resulting in significant tax benefits.

Inversions have captured headlines and mindshare since late August, when Burger King Worldwide merged with the Canadian chain Tim Hortons. Once joined, the company will be the world’s largest quick service restaurant company. The firm will also be headquartered in Canada, which has a lower tax rate than the U.S. While Burger King’s expected inversion brought the issue into the general consciousness, many other companies have similar stories. According to Reuters, 76 U.S. corporations have completed inversions since 1983; 47 of those deals have occurred since 2004. Some of these companies are obscure, others well known. The name brands that have essentially relocated as a result of inversions include Fruit of the Loom, Seagate Technology, Accenture, PricewaterhouseCoopers Consulting, Herbalife International, Tyco Electronics, Covidien, and Medtronic 

MIT Sloan Professor of Accounting Michelle Hanlon recently surveyed 600 tax executives to better understand the impact of U.S. tax policy on corporate decisions about investment location and profit repatriation. Hanlon’s research showed that both the tax and financial accounting effects lead to greater foreign direct investment by U.S. companies and lower repatriation [of taxable funds.]

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The need for supply chain flexibility

Posted by MIT Sloan Executive Education - 3 years and 1 month and 19 days ago

According to David Simchi-Levi, Professor of Engineering Systems at MIT Sloan, “a growing number of U.S. executives are moving some production operations back from overseas.” While there are a great number of factors driving that trend, one is the need for supply chain flexibility. Today’s global supply chain presents a significant amount of risk, mostly due to the combination of geographically diverse supply chains and Just-in-time (JIT) manufacturing that results in low inventory levels. 

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How to manage effectively in the face of risk

Posted by MIT Sloan Executive Education - 3 years and 5 months and 26 days ago

With globalization comes increased risk and uncertainty in nations, environments, communities, and businesses. As growing complexity makes it more difficult to determine the source of risk in these complex systems, it also reveals the interdependent nature of risk within a greater ecosystem. New studies show the best way to manage an organization in the face of risk is to build resiliency—the ability to withstand, recover from, and maintain function through a crisis.  But in order to manage risk effectively, resiliency must be built into the entire interrelated system of an organization.

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Business success in the U.S. doesn’t guarantee international success

Posted by MIT Sloan Executive Education - 3 years and 7 months and 19 days ago

Today, companies large and small are expanding their operations globally for a variety of reasons: lower labor costs, the possibility of a skilled talent pool, and the anticipation of newer, more lucrative markets. However, just because a company is successful stateside doesn’t mean that success will automatically translate overseas.

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Mobile money on the rise

Posted by MIT Sloan Executive Education - 3 years and 8 months and 19 days ago

While the developed world continues trudging through a slow economic recovery, parts of the developing world’s economy are being rapidly transformed by a new form of disruptive technology: mobile money. Mobile money—a cash management service available on mobile phones or the internet—is having more than a moment; it’s making a profound impact, powerful enough to shift economies across country borders. Studying the impact of mobile money in its most successful beta launch to date in Kenya can teach us a lot about the impact and adoption of disruptive innovations within a country and beyond its borders. 

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