March/April 2014

India's Growing Education Market

The British Council's Education Intelligence in the United Kingdom recently surveyed more than 10,000 students from across India about their educational goals. The council's report "Inside India: A New Status Quo" notes that 67 percent of these students felt that having greater access to international higher education opportunities would help strengthen India's position in the global economy.

Forty-two percent of students surveyed noted that newspapers were their primary sources to learn about international study opportunities.

The report also predicts that the flow of Indian students to institutions in the rest of the world could begin to decrease in the years to come. As the Indian government places greater emphasis on improving the quality of and access to higher education, more students are opting to enroll in local institutions.

"For many years India has provided an increasing flow of international students to study destinations such as the U.K., the U.S., and Australia," says Elizabeth Shepherd, research director for Education Intelligence. "With the fluctuating trends in Indian students' overseas priorities and the expanding education sector in India, it's even more important to understand the factors driving higher education decision making."

With the United Nations estimating that India's population will surpass that of China by approximately 2028, the number of educational providers within India—both foreign and domestic—will continue to increase and improve in quality, says Richard Everitt, director of education and society for the British Council in India. "We are entering a new era where traditional flows are being disrupted for a number of reasons," he says. "The U.K. is the No. 1 choice for young Indians who want to study overseas, but there are new dynamics coming into play. U.K. universities may want to consider how they are demonstrating their quality, their value, and related incentives."

The report is available for purchase at

The Discouraged Worker Effect

During financial downturns, markets pay close attention to the unemployment rate. But just as important to an economic recovery is the "discouraged worker effect," which refers to the factors that lead some unemployed workers to give up their searches altogether, say Mark Kurt, assistant professor of economics, and Steve DeLoach, professor of economics, both of Elon University's Love School of Business in North Carolina.

Past research shows that the high cost of a job search, a poor likelihood of success, and an expectation of lower wages can drive the discouraged worker effect. Kurt and DeLoach wanted to learn how job search intensity also might be affected by distant macroeconomic shocks such as statewide mass layoffs, stock market fluctuations, and housing values.

The pair examined data from the U.S. Bureau of Labor Statistics' American Time Use Survey 2003-09, which asked participants to keep diaries of their daily job search activities. Kurt and DeLoach found that a 5 percent decrease in stock prices on the S&P 500 increases job search time by more than 4 minutes in a week. "While this appears small," the authors write, "recall that the stock market fell by about 50 percent in the first half of 2009."

Reports of mass layoffs in a person's state of residence lead to a decrease in search intensity, counteracting the effect of a stock market dip on a job search. A decrease in local housing prices, however, produces only a slight increase in search time, likely because information about housing prices is not so widely available. Ironically, large increases in stock market prices can lead to a decrease in job search intensity among the unemployed—a phenomenon Kurt and DeLoach call "the wealth effect."

These findings could have implications for policymakers, the authors write. Policymakers should take into account the effect of macroeconomic events on job search intensity as they consider changes in fiscal policy or tax reform.

"Discouraging Workers: Estimating the Impacts of Macroeconomic Shocks on the Search Intensity of the Unemployed" appears in the December 2013 Journal of Labor Research.

Boosting Happiness at Work

Several studies show that focusing too deliberately on achieving happiness can make people less happy. But those studies are based on short-term lab-based activities. Four researchers wanted to see what would happen if they asked people to focus on happiness over longer periods of time, in real-world settings.

The co-authors of a current working paper on maximizing happiness include Kelly Goldsmith and David Gal, assistant professors of marketing at Northwestern University's Kellogg School of Management in Evanston, Illinois; Raj Raghunathan, a marketing professor at the University of Texas at Austin McCombs School of Business; and Lauren Cheatham, a doctoral student in marketing at the Stanford Graduate School of Business in California.

In one experiment, researchers asked 217 employees at Amazon's Mechanical Turk, an online marketplace that connects businesses with workers, to focus on their happiness levels daily for a week. Each participant was placed in one of three groups. Each day, those in the "happiness maximizing" group answered the question "Did you do your best to be happy today?" Those in the "happiness monitoring" group answered the question "How happy were you today?" Those in the control group simply reported what day of the week it was.

The researchers found that those in the maximizing group reported significant gains in happiness at the end of the week, compared to the control.

Contrary to the findings of past studies, those in the "monitoring" group did not experience a decline in happiness—their levels stayed steady. The researchers speculate that "the negative consequences of happiness monitoring…may attenuate over longer time horizons."

In another experiment, the researchers divided 349 managers from seven Fortune 500 firms in the U.S. into maximizing, monitoring, and control conditions. Each day participants received an email between 4:00 and 5:00 p.m. with a query designed for their condition. The maximizing group again reported the greatest boosts in happiness. This time, the happiness levels of the monitoring group also improved over those of the control group.

To boost happiness in the workplace, companies may want to go beyond an annual review to discover what employees think of their jobs, say the authors. Instead, managers might send daily emails that ask employees what they did that day to find purpose in their work and to engage with the company.

"Happiness in the World: Focusing on Maximizing Happiness Makes People Happy" is available online at

The CEO Experience Trap

When companies hire new leaders, they most often place their bets on CEOs with plenty of previous experience. But according to a new study, a company might see better outcomes if it takes a risk and hires someone with little to no prior experience.

Burak Koyuncu of NEOMA Business School in France and Monica Hamori of IE Business School in Spain looked at data on CEOs who had been at the helm of S&P 500 corporations since 2005, tracking their performance for up to three years. They found that the average return on assets for those who had transitioned from one CEO position to another was 48 percent lower than for those who had no prior experience or who worked in different positions between CEO jobs.

In many cases, CEOs need more time to "unlearn" the approaches they used in their old positions. They often try to apply old solutions to new problems, says Koyuncu, "because they have developed fixed assumptions about how tasks should be done."

These findings don't mean that companies always should hire inexperienced CEOs. But the authors recommend that when companies hire individuals straight from other CEO positions, they place them in interim positions for a year or more to learn the nuances of their new companies before taking the helm.

"The greater the opportunity for acculturation, the greater the chance the company can avoid falling into the CEO experience trap," said Koyuncu.

"Experience Matters? The Impact of Prior CEO Experience on Firm Performance" is forthcoming in Human Resource Management.

Religious Neighbors Spark Good Behavior

Businesses headquartered in religious communities behave better than those that aren't, whether or not their leaders are religious. This is the finding of a study by Jeffrey Callen of the University of Toronto's Rotman School of Management in Canada and Xiaohua Fang of Georgia State University's Robinson College of Business in Atlanta.

The researchers analyzed data from the American Religion Data Archive, looking at the number of churches and rate of church membership in U.S. counties. They then looked at the number of account restatements and stock returns for U.S. companies. They found that companies headquartered in the most religious counties were less likely to conceal bad news—and, so, are also less likely to experience the stock price crashes that often follow the market's sudden discovery of bad behavior.

Callen notes that companies can pay a high cost if they're not upfront in a church-going community. "Where you have strong corporate governance, religion doesn't need to kick in," says Callen. "But where there is poor corporate governance, religion substitutes for it."

"Religion and Stock Price Crash Risk" is forthcoming in the Journal of Financial and Quantitative Analysis. A working draft is available at The paper reinforces a similar 2010 study by researchers Thomas Omer, Sean McGuire, and Nathan Sharp of the Mays Business School at Texas A&M University in College Station. (See "Religion Curtails Financial Fraud" on page 61 of the September/October 2010 issue of BizEd.)

Singapore's Gender Diversity Inches Up

Women's corporate board participation in Singapore is slowly but steadily increasing, according to the 2013 Singapore Board Diversity Report from the National University of Singapore's Centre for Governance, Institutions and Organisations (CGIO). In 2012, women comprised 7.9 percent of all board members for firms listed on the Singapore Exchange, up from 7.3 percent in 2011 and 6.9 percent in 2010.

However, Singapore still ranked behind other countries in the region, including Indonesia, where 11.6 percent of board members were women; Hong Kong, where 9.4 percent were women; New Zealand, 9.1 percent; China, 9 percent; and Malaysia, 8.7 percent. Six in ten Singaporean boards were still all-male.

The countries with worse representation included India (5.8 percent), South Korea (2.4 percent), and Japan (2.0 percent). The report also found that the presence of one woman on the board improved a company's return on equity and return on assets by small but statistically significant amounts (.33 percent and .32 percent, respectively). Companies with women board members also scored higher in corporate governance.

The report's authors include Marleen Dieleman, Meijun Qian, and Muhammad Ibrahim. The report is available at 0/images/CGIO/Report/ Singapore% 20Board%20_ Diversity_Report_%202013_ Final.pdf.