Experimental feature

Listen to this article

Experimental feature

As students protest against proposed increases in university fees, research from academics in London and Germany comparing graduate taxes with tuition fees as a means of funding further education suggests that a tax is the better option.

Tom McKenzie, a research fellow at Cass Business School and Dirk Sliwka. a professor of human resource management at the University of Cologne, say that opting for graduate taxes rather than fees as a funding mechanism for higher education is a better funding model, especially if the revenue from the tax is paid directly to a graduate’s alma mater.

The duo say that a tax is preferable because it reduces risk for students, as well as acting as an incentive to encourage universities to improve their teaching and facilities.

“A tax paid back to the graduate’s alma mater would not only offer an affordable alternative to fees; it would also encourage universities to invest in teaching quality and help their students into employment upon graduation,” says Mr McKenzie.

The pair say that any proportional graduate tax on future income would also benefit students as it would allow more students to go to university as high-earning successful graduates would subsidise places for others.

However the writers note that whilst many students prefer the idea of a graduate tax on their future earnings, high ability students - those who are likely to be higher earners in the future prefer an upfront fee as they would expect to pay more tax than their less able peers later on.

Can there be order in chaos? If you are working in a dynamic and fast-paced environment, you might be forgiven for thinking that your boss is unlikely to make good strategic decisions when there is chaos all around.

However, the opposite could well be the case. Research from the Richard Ivey School of Business suggests that an unpredictable business environment may in fact force managers to increase their focus and make fewer erratic decisions.

Rob Mitchell, assistant professor of entrepreneurship at the business school at the University of Western Ontario, says that counter intuitively the dynamic the working environment, the less likely managers were to blunder and make poor decisions.

“What’s most intriguing to us is that dynamism actually leads to stability, even when the environment is also hostile.

“Instead of hurting decision making, dynamism improves it,” says Prof Mitchell.

With Dean Shepherd, professor of entrepreneurship at the Kelley School of Business, Indiana University and Mark Sharfman, professor of strategic management, Price College of Business, at the University of Oklahoma, Prof Mitchell looked at 2,048 decisions made by 64 chief executive officers of technology companies. They anticipated that the fast-paced working environment, full of distractions, would have contributed to erratic decisions. However, this was not the case.

The writers suggest that managers might develop the knack of tuning out distractions around them so that they can concentrate fully on the decision in front of them. The managers they said “simply fed on their experience to gain focus and improve their decision-making”.

However, in one area the researchers’ expectations were confirmed: when managers are in a hostile business environment then their decisions do become more erratic.

The researchers say tha ttheir findings have significant business implications. By knowing when a manager is likely to make erratic decisions for example suggestions can be offered so that managers know what to do in practice.

The paper will be published in an upcoming edition of Strategic Management Journal.

Get alerts on Business education when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article