March 6, 2003
Contact: David Lampe
Harvard Business School
(617) 495-6336
Understanding European Business Community is 'Vital,' says Dean Clark
PARIS -- March 6, 2003 -- Harvard Business School (HBS) officially opened the European Research Center (ERC) in Paris today with a research conference and gala dinner attended by over three hundred guests, including European business leaders, academics, and alumni.
"Harvard Business School has long had a global vision," said Dean Kim B. Clark, who attended the opening. "The scale of the European economy, the vitality of its business community, and the political and economic changes taking place - all these factors raise issues important to our faculty and students. The research and case development work they carry out at the European Research Center will strengthen the depth and diversity of the HBS curriculum."
Thierry Breton, chairman and CEO of France Telecom welcomed Harvard Business School's decision to open a research center in Europe in an after-dinner speech. Howard H. Leach, U.S. Ambassador to France, spoke at the conference lunch. HBS faculty and European business leaders came together at the conference to explore key issues affecting the region's economy, including:
- Changing financial markets and the evolving mutual funds industry
- Executive compensation and succession
- Entrepreneurship in Western and Eastern Europe
HBS Professor Peter Tufano moderated a panel discussion on why some European countries have adopted mutual funds widely while others have not. While the growth of European Fund Centres in Dublin and Luxembourg show that the fund industry spans national boundaries, the countries that have thriving fund industries are those with effective laws and regulation, a competitive banking sector, and a wealthy and educated population, Tufano noted.
In the session on executive compensation, HBS professors Brian J. Hall and Rakesh Khurana noted that the globalization of executive labor markets "should" push CEO salaries toward convergence world-wide, but this process is still in the early stages in Europe and elsewhere. Executives in global companies have a 12% pay premium over those in non-global companies, the professors pointed out. In particular, German and British executives who head international companies are increasingly demanding salaries similar in scope to those of their higher-paid American counterparts, Hall and Khurana said.
While examining data on nearly 4 million firms in 33 European nations, HBS Professors Paul Gompers and Josh Lerner found significant differences between entrepreneurship efforts in Western and Eastern Europe. While greater legal fairness (less corruption) and more legal formalism (i.e., the rule of law) is associated with more entry in Western Europe, exactly the opposite result holds in Eastern Europe, said Gompers and Lerner. They noted that the "rent seeking entrepreneurship" of emerging economies both calls into question policies that blindly encourage entrepreneurship and highlights the need to focus on legal institutions, enforcement, and protection of property rights.
Building on the previous success of the School's Asia-Pacific Research Center in Hong Kong and the Latin America Research Center in Buenos Aires, which opened in 1999 and 2000, respectively, the ERC will enable Harvard Business School faculty to study more effectively one of the world's most important economic regions during a time of significant transformation. Topics of interest range from the challenges of economic and financial integration and the management of cross-border mergers to policy-making issues and the impact of new technologies and developments in the life sciences.
Vincent Dessain, a member of the Harvard Business School MBA Class of 1987, has served as ERC's executive director since the Center's "soft" opening last spring. A Belgian-born lawyer fluent in five languages, he has extensive experience in business and higher education throughout Europe, most recently as a senior director in charge of corporate relations at INSEAD. "Field work at HBS means broad and extensive international activity," noted Dessain. "The ERC will help engage the expertise of business and academic leaders in the region, and enable the faculty to develop and test their ideas within a global framework."
Although the European Research Center will provide unprecedented on-site resources for HBS faculty, the School has had close ties to Europe for many years. One-third of Harvard Business School's international MBA students (who represent nearly 70 countries and comprise 37 percent of the student body of 1,800) are European. Nineteen HBS Alumni Clubs are located in the United Kingdom and the Continent. Twenty-five percent of the School's more than 200 faculty members travel to Europe each year to do research, according to Professor Dwight B. Crane, chair of the European Research Initiative, who points out the advantages of being able to compare business differences across regions.
"The technology industry is among those evolving in distinct ways," said Crane. "In the telecommunications arena, for instance, the European market is more focused on wireless devices than is the case in the United States."
Harvard Business School alumni and friends throughout Europe, many of them leading executives, have offered their expertise and experience to help HBS establish the new center. A number of them have also formed a European Advisory Board, headed by Lukas Muehlemann (Harvard MBA 1977), chairman and CEO of the Credit Suisse Group.
In addition to providing opportunities for many new projects, the European Research Center will contribute to several major HBS research efforts already underway, including:
- Development of Technology Industries: a comparative study of how new technology industries, such as biotechnology and semiconductors, develop in European countries
- Global Account Management: an analysis of firms' approaches to global management in Europe and around the world
- Global Corporate Governance Project: a study of the implications for corporate governance models of the introduction of the Euro, the growth of international finance markets, and the globalization of industries
- Modern Giants Project: a study of management practices at large multinational firms in Europe, Asia, and the United States
- Privatization in Europe: a study of the market infrastructure that contributes to a successful privatization and the management challenges faced by newly privatized companies.
Like the other HBS international research centers in Hong Kong (with a satellite office in Tokyo) and Buenos Aires (with a satellite office in Rio de Janeiro), the European Research Center is a means to one important end, Professor Crane emphasized. "Its mandate is to be a hub for developing new ideas - new intellectual content and capacity - in all of Europe."
Founded in 1908 and located on a 35-acre campus in Boston, Harvard Business School offers full-time programs leading to the MBA and doctoral degrees, as well as a portfolio of more than 40 Executive Education programs. With a faculty of more than 200 distinguished scholars, the School aims to shape the practice of business by building enduring knowledge, educating leaders who make a difference in the world, and effectively communicating important ideas to meet the challenges and opportunities of the new millennium.
Learn more about Harvard Business School's global outreach in research and education.