| ||||
John Maynard Keynes, in the concluding notes to his General Theory of Employment, Interest and Money, arguably one of the most important texts of the twentieth century, observed:
Practical men, who believe themselves to be quite exempt from intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
Keynes was himself a most prolific and persuasive academic scribbler, though much of his work was directly aimed at influencing economic policy and practice, so there is perhaps some apologetic and self-conscious justification behind this statement. However, it serves as a reminder to academics that their research and writing may, and probably should, eventually have practical applications. It also reminds people in the real world that they should take more than passing academic interest in academic research.
While the vocabulary and tools of academic researchers in a business school environment and people operating in the real world of business might be similar, their goals are quite different. Academic researchers need to examine data in bulk, over many years, and across many industries and countries, while business researchers need to examine individual firms in detail. Because they have different goals, academic researchers and business practitioners make use of different methodologies, resources, and tools. In the business school environment, however, it is often the case that tools of the real world of business must be adapted to the needs of academic research. Financial and economic databases are a case in point.
In years past, many business schools subscribed to a small core group of standard financial and economic databases and analytical software, among them: CRSP, COMPUSTAT, and CITIBASE for stock price, corporate financial, and economic data, respectively; and SAS, SPSS, MATLAB, MINITAB, and standard spreadsheet software for analysis. With the exception of spreadsheets, these were still predominantly server-based applications, and were in many instances designed specifically to support academic research. The databases, in particular, were easily amenable to the sort of bulk data analysis characteristic of academic research.
More recently, however, resources that have long been common on the desktops of financial analysts, traders, brokers, and executives have begun to migrate into the academic research environment. While we continue to have access to the databases mentioned above, Harvard Business School researchers now also have access to Bloomberg, DataStream, Spectrum, Primark, IBES, TAQ, and Execucomp. CRSP and COMPUSTAT (Research Insight) are now provided via CD-ROM rather than tape and with more convenient personal interfaces. Other analytical tools, such as Stata and Mathematica, have made inroads as well.
These additional resources have opened up new avenues of academic business research, but at the same time brought new challenges to those who provide the practical and technical support for that research. Perhaps most challenging is that many of these resources have been expertly designed for the sort of one-at-a-time, current-time-period analysis common to the workplace, and are therefore not well adapted to the kind of bulk historical analysis characteristic of academic research.
For example, Bloomberg and DataStream will easily generate time series data in spreadsheets and charts for the analysis of one or a few companies' financials, but it's not so easy to do the same for all of the companies in an entire industry or country. Another challenge faced by the researcher is that virtually every database has its own company identifier, which is often not consistent across databases or time periods.
The root of the problem in integrating these new resources into the academic environment is primarily that the aims and methods of applied academic research differ from those of applied business research. The bottom line for academics—publish or perish—depends on the discovery of broad trends and relationships across time and markets, while that for business people—profit or perish—is analytical insight into specific developments in specific firms and industries.
Academic researchers need to examine data in bulk, over many years and across many industries and countries, while business researchers need to examine individual firms in detail. It is important to realize that however much it might seem on the surface that academic research is divorced from immediate real-world concerns and practical applications, the general principles developed and taught in academia often prove eventually to be practical, useful, and influential.
· · · ·