The Unintended and Indirect Effects of Performance Measurement and Regulation on UK Productivity: A Multidisciplinary Ov

1. The Unintended and Indirect Effects of Performance Measurement and Regulation on UK Productivity: A Multidisciplinary Overview Progress Report – Loughborough University Naomi Brookes

2. Presentation Structure • Research Objectives and Methodologies • Systematic Literature Review of Peer-Review Journals • ‘Grounded Theoretic’ Thematic Analysis of Trade Journal Article Abstracts • Desk-based research on policy initiatives • Thoughts on economic theories of regulation

3. Research Objectives and Methodology • I - To identify extant bodies of academic research on regulation or legislation within the field of engineering, technology and operations management. • Systematic Literature Review of Peer-Review Journals • II - To explore the actuality of legislative and regulatory impact at a sector/business level • ‘Grounded Theoretic’ Thematic Analysis of Trade Journal Article Abstracts • III - To identify and delineate policy initiatives aimed at legislative and regulatory efficacy • Desk-based research on policy initiatives

4. Problems of Terminology • What is an ‘unintended’ or ‘indirect’ effect? • dependant on the purpose of the original legislation • capture all effects • How does ‘UK Productivity’ decompose to specific sector and enterprise level MOPs? • leadtimes, product cost, rate of new product introduction(cost, duration of NPD), agility? • capture all • Capture whenever legislation/regulation does something to a specific sector or enterprise.

5. Presentation Structure • Research Objectives and Methodologies • Systematic Literature Review of Peer-Review Journals • ‘Grounded Theoretic’ Thematic Analysis of Trade Journal Article Abstracts • Desk-based research on policy initiatives • Thoughts on economic theories of regulation

6. Systematic Literature Review Search Terms • Chosen Journals:IEEE Transactions on Engineering Management; International Journal of Operations Management, International Journal of Production Research, Journal of Operations Management; Management Science; Omega; Research Technology Management ; Academy of Management Journal; Administrative Science Quarterly – All 3* RAE publications for TOM group at ABS. • Subject: Legislation, Regulation • Date Range: 1/1/2002 – current date Results • 5 articles => No extant body of research

7. Presentation Structure • Research Objectives and Methodologies • Systematic Literature Review of Peer-Review Journals • ‘Grounded Theoretic’ Thematic Analysis of Trade Journal Article Abstracts • Desk-based research on policy initiatives • Thoughts on economic theories of regulation

8. Grounded Theory Thematic Review For each publication: Identify a sample population of ‘trade’ magazines and journals Search within publication for ‘legislation OR regulation’ in defined time period Manually review abstracts to those that relate legislation/regulation to its effect Inductively categorise and analyse abstracts (c.f. grounded theoretic approach) Combine analysis with existing analyses to: - identify overall themes - identify potential case-study areas N.B. A ‘qualitative’ methodology

9. Journals Sample

10. (Very) Tentative Themes • Regulation/Legislation effects on Innovation • as a stimulator to innovation • as an inhibitor of innovation • regulation/legislation prompted by breakthrough product • Legislation/Regulation Geographic Differentials Effects • Inimical Effects of Regulation/Legislation • internal • supply chain • Effects of ‘Deregulation’ • market growth and consumer saving • other effects • Effect of Antitrust/M&A Regulation/Legislation

11. Regulation/Legislation effects on Innovation • Regulation/Legislation as a stimulator to innovation • Noise regulation leads to innovative features of A300B –B4 (F31) • New fastener solution developed in response to end-of-life legislation(E55) • US senior’s Medicare legislation leads to innovative Pharma marketing solutions (e.g. Novartis’ Care Plan, Pfizer’s Share Card) (PL8) • Pedestrian Safety regulations leading to innovative automobile design ( AEL4, E12) • Global market for energy and environmental catalysts to grow to $13bn (E43) • GE announce environmental industries central to business strategy(E23) • Strengthening of India’s Patent laws leading to increase in proprietary drug market(PL4) • Lack of regulation inhibiting introduction of in-flight mobile telecoms technology(F32) • etc.

12. Effects on Innovation contd. • Legislation/Regulation as an Inhibitor to Innovation • Regulation in Pharma leading to long product development leadtimes (e.g. EU paediatric drug testing)(PR67, PL6) • Drug pricing regulations inhibit R&D activity (PL49) • end-of-life legislation prohibiting the use of plastics and composites in vehicle design ( E34, AEL8) • Legislation/Regulation prompted by breakthrough product • VLJ single pilot operation(F24) • Regulation required for UAV(F27,28,29,33)

13. Legislation/Regulation Geographic Differentials Effects • Development of ‘platform’ modular designs for automobiles (AEL11) • Disappearance of ‘blockbuster’ drugs and greater market segmentation ( PR5, PL59) • France’s difficulty in attracting aerospace FDI despite Airbus effect(F26) • Moving flight-crew to ‘flags-of-convenience’ FTL locations(F14,F15) • Alignment of differentials to increase market size by Latin American Aerospace authorities( harmonisation of Part 145 regulations) (F17) • EU regulation to include carriers in emissions trading considered trade barrier by US(F21)

14. Inimical effects of Legislation/Regulation • Internal • FDA Part11 regulations will cost $12M per company (PR9) • FDA Labelling regulations will cause labelling information requirements to double(PR28) • CARB safety regulations leading to more on-board diagnostic testing(AER2) • 54%companies face fines over carbon dioxide emissions(E51) • Regulations on passengers rights in the face of cancellations placing burdens on LCC(F12, F40, F43,F44,F46) • regulation throttling the UK (AER9, E 47) • EU regulation on departure/landing fees building in cost for small UK airports(F35) • Supply chain • REACH implications for fine chemical suppliers to Pharma(PR25) • Redundancies in non-recyclable automotive components industry(E46) • EU legislation on corporate governance will prevent the spread of best practice(E50) • Use of steel instead of zinc fuel tanks in automobiles(E19)

15. Effects of ‘Deregulation’ • Market Growth & Consumer Savings • Introduction of Part 135 regulations allows commuter services in China(F1,F9) • deregulation of airlines in Taiwan(F45) • deregulation of air transport in Saudi Arabia (F5, F8) • passenger savings of 12bn euros pa on intra-European travel • removal of legislation will enable deep-sea mining( E57) • Other Effects • Increase in smaller and corporate jet markets (buying and leasing) (F1,F9) • leisure carriers moving to long-haul destinations because of competition from LCC ( F30) • effect of SES will be 200,000 new jobs and reduced carbon emissions (F6) • not enough pilots in Asia (in India and China in particular) (F10) • lack of aerospace safety infrastructure in China (F25) • relaxing emissions regulations helps employment in UK industry(E35)

16. Effects of Anti-Trust/’M&A’ legislation/regulation • Blocking of GE/Honeywell merger (F16) • Prevention of GSK operating pricing differential in EU • AstraZeneca fined 60M euros for abuse of patent legislation(PL65, PR36)

17. Potential Case-Studies • Cross-sectoral impact of REACH legislation • Impact on fasteners design and manufacturers in the light of ‘end-of-life’ regulations • Effect of legislation and regulation on automobile design

18. Presentation Structure • Research Objectives and Methodologies • Systematic Literature Review of Peer-Review Journals • ‘Grounded Theoretic’ Thematic Analysis of Trade Journal Article Abstracts • Desk-based research on policy initiatives • Thoughts on economic theories of regulation

19. Policy Initiatives • UK Government • Better Regulation Commission (www.brc.gov.uk) • Better Regulation Task Force • European Commission's Communication for ‘Better Regulation for Growth and Jobs in the European Union’ • World Bank Report on ‘Doing Business in 2006: Creating Jobs’

20. Presentation Structure • Research Objectives and Methodologies • Systematic Literature Review of Peer-Review Journals • ‘Grounded Theoretic’ Thematic Analysis of Trade Journal Article Abstracts • Desk-based research on policy initiatives • Thoughts on economic theories of regulation

21. Regulations for Health and Safety c.f. Viscusi et al. • Discrete not Continuous Nature of Safety Improvements £ CX BX AX • indirect effects measured by some form of opportunity cost? safety level 100%

22. Porter and Linde(1995) • If well-designed environmental regulations can lead to improved competitiveness why can’t well-designed regulations and legislation per se improve competitiveness?