Business & Entrepreneurship

GriggsEconomic implications of the American Airlines decision to dramatically reduce flights from its St. Louis airport hub will be among the topics discussed in a free public forum on the “Future of the Airline Industry” to be held on campus Oct. 31. The discussion is timely since it comes one day before American Airlines plans to cut its St. Louis airport daily departing flights from 417 to 207. Keynote speaker is Michael Levine, a professor of law and management who directed federal airline deregulation efforts in the late 1970s and served as an executive at Northwest Airlines until 1999. Jan Druecker of the University of Illinois presents analysis on economic impact of job losses in region.

“The recent strikes by grocery workers in Missouri, California and West Virginia are indicative of a general economic dissatisfaction that could potentially expand into a broader confrontation between labor and management,” says Neil Bernstein, an expert in labor law and legal issues relating to striking workers and a professor of law at Washington University in St. Louis, is closely following the grocery strikes.

KouvelisThe concept of hiring another company to handle “non-core” functions has been around since companies began. But it’s only been in the last several decades that the term “outsourcing” has been coined. Selecting which functions to be outsourced is as individual as each company and the goods and services it provides. Panos Kouvelis, a professor of operations and manufacturing management at the Olin School of Business at Washington University, says that it is often argued that outsourcing helps share risks with suppliers, but new risks enter the picture. “Often difficult tasks, if not appropriately managed, can get out of control,” Kouvelis says. “However, these are the tasks in which a firm can build competency and appropriate market value.” Kouvelis explains the pros and cons of outsourcing.

Troubling new evidence on corporate governance and CEO pay.In 1980, the average CEO was paid around 40 times as much as the average worker, but the multiple is now above 400 for the largest U.S. companies. With such increases in top executive pay, including New York Stock Exchange Chairman Richard Grasso’s $139.5 million retirement-pay package, an expert on executive compensation says that corporate governance practices should come under even greater scrutiny. Todd Milbourn, Ph.D., a professor of finance at the Olin School of Business at Washington University in St. Louis, has recently documented other troubling evidence with regard to the efficacy of corporate governance and CEO pay.

Joe Angeles/WUSTL PhotoSobelGlobalization is creating divisive tensions between developed and developing nations. Many fear globalization, blaming it for their societal ills. Yet, globalization has produced opportunity and improvements in social welfare for those nations able to take advantage of its benefits. Nations who fail to take full advantage of globalization may have only themselves to blame, according to a study in a forthcoming issue of the Journal of International Management.

The recent decisions by Oklahoma and Colorado federal courts invalidating the Federal Trade Commission’s “Do Not Call List” were major victories for telemarketing companies, “but a tragedy for the rest of us,” says Neil M. Richards, associate professor of law at Washington University in St. Louis. “Even with the quick reversal of the Oklahoma decision by Congress and President Bush, the Colorado decision remains a major roadblock for the List,” notes Richards. “The FTC and the Federal Communications Commission have been warned by Judge Harrington in Colorado not to go against his order, and Congress has no power to overrule the judge’s decision- they cannot change the meaning of the First Amendment as interpreted by the Courts.”

October Business, Law & Economics Tip Sheet

Forbes Magazine has ranked the M.B.A. program at the University’s Olin School of Business No. 12 among 67 U.S. business schools. The Forbes rankings measure best “return on investment” for M.B.A. graduates of the Class of 1998. For this year’s survey, Forbes sent out 18,000 questionnaires to full-time graduates of M.B.A. programs around the world. With a five-year gain of $120,000 over tuition and foregone salary, the Olin School jumped eight places, from No. 20 in Forbes’ last ranking of M.B.A. programs in 2001.

Students in the inaugural Executive MBA class of a joint program between the John M. Olin School of Business at Washington University in St. Louis and Fudan University School of Management in Shanghai, China, arrived in St. Louis on September 6 for two weeks packed with classes and celebrations. The 70 students from China completed their MBA degrees with a capstone two-week residency at the Washington University business school.

The U.S. Food and Drug Administration will collaborate with Assistant Professor Jeffrey T. Macher of the Robert Emmett McDonough School of Business at Georgetown University and Associate Professor Jackson A. Nickerson of the Olin School of Business at Washington University in St. Louis as part of its strategic initiative to modernize the regulation of pharmaceutical manufacturing and product quality. Under the terms of the material transfer agreement with the FDA, Macher and Nickerson will conduct research and analysis to help the FDA identify the factors that predict manufacturing performance to further refine the agency’s risk-based site selection model for inspections as well as its other efforts to target identified risks to pharmaceutical quality and strengthen its pharmaceutical compliance program.