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Smart utility meters drive down manufacturing costs – if managers use them

The willingness of managers to actually make use of the technology is a key driver in reducing energy consumption and related costs.

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A new study of the extent to which “smart utility meters” can improve energy efficiency in manufacturing finds that the willingness of managers to actually make use of the technology is a key driver in reducing energy consumption and related costs. The work also serves as a proof-of-concept for using “event system theory” – which has historically been used to understand the impact of unexpected phenomena – to tease out the practical effects of planned actions in the business community, such as adopting new technologies.

“We had two goals with this study,” says Patrick Flynn, corresponding author of a paper on the work and an assistant professor of human resources in North Carolina State University’s Poole College of Management.

“First, we wanted to see how effective smart utility meters are at reducing energy consumption in the manufacturing sector, and which factors of the implementation approach might play a role there,” Flynn says. Smart utility meters give real-time data about power consumption to manufacturing managers, which they can use to make informed decisions about how to operate more sustainably.

“Second, there’s a lot of work out there that makes use of something called event system theory, which is largely used to help us understand the ripple effects of unexpected events such as the COVID pandemic or a stock market crash,” Flynn says. “But we know there are a lot of proactive events in the business community where companies make changes intentionally. We wanted to see if we could adapt event system theory to help us more fully understand the knock-on effects of these proactive events.”

To address both of these questions, the researchers looked at data from 87 plants, all of which were owned by a Fortune 500 company that adopted an energy management system which made use of smart utility meters. The researchers collected data on power consumption for each factory in the year before the smart utility meters were installed and for the year after the smart meter installation was finalized. The researchers also had data on when the smart meter installation took place, how long it took for the installation to be finalized, and how often factory managers accessed data from the smart utility meters.

“The first finding here is that, broadly speaking, the smart utility meters were a success,” says study co-author Amrou Awaysheh, OneAmerica Foundation Endowed Chair and associate professor of operations and supply chain management at Indiana University’s Kelley School of Business. “On average, energy consumption dropped by 7.46% across all of the factories. And the company saved more than $41 million per year in energy costs.”

However, the study showed there was significant variability from factory to factory, and that there were three variables associated with those differences.

“The strongest effect associated with greater energy savings was the extent to which managers accessed the smart meter data,” Awaysheh says. “In other words, our study suggests that people who actually used the data were able to achieve greater reductions in energy consumption. This is extremely important for managers.

“It isn’t enough to just invest in a new system,” Awaysheh says. “Managers need to make sure that system is being accessed and that behaviors are being changed as a result of the new insights.”

“The two other effects were less obvious,” Flynn says. “Factories that received the smart meters earlier also saw greater energy reductions. In addition, we found that the longer the installation process took, the more likely the factory was to have increased energy efficiency. And there was tremendous variation here, with some installations taking place in one month, while others took more than a year. Our hypothesis is that factories that experienced longer installation times were more likely to feel a greater sense of ownership of the smart meters and their potential.”

“Our work also helps demonstrate the viability of these types of investments for sustainability,” says Awaysheh. “The Department of Energy and policymakers around the globe want to increase investments in these kinds of systems to help reach net zero goals. Thus, when companies see that there is a financial benefit to investments in these types of systems, they are more likely to do so.”

The study also lays the groundwork for business researchers to go one step further.

“This work lays out a blueprint for how we can use event system theory to improve our understanding of any intentional change that a business makes, whether that’s installing a smart utility meter or adopting new human resources software,” Flynn says.

“Not only can event system theory help us understand the impacts that a proactive change had, it can also help us understand the impacts that a proactive change will have,” Flynn says. “And that means our research has greater potential for developing approaches that can help businesses thrive.”

The paper, “From Intent to Impact: A Proactive Event Approach for Amplifying Sustainability Across Time,” is published in the Journal of Management. The paper was co-authored by Amrou Awaysheh of Indiana University; Paul Bliese of the University of South Carolina; and Barbara Flynn of Fundação Getulio Vargas.

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Profit alone is a poor measure of success, study shows companies can look efficient while harming the planet

Firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

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Companies celebrated for strong financial performance may actually be inefficient once their environmental impact is taken into account, according to new research from the University of Surrey. 

The study, published in the European Journal of Operational Research, shows that firms that appear highly efficient at generating revenue can perform far worse when their environmental footprint are included in the calculation.  

To tackle this problem, researchers developed a new way to measure “sustainable corporate efficiency”, combining traditional financial metrics with environmental data such as energy consumption, carbon emissions and revenues generated from environmentally friendly products and services.  

Dr Menelaos Tasiou, co-author of the study and Senior Lecturer in Finance at the University of Surrey, said: “Businesses have long been judged on how efficiently they turn resources into profit. But if those profits come with large environmental costs, the picture changes completely. What we show is that true efficiency means generating revenue while also reducing the environmental damage caused by production. In other words, profitability alone can mask how wasteful a business really is when environmental costs are considered.  

The research analysed more than 2,800 publicly listed companies across 61 countries between 2010 and 2022, creating one of the largest global datasets measuring how sustainable companies are, when both financial performance and environmental impact are assessed together.  

The team combined company financial records, in alignment with the green economy (defined as a low carbon, resource efficient and socially inclusive economy), with environmental disclosures such as energy use and greenhouse gas emissions. They then applied a machine learning technique known as Convexified Efficiency Analysis Trees (CEAT) to estimate how efficiently companies convert resources into revenue while minimising pollution.  

Unlike older approaches, the method models the reality that production creates both desirable outputs, such as revenue, and undesirable ones, such as emissions. This allows companies to be compared on how well they balance profit with environmental performance.  

The results found a moderate link between financial efficiency and environmental efficiency, meaning many firms that are strong financially are not necessarily good at managing their environmental impact.  

The study also found large differences across industries and countries. Firms operating in sectors with high emissions, such as manufacturing and energy, often lagged behind leaders that were better at reducing carbon intensity while maintaining revenue.  

Dr Tasiou continued: “Measuring efficiency in this broader way can help investors, regulators and policymakers identify companies that are genuinely prepared for a low carbon economy. Stronger management capability plays a key role. Firms with more capable management teams were more likely to balance profitability with environmental responsibility, suggesting that leadership decisions can strongly influence sustainable performance.  

“As governments push towards net zero and investors scrutinise environmental performance more closely, companies that fail to integrate sustainability into their operations risk falling behind.” 

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