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TEN TAX TIPS FOR STUDENTS? [1]

Mark Morris La Trobe Business School Professor of Practice

By Mark Morris

Few student welcome the prospect of preparing and lodging an income tax return with the Australian Taxation Office (the ATO).

However, where the income tax deducted from a student’s job exceeds the total income tax payable for the tax year the only way in which a student can obtain a refund of overpaid tax is by lodging an income tax return.

Of course, other students will be legally required to lodge a return and pay tax where insufficient income tax been retained from their salary, or where they derive other categories of assessable income on which they owe tax.

We have developed ten tax tips to help you decide whether you need to lodge an income return for the year ended 30 June 2017, and how to prepare a return if you have too.

1. Are you an Australian tax resident?

The first step is to work out if you are an Australian resident for Australian income tax purposes.

If you were born in Australia and continue to live here, you will be regarded as an Australian resident for income tax purposes as this is the country in which you reside.

However, it is important for international students to recognise that being a resident for Australian tax purposes is quite different to being a permanent resident for Australian immigration purposes, and that they may sometimes unknowingly be an Australian tax resident.

Very broadly, an international student may be regarded as residing in Australia if they are here for such a period of time that their behavior reflects a degree of continuity, routine or habit that is consistent with residing in Australia.

Whilst it is a question of fact in each case as a broad rule of thumb the ATO takes the view that living in Australia for six months is a period of time which is generally consistent with a person residing here for tax purposes.

For example, in one of the ATO’s binding public taxation rulings it held that an overseas student who came to Australia to attend a pre-arranged 4-year university course was an Australian resident even though he left after 6 months to return to his home country following a family illness as his living and working arrangements whilst in Australia were consistent with someone whose pattern of behavior was that they resided in Australia[2].

Accordingly, if you are unsure whether you are an Australian resident for income tax purposes you should contact the ATO or a registered tax agent to obtain more clarity as to whether or not you are an Australian resident in working out your tax rights and obligations.

2. What happens if you are an Australian tax resident?

Assuming you are regarded as an Australian resident for tax purposes what are some of the key tax implications you need to consider.

On the plus side you will be entitled to a tax free threshold which will mean that you do not pay any income tax for the year ended 30 June 2017 if your total taxable income was $18,200 or less.

Accordingly, if you worked part time and derived salary income from which income tax was deducted by your employer you will be able to obtain a tax refund of any Pay As You Go (PAYG) tax retained from your salary income if your total taxable income was $18,200 or less.

In practice, most individual resident taxpayers will also usually be entitled to a tax credit being the low income tax offset which means that no tax will typically be payable if that person’s taxable income is below $20,542. However, the amount of this this tax offset reduces tax payable but is not in itself refundable.

On the negative side you will be subject to tax on all your assessable income for the year ended 30 June 2017 regardless of where it was sourced. For example, an overseas student would need to include both their Australian salary income and any interest income earned in a bank account held in their home country.

In addition, Australian residents are subject to a 2% Medicare levy but only where their taxable income exceed certain thresholds.

By contrast a non-resident is only taxable on assessable income which has an Australian source being generally locally derived investment income. However, such income will be subject to tax at a rate of 32.5% for any taxable income derived up to $87,000 as there is no tax-free threshold for non-resident individuals.

3. What do I need if I want to lodge a return for the 2017 year?

Most students who have been employed would have already been issued a tax file number which is a prerequisite for every individual lodging an income tax return.

If for some reason you are lodging a return but do not have a tax file number you will need to apply for one from the ATO either directly or by using a registered tax agent.

You should then collate all the records and information you will need to prepare you income tax return including, amongst others, any payment summary, bank interest statements, dividend slips, invoices and receipts.

Assuming you have a tax file number you may consider preparing and lodging your income tax return on-line using the ATO’s myTax product if your tax affairs are reasonably simple. Further details on myTax can be found here.

Otherwise it may be prudent to contact a registered tax agent to ensure you identify all your entitlements and to ensure that your income tax return is correctly prepared.

Regardless of how you lodge your return you will need to disclose full bank account details when preparing your income tax return if you expect to receive a tax refund.

4. What types of income need to be included in your return?

As discussed, as an Australian resident you will be taxed on all of your assessable income wherever it is derived.

Some of the more common types of assessable income include the following:

  • Salary and wages (whether as a full-time, part-time or casual employee);
  • Allowances and bonuses (where received during the 2017 income year);
  • Tips and gratuities (such as those received working in hospitality jobs);
  • Fees received as an independent contractor under a contract for service;
  • Any business income derived during the year (not being income derived from carrying on a hobby);
  • Australian government payments and allowances including, amongst others, Newstart allowance, youth allowance, AuStudy payments and certain other educational and training allowances;
  • Interest income;
  • Dividend income (including the amount of any franking credit tax offset for any franking credit attached to a dividend paid by an Australian resident company);
  • Any distributions received as a beneficiary from a family trust or as a partner in a partnership; and
  • Capital gains arising from the disposal of certain CGT assets (which is a highly complex area requiring specialist expertise).

The total of such assessable income may be reduced by eligible deductions which may take the form of work-related deductions, self-education expenses in certain circumstances and personal deductions.

5. What type of work-related deductions can you claim?

You may be entitled to claim a deduction for expenses directly incurred in the course of gaining or producing your assessable income. However, you will not be able to claim an outright deduction which is capital in nature although you may be able depreciate certain capital assets like a computer over time for tax purposes where it has been used for the purpose of gaining or producing assessable income. In addition, you will not be entitled to claim a deduction for expenditure which is private in nature such as the cost of conventional clothing (e.g. suits) purchased for work purposes.

Some of the more common types of deductions you may be able to claim are as follows:

  • Work-related subscription and union fees;
  • Protective clothing and certain work uniforms (including compulsory work uniforms required by your employer);
  • Home office expenses (where you are required to work at home after hours and have a separate room allocated in your home study for that purpose);
  • Employment related telephone mobile and internet costs; and
  • Travel expenses between worksites (but excluding travel between home and work)).

You may also be entitled to claim a deduction for the cost of tools of trade, briefcases and calculators costing less than $300 to the extent to which you use it for work-related purposes.

However, you will only generally be able to claim any work related expenses costing $300 or more if you have retained all the relevant invoices and receipts.

6. When are self-education costs allowable?

Broadly, self-education expenses are only deductible to the extent that the course of study undertaken will either maintain or improve your skills in your current occupation.

Accordingly, you will not be entitled to claim the costs of your course if you’ve not yet embarked on a particular career. Nor will you be able to claim such costs if you have decided to change careers and have incurred such expenses in studying a new area of expertise.

However, you will be able to claim a deduction for self-education expenses where the study or training you are undertaking is likely to enhance your chances of promotion or increase your income earning capacity in your existing occupation.

Further details as to when self-education expenses are allowable or not are set out in Taxation Ruling TR98/9 which can be downloaded here.

Eligible self-education costs include, amongst others, course fees, textbooks, stationary, travel costs and the depreciation of items such as laptops, tablets and printers. However, it is necessary to add back $250 of any self-education expenses as being non-allowable.

Finally, any Higher Education Loan Program (HELP) repayments are non-deductible.

7. What other personal deductions may be allowable?

Donations of $ 2 dollars or more to a deductible gift recipient (e.g. a charity like the Red Cross) will be allowable provided you have kept copies of receipts for any gifts made.

You can also claim a deduction for any fee paid to a registered tax agent during the year ended 30 June 2017 for the cost of managing your tax affairs. However, any amount paid to a registered tax agent to assist you in in preparing your 2017 income tax return will only be deductible in the year ended 30 June 2018.

8. What tax offsets can you claim?

Whilst tax deductions may reduce assessable income tax offsets are directly applied as a credit to reduce tax payable.

Certain tax offsets may also result in a refund to the extent that the tax credit exceeds tax payable.

The most common tax offsets that a student may claim include the beneficiary tax offset, the franking credit tax offset and the small business tax offset.

A beneficiary tax offset may be available where a student receives a Newstart allowance, youth allowance, Austudy payments and certain other Commonwealth education or training programs.

The calculation of this offset can be complex but this offset may not only reduce tax payable on the amount of Government benefits received but also assessable income received from other sources.

Further details on the beneficiary tax offset can be found here.

A resident company may pass on a tax credit for tax it has paid to shareholders when it pays such shareholders a franked dividend. Such a tax credit can be claimed as a franking credit tax offset which may also result in a tax refund where the franking credit exceeds tax payable.

Finally, where a student is also carrying on a business that individual may be entitled to the small business income tax offset for the year ended 30 June 2017 being 8% of the income tax payable on the portion of an individual’s taxable income that is ‘total net small business income’ provided the aggregated turnover of the business is less than $5million.

However, an individual is only able to claim one small business tax offset for an income year irrespective of the number of sources of small business income derived by that individual and the maximum amount of the offset is capped to $1,000 per year. The application of this offset is also quite complex and specialist advice should be sought if you intend to claim it.

9. What are some of the potential traps to watch out for?

There are special rules to discourage adults from splitting income with their children (i.e. minors) aged under 18 at the end of the year unless that minor is engaged in a full-time occupation, receives a carer allowance, disability support pension or double orphan pension or a person who is disabled or a beneficiary under a special disability trust.

Where the minor is subject to these special rules, penalty tax rates apply to such children receiving dividends, interest, rent, royalties or a family trust distribution.

Where such income is between $417 and $1,307 tax will be paid on the excess of income over $416 at a rate of 68% whilst any amount of such income in excess of $1,307 will be subject to tax at a rate of 47%.

10. Where do I go for help?

If you believe that you required to lodge an income tax return or that you may wish to lodge a return in order to obtain your tax refund, you may wish to either contact the ATO or look at their website for more details at www.ato.gov.au

Should you want to get independent tax advice then try to locate an accountant who has the tax expertise to makes sure you lodge a correct income tax return but make sure that the accountant is also a registered tax agent who has been legally authorised to provide such services.

And if you are entitled to a tax refund go get what is yours!

[1] Latrobe University has used reasonable care and skill in compiling the content of this general commentary. However, it should not be relied upon as advice in any circumstances, and no warranty is provided by either the University or the author concerning the accuracy and completeness of these materials. Accordingly, they disclaim all and any liability to any person in respect of reliance on any of the matters raised in these materials, and professional advice should be sought from an appropriately qualified registered tax agent where required.

[2] Refer to Example 8 of Taxation Ruling TR98/17.

Simmons journey takes him from UAE to Vicsport

Randall2.jpg

Simmons is loving his role as the Events and Administration coordinator at Vicsport.

After living in the United Arab Emirates for most of his childhood, La Trobe Bachelor of Business (Sport Management) graduate Randall Simmons took a chance and moved to Australia’s heartland of sport to pursue a career in the industry.

“I selected La Trobe because of the quality of its Sport Management course, and the opportunity to learn about sport management in the capital of sport was hard to pass up on.”

Gaining expertise with organisations such as Melbourne City Football Club, Carlton Football Club, the Victorian Olympic Council and the North Melbourne Football Club, Simmons made an immediate impact.

Simmons performed duties in a number of roles and across various departments including hospitality, delivering community programs and volunteer training.

“When I moved to Melbourne, I made a conscious decision to get as much sport experience as possible before I graduated.”

“By volunteering in these organisations I was able to gain the experience which most organisations in sport look for and this helped me land a full time role.”

“Sporting organisations look to employ people who have worked in the industry, volunteering is a big box to tick.”

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Randall completed placement at the Carlton Football Club as part of the Sport Management practicum.

The skills Randall gained in these positions assisted him to secure employment as the Events and Administration coordinator at VicSport immediately after his degree.

The La Trobe graduate was among a wave of applicants for the position, including many from the same graduating cohort as his own.  Upon reflection, Randall says it was his volunteering, internships and tailored course work that set him apart from the rest.

“The Bachelor of Business (Sport Management) degree was designed to give us real world experience of what is happening in the industry.”

“From Sport Marketing to Sport Governance, I have been able to take certain aspects from all my subjects and apply it to my role and in my organisation.”

LTU Volunteer 2
Randall’s performed duties across a number of departments while volunteering at the Melbourne City Football Club.

By studying a Bachelor of Business (Sport Management), you could work with La Trobe’s network of sporting partners such as the Carlton Football Club, Melbourne Rebels and Melbourne City Football Club.

This post was originally published on the La Trobe University Intern Diaries Blog.

LBS Researchers attend the International Conference on Responsible Marketing at XLRI

1st row L –R: Marthin Nanere, Tata L. Raghuram, P. Venugopal, Timothy Marjoribanks, Clare D’ Souza, (Ms), Sanjeev Varshney, Supriti Mishra, Vinay Kanetkar
2nd row L – R: Shubhangi Salokhe, Suchita Jha, Sasmita Dash, Ms. Anne Renee Brouwer, Mr Anabel Benjamin Bara, ShabbirHusain R.V., Bharti Varshney,
3rd row L – R: Aniruddha Chatterjee, Shaunak Roy, Peter Mathies, Ashok Prasad, Jubin Jacob John, Pranay Kumar Singh, Arvind Selvaraj, Pratyush Ranjan

XLRI- Xavier School of Management (Jamshedpur – India) in collaboration with La Trobe Business School, organised the International Conference on Responsible Marketing’ on January 23-24, 2017. XLRI is also a PRME (Principles for Responsible Management Education) signatory and in 2015-16 was ranked 4th among the prestigious 91 business schools in India. The Chairs of this conference were Prof. Pingali Venugopal, and Prof. Sanjeev Varshney from XLRI. It was co-chaired by staff from the La Trobe Business School, Associate  Professor Clare D’Souza, Professor Timothy Marjoribanks and Associate Professor Suzanne Young.

The conference invited researchers and practitioners to share their understanding on Responsible Marketing and provided a forum to engage in ideas, new directions and create innovative practices that impact responsible marketing. Discussions evolved around the theoretical underpinnings of the multi-dimensional nature of sustainability, responsible marketing, ethical issues, knowledge and behaviour towards sustainable consumption.

The 56 papers presented at the conference came from different business schools in India, Australia, USA, Canada and Pakistan.  It brought together a strong network of connections and provided a platform for researchers and practitioners to explore future strategies in the area. Indeed! it stirred up the ‘responsibility revolution’ for local businesses.

Fr. Abraham (SJ) gave the welcome address (centre). Mr. Anand Sen (second left) inaugurated the conference. There was some discussion around XLRI activities which was given by Prof. P Venugopal (second right).

Fr. Abraham (SJ) gave the welcome address. Mr. Anand Sen (President, TQM and Steel Business, Tata Steel) inaugurated the conference. In his address, Mr. Anand Sen highlighted the need to advocate responsible consumption and decrease wastage. There was some discussion around XLRI activities which was given by Prof. P Venugopal.

The key note addresses were given by Fr. Oswald Mascarenhas, S.J. (JRD Tata Chair Professor of Business Ethics at XLRI), who addressed the topic of “Responsible Marketing in a Turbulent market” and Mr. B. Hariharan (Vice President, ITC Hotels) who described how ITC is “Designing & Marketing Responsible Luxury”.

Professor Timothy Marjoribanks giving the keynote address.

Professor Timothy Marjoribanks (Associate Head of La Trobe Business School) keynote speech addressed the conference theme, as well as the profound role and reflection of LTU’s business school activities.  He captured the essence of PRME, a core tenet of sustainability and highlighted LTU’s position of strength by being the first PRME signatory in Australia.  His address was infused with a sense of optimism for responsible marketing. He emphasized that such opportunities for dialogue, research and collaboration with XLRI make important contributions to our common endeavor of fostering partnerships and attaining goodwill. Furthermore, cross country collaboration results in a vortex of ideas and outcomes that is highly significant.

LBS PhD students, Mr. Peter Matheis (left), Ms. Anne Brouwer (center) and Mr. Jubin Jacob John (right)

LBS PhD students, Mr. Peter Matheis (left), Ms. Anne Brouwer (center) and Mr. Jubin Jacob John (right)

Three of our enterprising PhD students, Mr. Peter Matheis, Ms. Anne Brouwer and Mr. Jubin Jacob John presented their work at this conference. Peter’s work hinges around ethical consumption and sustainability, where he explores the mechanics of ethical behaviour of consumers and examines the complexities of the intention-behaviour gap. Anne’s paper on greenwashing and its influences on consumer decision making offered great practical insights on how to effectively identify greenwashing.  Jubin’s work resonates on institutional pressures for responsible supply chain procurement. The scientific efforts in the supply chain procurement identifies ISO 14000 standards to induce greater systemic efficacy. They were interesting papers, addressing emerging new knowledge that pioneers in scholastic and research fields within this area can use some of these theoretical underpinnings to expand their work.

Dr Marthin Nanere

Is Green Marketing – a Myth, a Fallacy or Prophecy? Several authors have provided a critique of both theory and practice on green marketing. Dr Marthin Nanere from the Business School presented his discussion around green marketing and showed how eco-labels, can contribute to progress towards greater sustainability. Taking eco labels into account and integrating it with the principles of green marketing provide opportunities for gaining competitive advantage. His paper makes a meaningful contribution to the field of responsible marketing.

In addition to the conference, there was a two-day Faculty Development Program on Responsible Marketing to help faculty and doctoral students develop curriculum and cases for teaching Responsible Marketing. In the photograph below are the participants and members of the Faculty Development Program.  The Faculty Development Program was conducted by faculty from XLRI and La Trobe University. Both days had highly stimulating sessions that concluded in awarding the best team a prize for their outlined curriculum.

The buzz surrounding the conference, the sessions featuring practitioners and how they approach responsible marketing, the academic debates on responsibility and ethics whetted the audience’s appetite. La Trobe staff and students were proud to be part of this amazing conference as engaged and valued members.

Professor Muhammed Yunus has officially opened the LBS Yunus Centre!


On 7 April 2017, Professor Muhammad Yunus visited La Trobe University. In a ceremony held at La Trobe’s Hoogenraad Lecture Theatre, Professor Yunus received an Honorary Doctorate from Vice-Chancellor Professor John Dewar.and officially opened the Yunus Social Business Centre at La Trobe Business School.

Attendees included of key stakeholders including the La Trobe Business School staff, members of the business community, stakeholders and collaborators of the LBS Yunus Social Business Centre, and the La Trobe Asia community.

Professor Muhammad Yunus was welcomed with a song by the three social businessmen: Rafiuddin Ahmed, Marthin Nanere and Petrus Usmanij.

Yunus centres and the three zeroes

During the ceremony, Professor Yunus spoke about social business and ‘unleashing the potential’. Professor Muhammad Yunus is widely known for his progressive theories surrounding microcredit and for founding Grameen Bank, an innovative institution which has enabled impoverished entrepreneurs to access an affordable loan scheme and start a business. Through social business, Professor Dr Yunus has set out to create a world with three zeroes: zero poverty, zero unemployment and zero carbon emissions through social business. “All humans are entrepreneurs,” Dr Yunus said during his presentation. “If you can think of a problem to solve through a business you can set up that can get five people out of welfare, your effort is already worth it.”

Through Yunus Centres around the world, Professor Yunus wants to encourage young people all over the world to test out their business ideas through a microloan, and create a better society.

7th Social Business Day

From the 28 – 29 July this year, the Dhaka Yunus Centre will be hosting the seventh global Social Business Day, bringing together over 1500 people from over 60 countries. The theme of this year’s Social Business Day will be wealth concentration, and whether this concentration be stopped, and how social business can create a viable business-engine to address the huge wealth gap in society.

For more information on the Yunus Social Business Centre at La Trobe Business School, see the La Trobe Business School Yunus Centre website.

To be connected with the students Social Business Club, activity and events please join the Facebook page, or see the Social Business Club website.

Contact the Yunus Social Business Centre via email.

For more information on Professor Dr. Muhammad Yunus, keep an eye on the La Trobe Business School blog.

POP Mark Morris interviews Leigh Conlan: Career change is the only constant (or Doors a Latrobe Economic Degree can Unlock)

In this two-part blog entry, Professor of Practice Mark Morris discusses what innovation means in accounting, as well as what a career in accounting entails today, together with Leigh Conlan from Specialist Accounting Services. Leigh is also a La Trobe Business School graduate graduating in 1982 with a Bachelor in Economics.

Mark Morris: II understand that you are an alumni of La Trobe University

Leigh Conlan: Yes Mark, I studied economics and graduated in 1982 from La Trobe University. Following the completion of my degree with La Trobe, I was able to branch out into a variety of roles in both the public and private sectors.

Mark Morris: It seems these days that university graduates these days don’t have a job for life. Can you share with me your experience in relation to changes in your career?

Leigh Conlan: Absolutely. I have been fortunate to work for a number of organisations in a variety of capacities including accounting, economics, tax advisory, legislative analysis, and R&D consulting. I started out as a tax investigator with the ATO which was interesting work for a graduate as it allowed me to get a great perspective on private enterprise and in particular smaller organisations where accounting and the law intersect. Following this role, I transitioned to the ACCC which was then the Trade Practices Commission where I was heavily involved in litigation and policy objectives. What I found interesting in this role was, more specifically, price fixing collusion and conspiracy activities and investigations.

Mark Morris: So you were a corporate cop Leigh?

Leigh Conlan: Yes, essentially.

Mark Morris: And then you came over to private enterprise?

Leigh Conlan: That’s right, I came over to the dark side and started consulting in private enterprise. I worked for a number of big firms and was a partner of one of the larger accounting firms in Australia before I started my own practice.

Mark Morris: And what has your experience been like in respect of changes in roles?

Leigh Conlan: What I have found is that there is nothing wrong with a change of career and that change should always be embraced. In these modern times it is not only organisations that need to be agile and adaptive but this also applies to employees and individuals. To a certain extent change and being adaptive is a part of Australia’s history. Automation, fast changing technological and geopolitical changes will dictate market behaviour and employment opportunities.

Mark Morris: So how do you keep abreast of new developments in government policy and public-private collaboration?

Leigh Conlan: Well I am a member of the National Reference Group which is a peak body of private practitioners, the ATO and AusIndustry. I represent the CPA’s on that group which me enables to interface between public policy developments and issues from industry. I am also a member of the State Reference Group which provides further practical application.

Mark Morris: I gather that your ability to adapt and change led you to starting your accounting practice?

Leigh Conlan: Correct, I started Specialist Accounting Services a number of years back with a focus on providing high quality services in the fields of indirect tax and R&D advice.

Mark Morris: Can you tell me a little more about Specialist Accounting Services and how you differentiate yourselves against other service providers in this space?

Leigh Conlan: Sure. We differentiate ourselves by being an organisation which has the expertise across a range of industries relating to R&D. Specialist Accounting Services also employs a range of specialised technical consultants from the engineering and bio medical fields to leverage expertise in accordance with clients in these respective fields. This enables a better understanding of our clients’ needs and enables a smooth process through the R&D tax application process. This also empowers us to have a nurturing a close and positive working relationship with our clients. We also carry out services in respect of litigation support and competition policy assistance. Lastly, we provide a high quality service enabling our clients to receive a beneficial tax outcomes in accordance with the government legislation and the AusIndustry framework.

Mark Morris: Well, thank you for your time today Leigh. It has been a pleasure talking with you

Leigh Conlan: It was my pleasure. Thanks Mark.

Competing theories of economic thought: a changing pedagogy?

Dr Mark Cloney, Professor of Practice, Economics

Dr Mark Cloney, Professor of Practice, Economics

By Mark Cloney

Mark Cloney is a Professor of Practice at La Trobe Business School. In the following piece, POP Mark Cloney observes that economic theory has been a bit slower than other sciences to catch up to the changing nature of knowledge and the dynamics of the knowledge-based global economy [1]

He argues in the following entry that this has implications doe the discipline in terms of its capacity to engage with contemporary economic challenges, and also raise questions about the teaching of economics.

Capitalism has variously been described as an economic system with private or corporate ownership of capital goods; where investments are determined by rational decision makers and supply and demand; and production and the distribution of goods determined mainly by competition in a free market. These microeconomic foundations stem from neoclassical economics through the writings of economists such as Marshall [2].

Marshall’s Principles of Economics (1890) formalised the move from labour to utility as the source of value: a commodity’s value came from its utility to consumers through the forces of the market (i.e. supply and demand) [3]. Accordingly, in the marketplace people are rational and utility maximisers characterised as households, consumers or economic agents. These concepts were formalised in pure mathematical form in the general equilibrium model by Arrow and Debrea (1954) based on Walras’s earlier theory of equilibrium [4].

This general equilibrium model has formed the basis for economic thinking in most Western economies and university teaching of economics for the last 60 years or so.

So microeconomics analyses, the market behaviour of individual consumers and firms, is an attempt to understand the decision-making process concerned with the factors that influence the choices made by buyers and sellers, price, and supply and demand in individual markets. And, this is what drives innovation, economic development and firm behaviour in a globalised knowledge–based economy – or is it?

One of the problems with this perspective is that factors such as investment in research and development (R&D) or where actual research is conducted matters very little [5]. The traditional neoclassical view of knowledge as a public good  is that it is available everywhere and to everybody simultaneously which implies that innovation flows in a frictionless manner from producers to a full set of intended and unintended beneficiaries, contributing to generate a long-term process of convergence across countries and regions (see Rodriguez-Pose 2008). [6]

But what happens if competitive advantage in a global knowledge-based economy is as much actually determined by local non-market factors including its institutions, networks and innovation ecosystems? Or, by the forces of ‘collaboration’ not ‘competition’, or maximising ‘social and shared value’ not profits for stakeholders but for the community within in which firms operate? Do these orthodox microeconomic foundations still hold up?

The emergence of the knowledge-based economy, where knowledge, learning and innovation are the new drivers of economic growth and competitiveness, is premised on a distinct shift in the mode of production from the traditional capital and labour divisions to knowledge generation and diffusion [7]. This understanding of the knowledge economy comes from evolutionary, neo-Schumpeterian and economic geography economic theories. [8] Complementing this work are studies into the entrepreneurial society  and creativity where entrepreneur capital is a key driver for economic growth [9].

Internationally, innovation and regional development policy that focuses more explicitly on the ‘institutional’ and ‘locational’ dimensions of enterprise and socio economic development has emerged as a major policy tool to foster competitive advantage [10]. That is, there has been an increasing recognition by many that non-market factor influence competitiveness of firms just as supply and demand. So government policies have been designed to better coordinate collaboration structures in regions or local innovation ecosystems between government, education and the private sectors. Here local institutions including financial and legal support the supply side inputs and entrepreneurial activity that drives economic development and innovation [11].

These ideas support a range of alternative government policies targeted at small to medium business, industry clusters, business incubators and accelerators, strengthening institutional arrangements and networks, encouraging university/industry collaboration, local capacity building (including education, training and entrepreneur skills) and regional innovation ecosystems.

Consistent with these trends, Michael Porter and Mark Kramer (2011) [12] argue for the importance of creating shared value, which focuses on policies, collaboration and operation practice that enhances competiveness of a company while simultaneously advancing the economic and social conditions in the communities in which they operate. They cite firms such as Google, IBM, Intel, Jonson and Johnson, Nestle, Unilever and Wal-Mart as examples of companies that have embarked on shared value initiatives within the community’s where they operate. The notion of shared value changes the traditional emphasis on profit and price to a much broader definition.

Porter has suggested elsewhere that government policy, business and community processes (in other words institutional arrangements) are as important determinants of industry success as is ‘price’ [13].

The move to ‘shared value’ has seen the rise of B Corps which are for-profit companies certified by the non-profit B Lab to meet higher standards of social and environmental performance, accountability, and transparency. More than 1,400 Certified B Corps from 42 countries and over 120 industries are working together toward the goal: to redefine success in business [14]. B Corps meet high standards of verified social and environmental performance, public transparency, and legal accountability, and aspire to use the power of markets to solve broader social and environmental problems. In 2013 the United States introduced legislation to recognise this new type of corporate legal entity which has now been passed into law in 17 states [15]. Under this legislation companies must have a corporate purpose to create a material positive impact on society and the environment, director’s duties include consideration of non-financial stakeholders, besides shareholders, and it includes a reporting obligation on the social and environmental activities (verified through third parties).

Although in its relative infancy this movement is attempting to overcome market failures and treat as endogenous the negative externalities typically associated with the dynamics of neo-classical theory. This may or may not be a lasting trend, but what if it became the norm for firm behaviour and economic development in the knowledge-based economy?

What assumptions and economic theories can best capture these economic and policy trends and explain the broader social-political context shaping these ideas, firm behaviour and competitiveness? This is the real challenge for the next generation of economic theorists.

One of the major challenges for orthodox economics is that its theory is embedded in axioms that used to understand the world as largely stable and predictive, and which are now seen as unstable and largely unpredictable [16], as the Global Financial Crisis demonstrated in 2008.

Since the 1960s there has been profound advances in how other science disciplines understand and teach the systematic nature of botany, biology, physics, computer science, neuroscience, oceanography, and atmospheric sciences to name a few. As Liu and Hanauer (2016) [17] argue across these fields we have seen a set of conceptual shifts in understanding from: simple to complex; atomistic to networked; linear to non-linear; mechanistic to behavioural; efficient to effective; predictive to adaptive; independent to interdependent; individual ability to group diversity; rational calculator to irrational approximators; selfish to strong reciprocal; win-lose to win-win or lose-lose; and, competition to cooperation.

More contemporary economic theory such as complexity, evolutionary and behavioural economics [18] are incorporating these types of conceptual shifts and as such challenge orthodox economic theories. These contemporary approaches variously emphasise the actual motivations for firm and human behaviour, the importance of networks, ecosystems and endogenous processes, and the dynamics of constant innovation and disequilibrium as the basis for better understanding the empirical reality of the knowledge-based economy.

The remaining challenge is to design a new economic pedagogy (conceptual models and theories) to support the teaching of these alternative approaches and to incorporate them into undergraduate economic degrees.

 

 

Dr Mark Cloney

Professor of Practice – Economics

Department of Economics and Finance

La Trobe Business School

College of Arts, Social Sciences and Commerce | La Trobe University | Bundoora Victoria 3086

T: 03 9479 5621   |M: 0428173880  |

E: M.Cloney@latrobe.edu.au

[1] See Ngai-Ling Sum and Bob Jessop (2013) Competitiveness, The Knowledge-based economy and Higher Education, Journal of the Knowledge Based Economy, Vol.4 pp 24-44.

[2] See E.K. Hunt. (1979), History of Economic Thought; A Critical Perspective, Wadsworth Publishing

[3] Ibid

[4] John, Peters, John Elliott and Stephen Gullenberg (2002), Economic Transition as a Crisis of Vision: Classical versus Neo-classical Theories of General Equilibrium, Eastern Economic Journal, Vol.28, No.2, Spring 2002.

[5] Andre’s Rodriguez-Pose and Richard Crescenzi (2008), Research and Development, Spillovers, Innovation Systems, and the Genesis of Regional Growth in Europe, Regional Studies, Vol 42.1, pp51-63, February.

[6] Ibid.

[7] Mark James Cloney. (2003), Regional Development in Australia: Rethinking the Basis for Regional Policy, PhD Economics, University of Sydney & Maskell, P. and Malmberg, A. (1999), Localised learning and industrial competitiveness, Cambridge Journal of Economics, 23 (2):167- 185.

[8] Ibid.

[9] David. B. Audrestsch (2009), The entrepreneurial society’, The Journal of Technology Transfer, Vol. 34, Issue 3, June, pp. 245-254

[10] Giordano, B. (2001) Institutional Thickness: political sub-culture and the resurgence of regionalism in Italy a case study of Northern League in the province of Varese, Transactions of the Institute of British Geography, 26 (1): 25-41.

[11] Ngai-Ling Sum and Bob Jessop (2013), p. 32.

[12] Michael E. Porter and Mark R.  Kramer (2011) The Big Idea: Creating Shared Value, Rethinking Capitalism, Harvard Business Review, Jan- Feb – https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/pr

[13] See Michael Porter (1990) The Competitive Advantage of Nations, McMillian Press, Hong Kong.

[14] http://www.bcorporation.net/what-are-b-corps

[15] Gove, Andrea; Berg, Gary A. (2014), Social Business: Theory Practice, and Critical Perspectives, Springer-Verlag Berlin and Heidelberg GmbH & Co.p165.

[16] Eric Liu and Nick Hanauer (2016), Traditional Economics Failed. Here’s the New Blueprint’, http://evonomics.com/traditional-economics-failed-heres-a-new-blueprint/

[17] Ibid

[18] Amna Silim (2016), What is New Economic Thinking? Three strands of heterodox economics that are leading the way, https://evonomics.com/new-economic-thinking/

POP Mark Morris interviews Leigh Conlan: Supercharging R&D and collaboration

Professor of Practice Mark Morris (left) and Leigh Conlan (right)

In this two-part blog entry, Professor of Practice Mark Morris discusses what innovation means in accounting, as well as what a career in accounting entails today, together with Leigh Conlan from Specialist Accounting Services. Leigh is also a La Trobe Business School graduate graduating in 1982 with a Bachelor in Economics.

Mark Morris: I am pleased to introduce Leigh Conlan of Specialist Accounting Services to discuss the recent government innovation statement and incentives that the government has introduced for both private and research organisations in respect of R&D. Leigh, Good morning.

Leigh Conlan: Good Morning Mark.

Mark Morris: Now Leigh, I understand you run a consultancy practice in the R&D space and you advise a broad range of clients.

Leigh Conlan: That’s correct Mark, we run a specialist practice service and in fact, operate under a company name Specialist Account Services Pty Ltd.

Mark Morris: That’s great Leigh. Tell me about some of your clients.

Leigh Conlan: Well we advise a range of clients from small medium enterprises through to large corporations and government departments. We offer a professional assistance to all businesses and research providers in the matters of R&D tax incentives and government grants

Mark Morris: That’s a good segue into my next topic which is around the innovation statement released by the government. What do you think the government’s approach is in this regard Leigh?

Leigh Conlan: As you know Mark, the innovation statement is built on four key pillars but it is important to keep in mind Mark that this is the first time that there has been a comprehensive tying together of all of the research and development governmental policy objectives.

Mark Morris: So can you provide some further insight into the four pillars that the government has outlined in the innovation statement

Leigh Conlan: Well briefly speaking these four pillars as outlined in the National Innovation and Science Agenda statement being ‘Culture and capital’, ‘Collaboration’, ‘Talent and skills’, ‘Government as an exemplar’. Within these pillars are specific areas that the government is targeting. For example the government has set up a $20Billion Medical Research Fund to increase funding in the areas of medical research and innovation. Another example, which may relate to La Trobe, is the government R&D funding of $2.8Billion to universities and the higher education sectors. There are also other funding initiatives such as cyber security innovation and other IT projects the government has initiated. These overall projects form only a snapshot of government funding examples but provides a glimpse of the overall innovation policy and where the government is heading in respect of stimulating research and development.

Mark Morris: So what is the majority emphasis of the government funding Leigh?

Leigh Conlan: Well Mark, the big spend by the government is still the R&D tax incentive which equates to just over $4.5Billion per annum. While the majority of that money goes into business, it should be kept in mind that research service providers also greatly benefit from this policy and there are valuable private business spinoffs from research organisations.

Mark Morris: When you talk about R&D, it’s not all lab coat style research projects is it?

Leigh Conlan: Not at all. We see R&D in areas where you would not ordinarily think that R&D would apply. Research and Development takes place in a variety of forms and industries. Some examples may be building and construction, on farms and of course software development. We have come across a number of private organisations, particularly those which are small scale, which were under the misconception that many of their activities would not be considered R&D when in actual fact they may be.

Mark Morris: Can you talk a little more about such products and processes in this regard?

Leigh Conlan: Well, many organisations are undertaking the development of products using a scientific methodology to determine outcomes and therefore creating new knowledge as a result of these activities.  It is also very exciting to see a variety of small to medium enterprises across Australia undertaking a number of dynamic projects which involve Research and Development as well as new commercialisation of innovative products.

Mark Morris: So given you are across many organisations who are at the cutting edge of technology, I assume that you have other areas you advise on?

Leigh Conlan: That’s correct. Specialist Accounting Services is unique as we have technical expertise and we can assist in a variety of capacities including comprehensive advice in the areas of commercialisation, government development and early stage development grants, government support programs and investing in early stage development funding.

Mark Morris: So can you provide more detail in regards to government incentives and programs that you advise in?

Leigh Conlan: Sure, one such program is around the commercialisation Australia program which provides funding of up to $200,000 to assist new organisations and those wanting to test the viability of product commercialisation. Also we have provided advice in relation to cooperative research centre (CRC) project grants as well. The CRC and associated grants is an outcome focused programme designed to support industry while supporting collaboration between industry, research and the community in a competitive framework.

Mark Morris: Have there been many changes by the government in relation to government grants and assistance?

Leigh Conlan: Yes there have been changes in regards to the tech sector that were previously restricted on applying for grants. These have now been removed to stimulate commercialisation and the development of novel IP across a broader range of industries across Australia. We see the government’s focus in this domain is on stimulating new knowledge, local IP and bringing innovative products to market in order to stimulate economic and employment growth.

Mark Morris: So have you seen many examples where universities specifically benefit from the R&D tax incentive scheme?

Leigh Conlan: Yes Mark I have seen this a number of times where universities are providing services to private organisations and where both benefit from the close collaboration undertaken. One such example is one our clients in the ehealth domain where a prominent Victorian university provided research assistance in evaluating IT architecture suitable for gathering information around broad based and large scale health records.

Mark Morris: So this is all research and development expenditure around software and IT?

Leigh Conlan: Correct Mark, we have also been involved with a number of initiatives in the private sector relating specifically to analytics and big data projects.

Mark Morris: Can you elaborate on how these initiatives may provide beneficial outcomes for the private sector, RSPs as well as the general public?

Leigh Conlan: We have seen a number of initiatives carried out by the big four banks in relation to blockchain. The key objective of blockchain is to develop a distributed database ledger which can continuously update records between parties and therefore improve the efficiency of banking transactions.

Mark Morris: That’s very interesting. Do you see any other developments relating to big data in the private sector?

Leigh Conlan: Actually we have also seen developments in the Telecommunications sector where a number of Australian telco’s have been building big data lakes and utilising these data repositories for a number of practical applications such as geolocation, product marketing and improving operational uptime.

For the second part of this interview, keep an eye on the Business Newsroom blog!

Nobel Peace Laureate Professor Dr. Muhammad Yunus to visit La Trobe Business School: ‘Social Business: unleashing the potential’

Professor Dr Muhammad Yunus signs an MOU with La Trobe Business School in 2014

On 7 April 2017, La Trobe Business School will welcome Nobel Peace Laureate Professor Dr. Muhammad Yunus for an invite-only lecture.Professor Yunus will also be admitted to the La Trobe University degree, Doctor of Letters (honoris causa), conferred by the Vice Chancellor, Professor John Dewar.

Muhammad Yunus is widely known for his progressive theories surrounding microcredit and for founding Grameen Bank, an innovative institution which has enabled impoverished entrepreneurs to access an affordable loan scheme and start a business. Grameen Bank is generally considered to be the first modern microcredit institution ever established, and is an important player with international influence in the industry. In his 2007 book Creating a World without Poverty, Yunus goes beyond microcredit to pioneer the idea of Social Business – a completely new way to use the creative vibrancy of business to tackle social problems from poverty and pollution to inadequate health care and lack of education. Since then, ‘Yunus Centres’ around the globe have served as a one-stop resource centre for all Grameen social business related activities, La Trobe Business School being one of them. Dr. Yunus’ intellect, industry connections and experience will make a significant contribution to La Trobe Business School and the wider La Trobe University and its students, providing them with a unique opportunity to interact with a global thinker from the business world.

In his visit on 7 April 2017, Professor Dr Muhammad Yunus will speak about ‘unleashing the potential.’ This presentation will be about how to make the three zeroes (zero poverty, omissions and unemployment) relating to sustainable development, happen through social business.

Invitations for the Professor Dr Muhammad Yunus have gone out to key stakeholders including the La Trobe Business School scholars and staff, the NorthLink business community, stakeholders and collaborators of the LBS Yunus Social Business Centre, and the La Trobe Asia community.

La Trobe Business School Yunus Social Business Centre

The Yunus Social Business Centre at La Trobe Business School is the first business school based centre in Australia. Since 2014, the Yunus Social Business Centre at La Trobe Business School has been working with Professor Dr Muhammad Yunus. In August 2016, the centre ran the first international social business symposium, featuring Dr Andreas Heinecke, the founder of the Dialogue in the Dark Social Business Franchise.  Attendees came from over four different countries.

Professor Dr Muhammad Yunus coincides with the La Trobe Business School Yunus Centre for Social Business moving into a new space at the La Trobe University Melbourne Campus, as part of the multi-million dollar redevelopment of the Donald Whitehead Building.

For more information on the Yunus Social Business Centre at La Trobe Business School, see the La Trobe Business School Yunus Centre website.

To be connected with the students Social Business Club, activity and events please join the Facebook page, or see the Social Business Club website.

Contact the Yunus Social Business Centre via email.

For more information on Professor Dr. Muhammad Yunus, keep an eye on the La Trobe Business School blog.

LBS Associate Professor Vanessa Ratten publishes “Entrepreneurship and Innovation in Smart Cities”

Recently, LBS Associate Professor Vanessa Ratten published a new book titled “Entrepreneurship and Innovation in Smart Cities.”

The book aims to examine the role that innovation has in creating smart cities by focusing on issues such as public transport, use of energy efficiency and sustainability practices. It helps to shed understanding on how cities have become smarter in the way they handle increased migration to urban and rural areas and decrease the strain on public finances.

The work received several positive reviews from prestigious institutions:

‘There is a huge amount of confusion and hyperbole concerning the idea of a ‘smart city’ with the human element often entirely overlooked in favour of infrastructure and hardware models. Entrepreneurship, Innovation and Smart Cities takes a sweeping tour through an extensive range of literatures that help to clarify the processes and dynamics of social smart cities. Vanessa Ratten has authored a formidable compendium of material that provides a thorough overview of the way that current concepts of smartness are being applied in contemporary cities. The book is an essential starting point for any academic, practitioner or policy-maker who wants to better understand the role of humans in making smart social cities.’ — Dr Paul Benneworth, University of Twente, The Netherlands

‘Policy and business leaders have been debating the merits of smart cities. This pathbreaking book paves the way in understanding why smart cities are so important and strategies to create smart cities.’ — David B. Audretsch, Distinguished Professor, Indiana University

‘This book provides an excellent opportunity to discuss, from different perspectives, the development of cities, under the contemporaneous paradigm of smart cities.

There are a number of issues, associated to the debate over smart cities, such as innovation, economic development, social inclusion, and education, among others. Such dimensions are explored in the book, providing the opportunity to a deep exploration of the different perspectives of smart cities.’ — Vitor Braga, Associate Professor and Head of the Business Sciences Department, Polytechnic of Porto

A copy of the book can be ordered, here.

La Trobe Business School partners for Sport Development and Peace

Dr Emma Sherry

LBS Associate Professor Emma Sherry recently participated in the inaugural symposium on Sport for Development and Peace, hosted by the University of Illinois as an invited speaker and Town Hall panelist. The symposium, titled Forming Partnerships and Linkages in Sport for Development and Peace: Considerations, Tensions, and Strategies, brought together international academics and sport for development experts and practitioners to discuss how sport, specifically through the creation and nurturing of key partnerships, can be used to achieve the United Nations Sustainable Development Goals.

The purpose of the symposium was to bring together scholars, practitioners and students engaged in sport for development and peace (SDP) to create a dialogue about forming and sustaining partnerships and linkages between SDP initiatives and other sectors, the challenges facing partnership development, and strategies to overcome these challenges. The symposium was hosted by the Department of Recreation, Sport, and Tourism (RST) at the University of Illinois, the Sport+Development Lab (SDL), and Play for Change. The SDL is home to faculty and graduate students researching the intersection of sport and development. Play for Change is a registered student organization (RSO) focused on involving undergraduate and graduate students in actionable projects that use sport, recreation, and tourism for social change.

The sport for development and peace (SDP) field has grown exponentially in recent years, with more and more organizations, practitioners, and academics around the world embracing the possible contribution that sport can make to development agendas. SDP can occur at the individual, community, and societal levels. It can be defined as the use of sport as an engine for development through intercultural exchange, conflict resolution and peace building, community building, social inclusion, or programming for interpersonal development or health.

An emerging line of commentary in SDP concerns the nature of partnerships with various industry sectors. Without effective and sustainable partnerships, SDP organizations and scholars cannot viably engage in the field to effect social change; partnerships are the life blood of SDP organizations. However, many challenges and barriers exist that inhibit effective partnerships and linkages. From overcoming power dynamics, to misaligned goals and objectives, challenges can prevent organizations from establishing long-term partnerships and carrying out their missions. Given the international significance of partnerships and collaborations in SDP, much more conversation is needed about the nature of partnerships, their challenges, and effective strategies for forming and sustaining them.

The symposium brought together SDP experts, including Dr Sherry, to share presentations drawing on an original paper written for this symposium. Presenters provided a state of the field synopsis regarding partnerships with a specific sector (for example, health, community organisations, education or national and international bodies), outline challenges for developing and sustaining them, and then propose strategies for addressing these challenges.

In addition to the symposium, there were also two evening public events. On the first night, Dr. John Sugden, one of the world’s foremost experts in SDP and partnership development, provided a keynote address on the history and development of SDP, its current state of the field, and thoughts on developing and sustaining partnerships and linkages. The second night featured a town hall meeting with the symposium presenters focused on the power of sport to work for social good and change, and the challenges associated with doing so.

Dr Sherry noted that although the two-day symposium provided a full schedule for all attendees, the opportunity for international scholars in this field to spend time together to deeply discuss key research, theory-building and opportunities for research collaboration was invaluable. The opportunity for networking and discussion was extended through a very active use of Twitter by those organizing and attending (#sport4change2017) which extended the reach of the symposium to those unable to attend in person. Dr Sherry hopes that this is the first of many such events, and was delighted to be invited to present and share her research in the SDP field.

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