Strømme Foundation changes its strategy from a focus on microcredit to a focus on financing small and mediums sized companies, in line with what my own research and experience indicates to be a better path towards prosperous economic development. I concur with this move and look forward to seeing the results from this change, and encourage more organizations and investors to follow this path. This is not to say that microfinance is not helping poor people. Someone said to me: “These microloans do help a little especially when it comes to women who can send their kids to school. Put a metal roof with monies earned from the small businesses they setup.” I completely agree, but by focusing on small and medium sized companies, we can help create even more jobs through scaling businesses led by competent managers. It is simply difficult to scale a small microentrepreneur with very limited personal capacity to lead a larger business. I simply suggest that there are other means which we also need to explore. Financing of SME´s has until recently been a forgotten area of focus, and more and more investors are shifting towards this group as well for more impact.
Do your kids love spagetti with a pasta sauce? Well, you may have thought you made a good pasta sauce, but my friends, here is a recipe that takes the art of making a pasta sauce to another level, and reveals the simple truth of perfecting a pasta sauce.
Over the years I have been experimenting with various ingredients in the pasta sauces, and tested on my kids. In all honesty, it is because the list of things I at the moment can cook well, is short. The cooking has come with various level of success, and some complete failures. As a researcher I of course ask my self, why, what and how is this possible.
I have now successfully identified the two ingredients that make the pasta sauce move to another level, a level where you will start getting positive reviews on your cooking from your kids. Used properly these two ingredients which I am about to reveal, will make any kid or adult literally down the pasta and sauce in a few minutes, and they will go for a second round.
The nr 1 key ingredient is Tabasco. Any other spices simply do not compare to the wonders made by a few drops of Louisiana Tabasco into the sauce. The other key ingredient, not to be taken lightly, is to make sure you mix in a butterormargarine with the pasta. Here, the trick is to use a lot of it. The Tabasco gives a warmth and yumminess to the pasta sauce that makes it hard to resist and really completes the pasta sauce. The butter or margarine makes the pasta itself delicious. Also make sure to boil the pasta exactly according to the instructions, too short or too long can result in a complete disaster. Believe me. Lastly, I have noticed that the type of pasta that taste the best together with my kids is the regular spagetti.
Minced meat or meat substitute such as quorn
Pepper and salt – modest amount
Garlic – do not be a coward, use plenty
One onion – the bigger the better
Crushed or strained tomatoes – but not too much
Red pepper (not the strong one) – it is more for the visual effect
Grated carrot – use the smaller option such that you do not really see the carrot in the sauce
A few drops of Tabasco
Margarine or butter
Sure, if you have time to let it boil for a long time, that may make wonders, but I would say this can be completed in 20-30 minutes.
Other potential ingredients:
Mushrooms – as replacement for the quorn or meat
A little bit cream in the sauce – just a small amount
I senaste numret av entré skriver journalisten Maria Linde om min avhandling samt om vårt jobb med MTI Investment AS – det nordiska investmentbolaget som investerar i växande små och medelstora företag i Östra Afrika.
För att ladda ner delen som har med min forskning att göra klicka här:
On June 20 2016 I defended successfully my thesis at the University of Agder in Norway. Since then I am affiliated with the Stockholm School of Economics, where I do research, supervise students and teach in courses related to entrepreneurship both in the Executive MBA program and also in the Master program. I also hold a position as an Associate Professor at Hauge School of Management at NLA Høgskole in Oslo, currently teaching a bachelor course in Entrepreneurship and Innovation. My focus area is on financing of entrepreneurship. Building on the learnings from my thesis, I founded MTI Investment AS together with my supervisor, Professor Trond Randøy, and two fellow PhDs from Tanzania, Dr. Neema Mori and Dr. Gibson Munisi. It is my firm belief, that while financing microentrepreneurs in the informal economy do help people make more money, and also stay away from criminal activity, informal societies and developing countries need more small and medium sized businesses. We seem to be fixated with this romanticized idea that all people are entrepreneurs, but if we were to go back 100 years in time and look at Norway and Sweden from a distance – would we have suggested microfinance as the solution to get people out of poverty. While it is helpful, why shy away from financing the real job creators in an economy, the small and medium-sized firms.
The Norwegian newspaper Vårt Land writes in the Monday issue (October 17, 2016 p. 8-9) about my research in an article with the title “Therefore microfinance is not that effective” (Derfor er mikrofinans lite effektivt). While my findings do find that microfinance does add extra income to an individual´s business, it also shows that size can act as a counterbalancing factor such that income actually is reduced with increased sized. The economies of scale are in other words negative in the early phase of the firm. My research also points to the fact that growth in sales or assets does not seem to be related to taking on microloans. This is not controversial. What is obvious and perhaps more relevant from my research is that the level of financial literacy among poor microentrepreneurs is VERY low, and then one should take into account that the clients I surveyed were not the poorest of the poor, but merely poor. Little research is still however done in this area, and much more is needed. There is even research pointing towards the odd fact that those with more education actually do worse. This
Little research is still however done in this area, and much more is needed. There is even research finding in some informal economies that those with more education actually do worse (Honig, 1998). This is counterintuitive, and much more research is needed here. I am currently working on a paper which looks at the role of Financial Literacy, Role Models and how these two concepts affect firm performance in the informal economy. Research in the left tail of human capital among the poorest individuals on the planet is still in its infancy, but over time we will eventually learn how to effectively lift the human capital and sustain individuals in an improved economic state. The practical example of MTI Investments, and other pioneering firms, financing small and medium-sized firms, may be leading the way in this regard, where more investments are allocated towards small and medium sized firms, rather than mostly microenterprises today.
Here I present my story, connecting the dots of my academic life. I began thinking about pursuing a PhD in 1991, when I was an undergraduate student at Slippery Rock University (SRU) in Pennsylvania, USA, on a Sweden–America Foundation scholarship.
Several informal talks with one of my undergraduate professors helped me weigh the pros and cons of an MBA versus a PhD. Being a bit ambivalent about the decision and wanting to keep both doors open, I elected to go for a bachelor of science degree in economics. Upon graduating summa cum laude in 1994, I was still ambivalent, so I returned to Sweden, where I took a job assisting Professor Lars Oxelheim at the Research Institute of Industrial Economics (IFN, then known as IUI) in writing a book about the deregulation of the Nordic financial markets and its effect on Nordic interest rates as compared to a global interest rate (Oxelheim, 1996). Professor Oxelheim and I also discussed me potentially pursuing a PhD, but back then I did not know what research focus I was interested in, nor did I realize that embarking on a PhD is one of the more entrepreneurial ventures in which a person can engage.
The experience at IFN led to my next job as a researcher at the Boston Consulting Group (BCG), where I specialized in corporate valuations and a corporate performance framework known as Cash Flow Return On Investment (CFROI), developed by HOLT Value Associates (Madden, 1999). The experience at BCG motivated me to take a master of science degree in economics and finance from the Stockholm School of Economics (SSE). This was one of the best career decisions I have made and gave me many valuable contacts with whom I still interact today. In 1998 and 1999, after graduating, I tried starting a couple of businesses. One was an online database for financial analysis services called MIG (Management Information Group) and the other a business promoting stand-up comedians and speakers, called IGNITE Infotainment Professionals. Both firms had high-flying visions (seen in the pluralistic nature of the names) but made meager progress. Despite the tough times, the experience was enjoyable, and I learned more about business in these two years than any school could have taught me. Specifically, I learned that perseverance, along with a strong personal conviction, is important, but that luck is probably also part of the equation. The experience and knowledge gained through these years are also shown throughout this dissertation.
In 2005, having spent five years as a financial advisor on global equities at Credit Suisse, I became a portfolio manager at DNB Asset Management, responsible for global cyclical firms (materials, transportation, automobiles, and commercial services). However, in 2008, this work came to a sharp halt with the collapse of Lehman Brothers and the layoff of many in the financial industry, including those of us at DNB. I discussed with Professor Carl Fey starting a PhD, but I still felt ambivalence about the prospect. I had previously written an academic paper with Professor Fey and Professor Ingmar Björkman based in my master thesis at SSE. The article is today cited 49 times according to Google Scholar (Fey, Engström, & Björkman, 1999). However, I did not pursue the opportunity, as this was not an area of interest close to my heart, and I therefore again missed how incredibly entrepreneurial it is to undertake a PhD.
Instead, I worked for three years as chief financial officer at the Swedish Mission Covenant Church, which not only gave me a better understanding of civil society and organizations based on the popular movements from the late 1800s and early 1900s but also a lot of experience in managing people, creating control systems, and managing a budget process and different type of assets, such as properties and foundations. The job involved a lot of responsibility and creativity, but it was also very entrepreneurial. It gave me a good glimpse at how small businesses are run and governed, since the church was involved in several small and large businesses.
One of the investments the church had made was a small footnote on the balance sheet, Oikocredit, that was not earning any interest for the church. As the financial assets I was responsible for were a guarantee for the future pensions of several employees, I was keen to ensure the assets were managed in the best possible way. Not getting a return on investment was unsatisfactory to me. I therefore investigated Oikocredit and visited an annual general meeting in 2011 in Dar es Salaam, Tanzania, where I learned about microfinance. I observed how controversial the idea of paying investors a market interest rate was; some owners there argued frantically that this was morally wrong. In 2011, the interest investors could receive from lending money to Oikocredit was at most 2%. In a scenario where inflation is running at 3%, I as an investor would lose 1% by investing in microfinance. The argument against a higher return to investors was that there was also a return to society, a social return, upon which investors should look favorably. The return was not close enough to the cost of capital required by the pension fund, which was the foundation of the church assets, and thus microfinance did not seem as a good investment to me at the time. Now, with global interest rates at record low levels, many investors are turning towards microfinance as an alternative asset class, in hopes better returns.
AGM at Oikocredit in 2011
Members of Oikocredit
The experience in Tanzania sparked my interest in this controversial topic, and I immediately contacted Professor Lars Oxelheim again, with whom I had kept in touch with over the years. The decision to contact Professor Lars Oxelheim was also inspired by my friend Klas Palm, who had just initiated his PhD studies on innovation and quality management related issues. My research interest then was how interest rates are affected by the increased rate of return required by investors. My hypothesis was that the interest rate would not change to the end user, as the local market sets the interest rate. What I therefore wanted to research was the degree to which the microfinance investment vehicles like Oikocredit, which operate between the investors and the local microfinance banks, could absorb a higher required rate from investors, and whether this would pressure them to become more efficient in order to preserve a low interest rate. Little did I know that my topic would be completely different a year later.
I believe it is also worth mentioning that about a year prior to me beginning at the University of Agder, I became friends with the beat artist Michael Bowen and his family, who had moved from Hawaii to Sweden (Collin, 2006). On a few occasions, I played the saxophone while Michael spoke or painted. It was inspirational to meet with Michael, who was very positive and encouraging of my talents. Tragically, Michael passed away in 2009. However, his memories live on and are, in fact, scattered all over the University of Agder. He has more than 100 art objects installed at the university and the nearby Kristiansand Cathedral School. I have obtained permission from his widow Isabel Paoli-Bowen to use his paintings as article separators in this thesis. Michael was a pioneer in combining music and painting (art), known as performance art, and building on these ideas, I would like to emphasize the long-standing relationship between research and art, and the inspiration both music and art are to my endeavors.
After my first year of PhD studies, during which I learned about current and historic research and methods and interacted with many students and faculty, my interest had turned to how microfinance impacts the microentrepreneurs. I had experienced being an entrepreneur previously, and the topic of microfinance and the microentrepreneurs seemed a lot more interesting than doing research on the sensitivity of interest rates. “Come on,” as my supervisor Trond Randøy would say. I also had access to unique data, since one of my supervisors, Professor Roy Mersland, had helped build a leading microfinance institution in Ecuador (Banco D-Micro). I am especially grateful to Carolina and Hans Martin Espegren, for a successful collaboration in gathering data in Ecuador. We spent several weeks collecting and analyzing the data together, but we also had fun visiting the coast, surfing, cooking dinner together, or going for an evening run.
I would also like to express my gratitude to my supervisors. First of all, a big thank you to my main supervisor, Professor Trond Randøy. Working together with Professor Randøy has been truly enjoyable from the start, and I am grateful for not only the professional collaborations, but also for the personal friendship we have built over the years, including a few jazz jam sessions, hikes in the mountains, canoeing around Kristiansand, international research conferences, and entrepreneurial ventures in Tanzania. An indirect result and spin-off from this PhD endeavor is the creation of MTI Investment AS (www.mti-investment.com), a venture capital firm investing in the growth of eastern Africa. In MTI, all of my previous undertakings and experiences are combined and maximized, and every person with whom I have ever worked is connected somehow with this business.
“Ut på tur, aldri sur” is a Norwegian saying – “You’ll never be grumpy on a hike”
One of Professor Randøy’s previous PhD students, Professor Roy Mersland, was my second supervisor. He became a professor within five years of obtaining his PhD. I am grateful for having met Professor Mersland and seen the dedication, passion, and focus with which he carries out all work. Professor Mersland was instrumental in getting me access to Banco D-Miro data, which form the skeleton of my PhD. My third supervisor is Dr. Leif Atle Beisland. Dr. Beisland and I had many discussions about performance measurement that were instrumental in focusing the thesis on return on assets. I would also like to express a special thank you to Professor Oxelheim who has followed my academic progress and with whom I have written several debate articles with during these three years (Engström & Oxelheim, 2013a, 2013b, 2014). Professor Oxelheim has an inner energy and passion for research that is truly inspirational. Just like my supervisors did, I wrote this thesis during numerous flights, on various airport buses and trains, sometimes in a hotel room in a foreign country such as in Tanzania, sometimes in the office in Kristiansand, and sometimes in the office at the Stockholm School of Economics (SSE), with which I was affiliated during the last year of my thesis.
I also would like to thank all the faculty members at the University of Agder, in particular Professor Otto Andersen, Dr. Bjørn-Tore Flåten, Dr. Rotem Shneor, Professor Andreas Falkenberg, Professor Joyce Falkenberg, Andre Tofteland, Anne Line Omsland, Dr. Burak Tunca, Dr. Daniel Göller, Daudi Pascal Ndaki, Diana Trydal, Professor Ellen Nyhus, Erik Arntsen, Geir Haaland, Gro Anita Homme, Professor Emeritus Harald Knudsen, Professor Ilan Alon, Irfan Irfan, Professor Jan-Inge Jensen, Dr. Kjetil Andersson, Dr. Kristin Dale, Kristina Walker Pedersen, Bandula Galhena, Amila Sirisena, Harald Stokkeland, Lisa Whitehead, Dr. Naima Saeed, Dr. Neema Mori, Dr. Gibson Munisi, Nertila Stringa, Professor Stein Kristiansen, Dr. Stina Torjesen, Stina Øyna, Stine Bårdsen, Unni Henriksen, Inger-Lise Myrvold, and Målfrid Tangedal.
In addition to the above-mentioned individuals, I also owe a thank you to many of the faculty members and PhD students from other schools, such as Professor Dale Duhan, Professor Arent Greve, Professor Terje Moen, Professor Yaakob Weber, Professor Kirsten Foss, Dr. Gry Alsos, Professor Tommy Clausen, Professor Johan Wiklund, Professor Karl Wennberg, Professor Carin Holmquist, Professor Sara Carter, Professor Hans Lundström, Dr. Espen Isaksen, Dr. Marianne Steinmo, Dr. Maj Munkefjord, Dr. Sølvi Solvoll, Marianne Arntzen-Nortquist, Marit Breivik Meyer, Karin Wigger, Oxana Bulanova, Nhien Nguyen, Thomas Lauvås, Siri Jakobsen, Are Jensen, Dr. Terese Strand, Nedim Effendic, Dr. Nadav Rotemberg Shir, Beldina Owalla, Kajsa Asplund, and Professor Alex McKelvie.
Apart from academia I am also grateful to the Norwegian Alliance Microfinance and their CEO Andreas Andersen for allowing me to work with Banco D-Miro in Ecuador. At Banco D-Miro, I am thankful to all the support and help from the CEO Carlos Viteri and the marketing director John Pacheco in creating the survey instrument and in motivating and instructing the local call center. I am also grateful to Johnny Villavicencio and colleagues for helping me in retrieving longitudinal (historic) data from the Banco D-Miro database. When in Ecuador, I was also fortunate to get to know many wonderful people from the local Alliance Mission group, including Hans Martin and Caroline Espegren,Isak Holmen Sørensen, Maria Andreassen, Rebeckka Andreassen Garcia, Daniel Garcia, Maria Andreassen,Ingunn Skutlaberg Valbø, Bjørnar Valbø, Rita Franco, Lily Macias Ramos, and many more. Gathering data without this group of individuals around would simply not have been the same experience. Thank you all.
Last but not least, I would like to thank my close friends and family for supporting me every step of the way. I wish I could thank my aunt Kajsa Tunér, who is not with us anymore, but she definitely was an influence, and I still to this day remember when she earned her PhD in 1986 when I was 15 years old (Tunér, 1986). The same must also be said about some other important people who are no longer with us, like my grandparents on both my mother’s and father’s sides. My brother Johan Engström has been an inspiration in his hard work to become a radiologist, and also my sister Hedvig Engström Jakobsson, who earned her PhD in 2011 (Engström Jakobsson, 2011). I would like to thank my mother Margareta Dehle for always being very supportive and for helping my family in so many ways. A special thank you is directed to my two daughters Ella and Kajsa who, who during these three years, have had to speak to their father on Skype and Facetime far too many times. A special welcome and thank you to my newborn adorable daughter Leona, who was born in the very last phase of my PhD, a phase when I also lost my dear and greatly missed father, Per Engström, who had been a surgeon. This dissertation is therefore made in memory of my father and dedicated to my three children.
Collin, L. (2006, November 7). Det bor en beatnik i staden. Svenska Dagladet. Stockholm.
Engström Jakobsson, H. (2011). Molecular characterization of the dynamics and development of the human microbiota.