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Psychological Support / To prevent the spread of COVID-19:
« on: June 09, 2020, 07:17:05 PM »
To prevent the spread of COVID-19:
Clean your hands often. Use soap and water, or an alcohol-based hand rub.
Maintain a safe distance from anyone who is coughing or sneezing.
Don’t touch your eyes, nose or mouth.
Cover your nose and mouth with your bent elbow or a tissue when you cough or sneeze.
Stay home if you feel unwell.
If you have a fever, cough and difficulty breathing, seek medical attention. Call in advance.
Follow the directions of your local health authority.
Avoiding unneeded visits to medical facilities allows healthcare systems to operate more effectively, therefore protecting you and others.

Business Math / Business Mathematics
« on: July 29, 2018, 09:36:50 AM »
Business Mathematics

Mathematics is an important part of managing business. Business and mathematics go hand in hand this is because business deals with money and money encompasses everything in itself. There is a need for everyone to manage money as some point or the other to take decisions which requires everyone to know mathematics. Business mathematics is used by commercial enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing, sales forecasting, and financial analysis. It helps you know the financial formulas, fractions; measurements involved in interest calculation, hire rates, salary calculation, tax calculation etc. which help complete business tasks efficiently. Business mathematics also includes statistics and provides solution to business problems.

Business is always surrounded with challenges which need to be dealt with in a proper fashion so that they do no arise in future. These problems that occur on a daily basis can be effectively solved with the help of mathematical models. Hence mathematics not only helps to calculate but also analyze business problems and work upon them. Learning and using business mathematics enables a person to think out of the box, sharpens one’s thinking and helps in precisely formulating and structuring relationships.

Business Mathematics
Use of Business Mathematics in business
In order to known a business it requires skill more than the developing a product or providing a service. If a business has to survive ad succeed it needs to look after the finances and make necessary arrangements for it to prosper as well. Understanding business mathematics is important to maintain profitable operations and accurate keeping of records. It is required right from the start for pricing products/services till the end when we need to check if the budget was met. Let’s look at situations where business mathematics is required:

Production costs calculation
Before one formally starts production and establishes its business it is very important to estimate the costs that would be incurred in relation to the manufacturing such as the cost of raw materials, machinery, rent, administrative expenses etc. In addition to these basic expenses there are other associated costs such as marketing, warehousing, interest and repayment of loans etc. Once all he expenses relating to production have been included I would be easy to estimate the profit from it to sustain and remain competitive in the market. Accurately determining the cost associated with each item will make the base for the business strong.

Price determination
When you have successfully determined the costs, the next task is to price the products correctly so that it generates right amount of cash flows for future requirements of the business. Charging the correct selling price would ensure that the product remains profitable.

Profit Measurement
These require determining the net profit by subtracting the operating costs from the total amount of sales/revenue during a period of time. What also needs to deducted are the tax, depreciation, discount expenses. This helps to find out if the products are being charged enough to continue the business operations and expand.

Financial Analysis
You need to project the revenue and expenses of a business if we need to analyze the financial health of a business. We need to do sensitivity analysis of how an increase or decrease in sales figure or pricing could affect the business. It helps in determining how each employee contributes to the business and how I would affect. Using business mathematics helps in making these interpretations ad take the business to a higher level.

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Career in Business Mathematics
In addition to mathematical knowledge any person who wants to make their career in business mathematics one needs to also have knowledge of subjects like economics, finance and business management in order to open up many doors in this challenging field. As far the skills goes one has to have good oral and written communication skills as business mathematicians need to work on teams, collate research and be in contact with clients.

Since all corporations require managing their money and business many mathematicians find employment in these fields. Mathematicians follow a logical thinking;follow a problem-solving approach to business.

Companies hire mathematicians to work as the following:

Financial analysts
Insurance underwriters
Budget Analysts
Market Research Analyst
Securities Analyst

Business Math / Business mathematics
« on: July 29, 2018, 09:35:29 AM »
Business mathematics
From Wikipedia, the free encyclopedia

This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. Please help to improve this article by introducing more precise citations. (January 2018) (Learn how and when to remove this template message)
Business mathematics is mathematics used by commercial enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing, sales forecasting, and financial analysis. Mathematics typically used in commerce includes elementary arithmetic, elementary algebra, statistics and probability. Business management can be done more effectively in some cases by use of more advanced mathematics such as calculus, matrix algebra and linear programming.

Business mathematics, sometimes called commercial math or consumer math, is a group of practical subjects used in commerce and everyday life. In schools, these subjects are often taught to students who are not planning a university education. In the United States, they are typically offered in high schools and in schools that grant associate's degrees; elsewhere they may be included under Business studies. The emphasis in these courses is on computational skills and their practical application, with practical application being predominant.

A (U.S.) business math course might include a review of elementary arithmetic, including fractions, decimals, and percentages. Elementary algebra is often included as well, in the context of solving practical business problems. The practical applications typically include checking accounts, price discounts, markups and Markup, payroll calculations, simple and compound interest, consumer and business credit, and mortgages and revenues.

University level[edit]
"Business Mathematics" includes mathematics courses taken at an undergraduate level by business students. The two most common mathematics courses taken in this form are Business Calculus and Business Statistics. Programs often include a separate module on interest calculations.

These courses are usually focused on problems from the business world, and the syllabus is adjusted correspondingly. Thus for example, whereas in a regular calculus course students would study trigonometric functions, courses here would not typically cover this area. Correspondingly, these courses typically do not go into the same depth as standard courses in the mathematics or science fields. (Although see Bachelor of Science in Business Administration and Bachelor of Business Science.)

Note that economics majors, especially those planning to pursue graduate study in the field, are encouraged to instead take regular calculus, as well as linear algebra and other advanced math courses, especially real analysis.

At the postgraduate level, generalist management and finance programs include quantitative topics which are foundational for the study in question - often exempting students with an appropriate background. These are usually "interest mathematics" and statistics, both at the above level. MBA programs often also include basic operations research and may combine the topics as "quantitative analysis"; MSF programs may similarly cover applied econometrics.

More technical Masters in these areas, such as those in management science and quantitative finance, will entail a deeper, more theoretical study of operations research and econometrics, and then extend to further advanced topics such as mathematical optimization and stochastic calculus. These programs do not include "Business mathematics" per se.

Where mathematical economics is not required, graduate economics programs often include "quantitative techniques", which covers (applied) linear algebra and multivariate calculus, and may include the above topics; regardless, econometrics is usually a separate course, and is dealt with in depth.

Business Math / What is Mathematics in Business and Economics?
« on: July 29, 2018, 09:34:38 AM »
What is Mathematics in Business and Economics?

Mathematics in Business and Economics seeks to solve economic problems by means of methods and concepts provided in the sphere of mathematical science.

It is clear to everyone that bankers crunch numbers on a daily basis. However, one also comes upon mathematics everywhere where the future developments and trends are to be determined.

Mathematics in Business and Economics is all about how the problems from the realm of business and technology can be translated into the language of mathematics and then be solved by means of mathematical models. Quite often this involves more than one mathematical model - what makes the matter even more exciting!

What is in it for me?

Without mathematics there would be no DVDs, no weather forecasts, no barcode on your chocolate bar, no online shopping, and also no possibilities for surfing the web for downloading your favorite ring tones. Challenges such as these show up in business on a daily basis and can be efficiently solved by the help of mathematical methods: in Mathematics in Business and Economics you will not only learn how to calculate and analyze, but also how to sort out open questions into business contexts and solve them, often bringing about substantial societal benefits.

By occupying yourself with Mathematics in Business and Economics, you will learn how to think out of the box, sharpen your ability to think in abstract terms, and train yourself how to more precisely formulate and structure causal relationships.

Microeconomics / In economics and moral philosophy
« on: July 29, 2018, 09:29:28 AM »
In economics and moral philosophy

The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, Smith expounded how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his own day and his general approach and writing style were often satirised by Tory writers in the moralising tradition of Hogarth and Swift, as a discussion at the University of Winchester suggests.[94] In 2005, The Wealth of Nations was named among the 100 Best Scottish Books of all time.[4]

In light of the arguments put forward by Smith and other economic theorists in Britain, academic belief in mercantilism began to decline in Britain in the late 18th century. During the Industrial Revolution, Britain embraced free trade and Smith's laissez-faire economics, and via the British Empire, used its power to spread a broadly liberal economic model around the world, characterised by open markets, and relatively barrier free domestic and international trade.[95]

George Stigler attributes to Smith "the most important substantive proposition in all of economics". It is that, under competition, owners of resources (for example labour, land, and capital) will use them most profitably, resulting in an equal rate of return in equilibrium for all uses, adjusted for apparent differences arising from such factors as training, trust, hardship, and unemployment.[96]

Paul Samuelson finds in Smith's pluralist use of supply and demand as applied to wages, rents, and profit a valid and valuable anticipation of the general equilibrium modelling of Walras a century later. Smith's allowance for wage increases in the short and intermediate term from capital accumulation and invention contrasted with Malthus, Ricardo, and Karl Marx in their propounding a rigid subsistence–wage theory of labour supply.[97]

Joseph Schumpeter criticised Smith for a lack of technical rigour, yet he argued that this enabled Smith's writings to appeal to wider audiences: "His very limitation made for success. Had he been more brilliant, he would not have been taken so seriously. Had he dug more deeply, had he unearthed more recondite truth, had he used more difficult and ingenious methods, he would not have been understood. But he had no such ambitions; in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along."[98]

Classical economists presented competing theories of those of Smith, termed the "labour theory of value". Later Marxian economics descending from classical economics also use Smith's labour theories, in part. The first volume of Karl Marx's major work, Capital, was published in German in 1867. In it, Marx focused on the labour theory of value and what he considered to be the exploitation of labour by capital.[99][100] The labour theory of value held that the value of a thing was determined by the labour that went into its production. This contrasts with the modern contention of neoclassical economics, that the value of a thing is determined by what one is willing to give up to obtain the thing.

A brown building
The Adam Smith Theatre in Kirkcaldy
The body of theory later termed "neoclassical economics" or "marginalism" formed from about 1870 to 1910. The term "economics" was popularised by such neoclassical economists as Alfred Marshall as a concise synonym for "economic science" and a substitute for the earlier, broader term "political economy" used by Smith.[101][102] This corresponded to the influence on the subject of mathematical methods used in the natural sciences.[103] Neoclassical economics systematised supply and demand as joint determinants of price and quantity in market equilibrium, affecting both the allocation of output and the distribution of income. It dispensed with the labour theory of value of which Smith was most famously identified with in classical economics, in favour of a marginal utility theory of value on the demand side and a more general theory of costs on the supply side.[104]

The bicentennial anniversary of the publication of The Wealth of Nations was celebrated in 1976, resulting in increased interest for The Theory of Moral Sentiments and his other works throughout academia. After 1976, Smith was more likely to be represented as the author of both The Wealth of Nations and The Theory of Moral Sentiments, and thereby as the founder of a moral philosophy and the science of economics. His homo economicus or "economic man" was also more often represented as a moral person. Additionally, economists David Levy and Sandra Peart in "The Secret History of the Dismal Science" point to his opposition to hierarchy and beliefs in inequality, including racial inequality, and provide additional support for those who point to Smith's opposition to slavery, colonialism, and empire. They show the caricatures of Smith drawn by the opponents of views on hierarchy and inequality in this online article. Emphasised also are Smith's statements of the need for high wages for the poor, and the efforts to keep wages low. In The "Vanity of the Philosopher: From Equality to Hierarchy in Postclassical Economics", Peart and Levy also cite Smith's view that a common street porter was not intellectually inferior to a philosopher,[105] and point to the need for greater appreciation of the public views in discussions of science and other subjects now considered to be technical. They also cite Smith's opposition to the often expressed view that science is superior to common sense.[106]

Smith also explained the relationship between growth of private property and civil government:

Men may live together in society with some tolerable degree of security, though there is no civil magistrate to protect them from the injustice of those passions. But avarice and ambition in the rich, in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt to invade property, passions much more steady in their operation, and much more universal in their influence. Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days' labour, civil government is not so necessary. Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. (...) Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs. All the inferior shepherds and herdsmen feel that the security of their own herds and flocks depends upon the security of those of the great shepherd or herdsman; that the maintenance of their lesser authority depends upon that of his greater authority, and that upon their subordination to him depends his power of keeping their inferiors in subordination to them. They constitute a sort of little nobility, who feel themselves interested to defend the property and to support the authority of their own little sovereign in order that he may be able to defend their property and to support their authority. Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all. (Source: The Wealth of Nations, Book 5, Chapter 1, Part 2)

In British Imperial debates[edit]
Smith's chapter on colonies in turn would help shape British imperial debates from the mid-nineteenth century onward. The Wealth of Nations would become an ambiguous text regarding the imperial question. In his chapter on colonies, Smith pondered how to solve the crisis developing across the Atlantic among the empire's thirteen American colonies. He offered two different proposals for easing tensions. The first proposal called for giving the colonies their independence and, by thus parting on a friendly basis, Britain would be able to develop and maintain a free-trade relationship with them, and possibly even an informal military alliance. Smith's second proposal called for a theoretical imperial federation that would bring the colonies and the metropole closer together through an imperial parliamentary system and imperial free trade.[107]

Smith's most prominent disciple in nineteenth-century Britain, peace advocate Richard Cobden, preferred the first proposal. Cobden would lead the Anti-Corn Law League in overturning the Corn Laws in 1846, shifting Britain to a policy of free trade and empire "on the cheap" for decades to come. This hands-off approach toward the British Empire would become known as Cobdenism or the Manchester School.[108] By the turn of the century, however, advocates of Smith's second proposal such as Joseph Shield Nicholson would become ever more vocal in opposing Cobdenism, calling instead for imperial federation.[109] As Marc-William Palen notes: "On the one hand, Adam Smith’s late nineteenth and early twentieth-century Cobdenite adherents used his theories to argue for gradual imperial devolution and empire ‘on the cheap’. On the other, various proponents of imperial federation throughout the British World sought to use Smith’s theories to overturn the predominant Cobdenite hands-off imperial approach and instead, with a firm grip, bring the empire closer than ever before."[110] Smith's ideas thus played an important part in subsequent debates over the British Empire.

Portraits, monuments, and banknotes[edit]

A statue of Smith in Edinburgh's High Street, erected through private donations organised by the Adam Smith Institute
Smith has been commemorated in the UK on banknotes printed by two different banks; his portrait has appeared since 1981 on the £50 notes issued by the Clydesdale Bank in Scotland,[111][112] and in March 2007 Smith's image also appeared on the new series of £20 notes issued by the Bank of England, making him the first Scotsman to feature on an English banknote.[113]

Statue of Smith built in 1867–1870 at the old headquarters of the University of London, 6 Burlington Gardens
A large-scale memorial of Smith by Alexander Stoddart was unveiled on 4 July 2008 in Edinburgh. It is a 10 feet (3.0 m)-tall bronze sculpture and it stands above the Royal Mile outside St Giles' Cathedral in Parliament Square, near the Mercat cross.[114] 20th-century sculptor Jim Sanborn (best known for the Kryptos sculpture at the United States Central Intelligence Agency) has created multiple pieces which feature Smith's work. At Central Connecticut State University is Circulating Capital, a tall cylinder which features an extract from The Wealth of Nations on the lower half, and on the upper half, some of the same text but represented in binary code.[115] At the University of North Carolina at Charlotte, outside the Belk College of Business Administration, is Adam Smith's Spinning Top.[116][117] Another Smith sculpture is at Cleveland State University.[118] He also appears as the narrator in the 2013 play The Low Road, centred on a proponent on laissez-faire economics in the late eighteenth century but dealing obliquely with the financial crisis of 2007–2008 and the recession which followed—in the premiere production, he was portrayed by Bill Paterson.

A bust of Smith is in the Hall of Heroes of the National Wallace Monument in Stirling.

Adam Smith resided at Panmure house from 1778 to 1790. This residence has now been purchased by the Edinburgh Business School at Heriot Watt University and fundraising has begun to restore it.[119][120] Part of the Northern end of the original building appears to have been demolished in the 19th century to make way for an iron foundry.

As a symbol of free market economics[edit]
A sculpture of an upside down cone
Adam Smith's Spinning Top, sculpture by Jim Sanborn at Cleveland State University
Smith has been celebrated by advocates of free market policies as the founder of free market economics, a view reflected in the naming of bodies such as the Adam Smith Institute in London, the Adam Smith Society[121] and the Australian Adam Smith Club,[122] and in terms such as the Adam Smith necktie.[123]

Alan Greenspan argues that, while Smith did not coin the term laissez-faire, "it was left to Adam Smith to identify the more-general set of principles that brought conceptual clarity to the seeming chaos of market transactions". Greenspan continues that The Wealth of Nations was "one of the great achievements in human intellectual history".[124] P. J. O'Rourke describes Smith as the "founder of free market economics".[125]

Other writers have argued that Smith's support for laissez-faire (which in French means leave alone) has been overstated. Herbert Stein wrote that the people who "wear an Adam Smith necktie" do it to "make a statement of their devotion to the idea of free markets and limited government", and that this misrepresents Smith's ideas. Stein writes that Smith "was not pure or doctrinaire about this idea. He viewed government intervention in the market with great skepticism...yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system. He did not wear the Adam Smith necktie." In Stein's reading, The Wealth of Nations could justify the Food and Drug Administration, the Consumer Product Safety Commission, mandatory employer health benefits, environmentalism, and "discriminatory taxation to deter improper or luxurious behavior".[126]

Similarly, Vivienne Brown stated in The Economic Journal that in the 20th century United States, Reaganomics supporters, the Wall Street Journal, and other similar sources have spread among the general public a partial and misleading vision of Smith, portraying him as an "extreme dogmatic defender of laissez-faire capitalism and supply-side economics".[127] In fact, The Wealth of Nations includes the following statement on the payment of taxes:

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.[128]

Some commentators have argued that Smith's works show support for a progressive, not flat, income tax and that he specifically named taxes that he thought should be required by the state, among them luxury goods taxes and tax on rent.[129] Yet Smith argued for the "impossibility of taxing the people, in proportion to their economic revenue, by any capitation" (The Wealth of Nations, V.ii.k.1). Smith argued that taxes should principally go toward protecting "justice" and "certain publick institutions" that were necessary for the benefit of all of society but that could not be provided by private enterprise (The Wealth of Nations, IV.ix.51).

Additionally, Smith outlined the proper expenses of the government in The Wealth of Nations, Book V, Ch. I. Included in his requirements of a government is to enforce contracts and provide justice system, grant patents and copy rights, provide public goods such as infrastructure, provide national defence and regulate banking. It was the role of the government to provide goods "of such a nature that the profit could never repay the expense to any individual" such as roads, bridges, canals, and harbours. He also encouraged invention and new ideas through his patent enforcement and support of infant industry monopolies. He supported partial public subsidies for elementary education, and he believed that competition among religious institutions would provide general benefit to the society. In such cases, however, Smith argued for local rather than centralised control: "Even those publick works which are of such a nature that they cannot afford any revenue for maintaining themselves . . . are always better maintained by a local or provincial revenue, under the management of a local and provincial administration, than by the general revenue of the state" (Wealth of Nations, V.i.d.18). Finally he outlined how the government should support the dignity of the monarch or chief magistrate, such that they are equal or above the public in fashion. He even states that monarchs should be provided for in a greater fashion than magistrates of a republic because "we naturally expect more splendor in the court of a king than in the mansion-house of a doge".[130] In addition, he allowed that in some specific circumstances retaliatory tariffs may be beneficial:

The recovery of a great foreign market will generally more than compensate the transitory inconvenience of paying dearer during a short time for some sorts of goods.[131]

However, he added that in general a retaliatory tariff "seems a bad method of compensating the injury done to certain classes of our people, to do another injury ourselves, not only to those classes, but to almost all the other classes of them" (The Wealth of Nations, IV.ii.39).

Economic historians such as Jacob Viner regard Smith as a strong advocate of free markets and limited government (what Smith called "natural liberty") but not as a dogmatic supporter of laissez-faire.[132]

Economist Daniel Klein believes using the term "free market economics" or "free market economist" to identify the ideas of Smith is too general and slightly misleading. Klein offers six characteristics central to the identity of Smith's economic thought and argues that a new name is needed to give a more accurate depiction of the "Smithian" identity.[133][134] Economist David Ricardo set straight some of the misunderstandings about Smith's thoughts on free market. Most people still fall victim to the thinking that Smith was a free market economist without exception, though he was not. Ricardo pointed out that Smith was in support of helping infant industries. Smith believed that the government should subsidise newly formed industry, but he did fear that when the infant industry grew into adulthood it would be unwilling to surrender the government help.[135] Smith also supported tariffs on imported goods to counteract an internal tax on the same good. Smith also fell to pressure in supporting some tariffs in support for national defence.[135]

Some have also claimed, Emma Rothschild among them, that Smith would have supported a minimum wage,[136] although there is no direct textual evidence supporting the claim. Indeed, Smith wrote:

The price of labour, it must be observed, cannot be ascertained very accurately anywhere, different prices being often paid at the same place and for the same sort of labour, not only according to the different abilities of the workmen, but according to the easiness or hardness of the masters. Where wages are not regulated by law, all that we can pretend to determine is what are the most usual; and experience seems to show that law can never regulate them properly, though it has often pretended to do so. (The Wealth of Nations, Book 1, Chapter 8)

However, Smith also noted, to the contrary, the existence of an imbalanced, inequality of bargaining power:[137]

A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

Microeconomics / Adam Smith
« on: July 29, 2018, 09:28:21 AM »
Adam Smith

From Wikipedia

Adam Smith FRSA (c.16 June 1723 NS (c. 5 June 1723 OS[1]) – 17 July 1790) was a Scottish economist, philosopher and author as well as a moral philosopher, a pioneer of political economy and a key figure during the Scottish Enlightenment era.[2] Smith is best known for two classic works: An Inquiry into the Nature and Causes of the Wealth of Nations (1776) and The Theory of Moral Sentiments (1759). The former, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics.[3]

Smith studied social philosophy at the University of Glasgow and at Balliol College, Oxford, where he was one of the first students to benefit from scholarships set up by fellow Scot, John Snell. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy and during this time wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day.

Smith laid the foundations of classical free market economic theory. The Wealth of Nations was a precursor to the modern academic discipline of economics. In this and other works, he developed the concept of division of labour and expounded upon how rational self-interest and competition can lead to economic prosperity. Smith was controversial in his own day and his general approach and writing style were often satirised by Tory writers in the moralising tradition of William Hogarth and Jonathan Swift. In 2005, The Wealth of Nations was named among the 100 Best Scottish Books of all time.[4] The minor planet 12838 Adamsmith was named in his memory.[5]

Portrait of Smith's mother, Margaret Douglas
Smith was born in Kirkcaldy, in the County of Fife, Scotland. His father, also Adam Smith, was a Scottish Writer to the Signet (senior solicitor), advocate and prosecutor (Judge Advocate) and also served as comptroller of the Customs in Kirkcaldy.[6] In 1720, he married Margaret Douglas, daughter of the landed Robert Douglas of Strathendry, also in Fife. His father died two months after he was born, leaving his mother a widow.[7] The date of Smith's baptism into the Church of Scotland at Kirkcaldy was 5 June 1723[8] and this has often been treated as if it were also his date of birth,[6] which is unknown. Although few events in Smith's early childhood are known, the Scottish journalist John Rae, Smith's biographer, recorded that Smith was abducted by gypsies at the age of three and released when others went to rescue him.[N 1] Smith was close to his mother, who probably encouraged him to pursue his scholarly ambitions.[10] He attended the Burgh School of Kirkcaldy—characterised by Rae as "one of the best secondary schools of Scotland at that period"[9]—from 1729 to 1737, he learned Latin, mathematics, history, and writing.[10]

Formal education[edit]
A plaque of Smith
A commemorative plaque for Smith is located in Smith's home town of Kirkcaldy
Smith entered the University of Glasgow when he was fourteen and studied moral philosophy under Francis Hutcheson.[10] Here, Smith developed his passion for liberty, reason and free speech. In 1740, Smith was the graduate scholar presented to undertake postgraduate studies at Balliol College, Oxford, under the Snell Exhibition.[11]

Smith considered the teaching at Glasgow to be far superior to that at Oxford, which he found intellectually stifling.[12] In Book V, Chapter II of The Wealth of Nations, Smith wrote: "In the University of Oxford, the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching." Smith is also reported to have complained to friends that Oxford officials once discovered him reading a copy of David Hume's Treatise on Human Nature, and they subsequently confiscated his book and punished him severely for reading it.[9][13][14] According to William Robert Scott, "The Oxford of [Smith's] time gave little if any help towards what was to be his lifework."[15] Nevertheless, Smith took the opportunity while at Oxford to teach himself several subjects by reading many books from the shelves of the large Bodleian Library.[16] When Smith was not studying on his own, his time at Oxford was not a happy one, according to his letters.[17] Near the end of his time there, Smith began suffering from shaking fits, probably the symptoms of a nervous breakdown.[18] He left Oxford University in 1746, before his scholarship ended.[18][19]

In Book V of The Wealth of Nations, Smith comments on the low quality of instruction and the meager intellectual activity at English universities, when compared to their Scottish counterparts. He attributes this both to the rich endowments of the colleges at Oxford and Cambridge, which made the income of professors independent of their ability to attract students, and to the fact that distinguished men of letters could make an even more comfortable living as ministers of the Church of England.[14]

Smith's discontent at Oxford might be in part due to the absence of his beloved teacher in Glasgow, Francis Hutcheson. Hutcheson was well regarded as one of the most prominent lecturers at the University of Glasgow in his day and earned the approbation of students, colleagues, and even ordinary residents with the fervor and earnestness of his orations (which he sometimes opened to the public). His lectures endeavoured not merely to teach philosophy but to make his students embody that philosophy in their lives, appropriately acquiring the epithet, the preacher of philosophy. Unlike Smith, Hutcheson was not a system builder; rather it was his magnetic personality and method of lecturing that so influenced his students and caused the greatest of those to reverentially refer to him as "the never to be forgotten Hutcheson"—a title that Smith in all his correspondence used to describe only two people, his good friend David Hume and influential mentor Francis Hutcheson.[20]

Teaching career[edit]
Smith began delivering public lectures in 1748 in Edinburgh, sponsored by the Philosophical Society of Edinburgh under the patronage of Lord Kames.[21] His lecture topics included rhetoric and belles-lettres,[22] and later the subject of "the progress of opulence". On this latter topic he first expounded his economic philosophy of "the obvious and simple system of natural liberty". While Smith was not adept at public speaking, his lectures met with success.[23]

A man posing for a painting
David Hume was a friend and contemporary of Smith
In 1750, Smith met the philosopher David Hume, who was his senior by more than a decade. In their writings covering history, politics, philosophy, economics and religion, Smith and Hume shared closer intellectual and personal bonds than with other important figures of the Scottish Enlightenment.[24]

In 1751, Smith earned a professorship at Glasgow University teaching logic courses, and in 1752 he was elected a member of the Philosophical Society of Edinburgh, having been introduced to the society by Lord Kames. When the head of Moral Philosophy in Glasgow died the next year, Smith took over the position.[23] He worked as an academic for the next thirteen years, which he characterised as "by far the most useful and therefore by far the happiest and most honorable period [of his life]".[25]

Smith published The Theory of Moral Sentiments in 1759, embodying some of his Glasgow lectures. This work was concerned with how human morality depends on sympathy between agent and spectator, or the individual and other members of society. Smith defined "mutual sympathy" as the basis of moral sentiments. He based his explanation, not on a special "moral sense" as the Third Lord Shaftesbury and Hutcheson had done, nor on utility as Hume did, but on mutual sympathy, a term best captured in modern parlance by the twentieth-century concept of empathy, the capacity to recognise feelings that are being experienced by another being.

Following the publication of The Theory of Moral Sentiments, Smith became so popular that many wealthy students left their schools in other countries to enroll at Glasgow to learn under Smith.[26] After the publication of The Theory of Moral Sentiments, Smith began to give more attention to jurisprudence and economics in his lectures and less to his theories of morals.[27] For example, Smith lectured that the cause of increase in national wealth is labour, rather than the nation's quantity of gold or silver, which is the basis for mercantilism, the economic theory that dominated Western European economic policies at the time.[28]

A drawing of a man sitting down
François Quesnay, one of the leaders of the Physiocratic school of thought
In 1762, the University of Glasgow conferred on Smith the title of Doctor of Laws (LL.D.). At the end of 1763, he obtained an offer from Charles Townshend—who had been introduced to Smith by David Hume—to tutor his stepson, Henry Scott, the young Duke of Buccleuch. Smith then resigned from his professorship to take the tutoring position. He subsequently attempted to return the fees he had collected from his students because he resigned in the middle of the term, but his students refused.[29]

Tutoring and travels[edit]
Smith's tutoring job entailed touring Europe with Scott, during which time he educated Scott on a variety of subjects—such as etiquette and manners.[29] He was paid £300 per year (plus expenses) along with a £300 per year pension; roughly twice his former income as a teacher.[29] Smith first travelled as a tutor to Toulouse, France, where he stayed for one and a half years.[29] According to his own account, he found Toulouse to be somewhat boring, having written to Hume that he "had begun to write a book to pass away the time".[29] After touring the south of France, the group moved to Geneva, where Smith met with the philosopher Voltaire.[30]

From Geneva, the party moved to Paris. Here Smith came to know several great intellectual leaders of the time; invariably having an effect on his future works. This list included: Benjamin Franklin,[31] Turgot, Jean D'Alembert, André Morellet, Helvétius, and, notably, François Quesnay, the head of the Physiocratic school.[32] Smith was so impressed with his ideas[33] that he might have dedicated The Wealth of Nations to Quesnay had he not died beforehand.[34] Physiocrats were opposed to mercantilism, the dominating economic theory of the time. Illustrated in their motto Laissez faire et laissez passer, le monde va de lui même! (Let do and let pass, the world goes on by itself!). They were also known to have declared that only agricultural activity produced real wealth; merchants and industrialists (manufacturers) did not.[31] However, this did not represent their true school of thought, but was a mere "smoke screen" manufactured to hide their actual criticisms of the nobility and church; arguing that they made up the only real clients of merchants.[35]

The wealth of France was virtually destroyed by Louis XIV and Louis XV in ruinous wars,[36] by aiding the American insurgents against the British, and perhaps most destructive (in terms of public perceptions) was what was seen as the excessive consumption of goods and services deemed to have no economic contribution—unproductive labour. Assuming that nobility and church are essentially detractors from economic growth, the feudal system of agriculture in France was the only sector important to maintain the wealth of the nation. Given that the English economy of the day yielded an income distribution that stood in contrast to that which existed in France, Smith concluded that the teachings and beliefs of Physiocrats were, "with all [their] imperfections [perhaps], the nearest approximation to the truth that has yet been published upon the subject of political economy".[37] The distinction between productive versus unproductive labour—the physiocratic classe steril—was a predominant issue in the development and understanding of what would become classical economic theory.

Later years[edit]
In 1766, Henry Scott's younger brother died in Paris, and Smith's tour as a tutor ended shortly thereafter.[31] Smith returned home that year to Kirkcaldy, and he devoted much of the next ten years to his magnum opus.[38] There he befriended Henry Moyes, a young blind man who showed precocious aptitude. As well as teaching Moyes, Smith secured the patronage of David Hume and Thomas Reid in the young man's education.[39] In May 1773, Smith was elected fellow of the Royal Society of London,[40] and was elected a member of the Literary Club in 1775. The Wealth of Nations was published in 1776 and was an instant success, selling out its first edition in only six months.[41]

In 1778, Smith was appointed to a post as commissioner of customs in Scotland and went to live with his mother in Panmure House in Edinburgh's Canongate.[42] Five years later, as a member of the Philosophical Society of Edinburgh when it received its royal charter, he automatically became one of the founding members of the Royal Society of Edinburgh,[43] and from 1787 to 1789 he occupied the honorary position of Lord Rector of the University of Glasgow.[44]

Smith died in the northern wing of Panmure House in Edinburgh on 17 July 1790 after a painful illness. His body was buried in the Canongate Kirkyard.[45] On his death bed, Smith expressed disappointment that he had not achieved more.[46]

Smith's literary executors were two friends from the Scottish academic world: the physicist and chemist Joseph Black, and the pioneering geologist James Hutton.[47] Smith left behind many notes and some unpublished material, but gave instructions to destroy anything that was not fit for publication.[48] He mentioned an early unpublished History of Astronomy as probably suitable, and it duly appeared in 1795, along with other material such as Essays on Philosophical Subjects.[47]

Smith's library went by his will to David Douglas, Lord Reston (son of his cousin Colonel Robert Douglas of Strathendry, Fife), who lived with Smith.[49] It was eventually divided between his two surviving children, Cecilia Margaret (Mrs. Cunningham) and David Anne (Mrs. Bannerman). On the death of her husband, the Reverend W. B. Cunningham of Prestonpans in 1878, Mrs. Cunningham sold some of the books. The remainder passed to her son, Professor Robert Oliver Cunningham of Queen's College, Belfast, who presented a part to the library of Queen's College. After his death the remaining books were sold. On the death of Mrs. Bannerman in 1879, her portion of the library went intact to the New College (of the Free Church) in Edinburgh and the collection was transferred to the University of Edinburgh Main Library in 1972.

Personality and beliefs[edit]
An enamel paste medallion, depicting a man's head facing the right
James Tassie's enamel paste medallion of Smith provided the model for many engravings and portraits that remain today[50]
Not much is known about Smith's personal views beyond what can be deduced from his published articles. His personal papers were destroyed after his death at his request.[48] He never married,[51] and seems to have maintained a close relationship with his mother, whom he lived with after his return from France and who died six years before his own death.[52]

Smith was described by several of his contemporaries and biographers as comically absent-minded, with peculiar habits of speech and gait, and a smile of "inexpressible benignity".[53] He was known to talk to himself,[46] a habit that began during his childhood when he would smile in rapt conversation with invisible companions.[54] He also had occasional spells of imaginary illness,[46] and he is reported to have had books and papers placed in tall stacks in his study.[54] According to one story, Smith took Charles Townshend on a tour of a tanning factory, and while discussing free trade, Smith walked into a huge tanning pit from which he needed help to escape.[55] He is also said to have put bread and butter into a teapot, drunk the concoction, and declared it to be the worst cup of tea he ever had. According to another account, Smith distractedly went out walking in his nightgown and ended up 15 miles (24 km) outside of town, before nearby church bells brought him back to reality.[54][55]

James Boswell who was a student of Smith's at Glasgow University, and later knew him at the Literary Club, says that Smith thought that speaking about his ideas in conversation might reduce the sale of his books, and so his conversation was unimpressive. According to Boswell, he once told Sir Joshua Reynolds that 'he made it a rule when in company never to talk of what he understood'.[56]

A drawing of a man standing up, with one hand holding a cane and the other pointing at a book
Portrait of Smith by John Kay, 1790
Smith has been alternately described as someone who "had a large nose, bulging eyes, a protruding lower lip, a nervous twitch, and a speech impediment" and one whose "countenance was manly and agreeable."[14][57] Smith is said to have acknowledged his looks at one point, saying, "I am a beau in nothing but my books."[14] Smith rarely sat for portraits,[58] so almost all depictions of him created during his lifetime were drawn from memory. The best-known portraits of Smith are the profile by James Tassie and two etchings by John Kay.[59] The line engravings produced for the covers of 19th century reprints of The Wealth of Nations were based largely on Tassie's medallion.[60]

Religious views[edit]
There has been considerable scholarly debate about the nature of Smith's religious views. Smith's father had shown a strong interest in Christianity and belonged to the moderate wing of the Church of Scotland.[61] The fact that Adam Smith received the Snell Exhibition suggests that he may have gone to Oxford with the intention of pursuing a career in the Church of England.[62]

Anglo-American economist Ronald Coase has challenged the view that Smith was a deist, based on the fact that Smith's writings never explicitly invoke God as an explanation of the harmonies of the natural or the human worlds.[63] According to Coase, though Smith does sometimes refer to the "Great Architect of the Universe", later scholars such as Jacob Viner have "very much exaggerated the extent to which Adam Smith was committed to a belief in a personal God",[64] a belief for which Coase finds little evidence in passages such as the one in the Wealth of Nations in which Smith writes that the curiosity of mankind about the "great phenomena of nature", such as "the generation, the life, growth and dissolution of plants and animals", has led men to "enquire into their causes", and that "superstition first attempted to satisfy this curiosity, by referring all those wonderful appearances to the immediate agency of the gods. Philosophy afterwards endeavoured to account for them, from more familiar causes, or from such as mankind were better acquainted with than the agency of the gods".[64]

Some other authors argue that Smith's social and economic philosophy is inherently theological and that his entire model of social order is logically dependent on the notion of God's action in nature.[65]

Smith was also a close friend and later the executor of David Hume, who was commonly characterised in his own time as an atheist.[66] The publication in 1777 of Smith's letter to William Strahan, in which he described Hume's courage in the face of death in spite of his irreligiosity, attracted considerable controversy.[67]

Published works[edit]
The Theory of Moral Sentiments[edit]
Main article: The Theory of Moral Sentiments

1922 printing of An inquiry into the nature and causes of the wealth of nations
In 1759, Smith published his first work, The Theory of Moral Sentiments, sold by co-publishers Andrew Millar of London and Alexander Kincaid of Edinburgh.[68] Smith continued making extensive revisions to the book, up until his death.[N 2] Although The Wealth of Nations is widely regarded as Smith's most influential work, it is believed that Smith himself considered The Theory of Moral Sentiments to be a superior work.[70]

In the work, Smith critically examines the moral thinking of his time, and suggests that conscience arises from dynamic and interactive social relationships through which people seek "mutual sympathy of sentiments."[71] His goal in writing the work was to explain the source of mankind's ability to form moral judgement, given that people begin life with no moral sentiments at all. Smith proposes a theory of sympathy, in which the act of observing others and seeing the judgements they form of both others and oneself makes people aware of themselves and how others perceive their behaviour. The feedback we receive from perceiving (or imagining) others' judgements creates an incentive to achieve "mutual sympathy of sentiments" with them and leads people to develop habits, and then principles, of behaviour, which come to constitute one's conscience.[72]

Some scholars have perceived a conflict between The Theory of Moral Sentiments and The Wealth of Nations; the former emphasises sympathy for others, while the latter focuses on the role of self-interest.[73] In recent years, however, some scholars[74][75][76] of Smith's work have argued that no contradiction exists. They claim that in The Theory of Moral Sentiments, Smith develops a theory of psychology in which individuals seek the approval of the "impartial spectator" as a result of a natural desire to have outside observers sympathise with their sentiments. Rather than viewing The Theory of Moral Sentiments and The Wealth of Nations as presenting incompatible views of human nature, some Smith scholars regard the works as emphasising different aspects of human nature that vary depending on the situation. Otteson argues that both books are Newtonian in their methodology and deploy a similar "market model" for explaining the creation and development of large-scale human social orders, including morality, economics, as well as language.[77] Ekelund and Hebert offer a differing view, observing that self-interest is present in both works and that "in the former, sympathy is the moral faculty that holds self-interest in check, whereas in the latter, competition is the economic faculty that restrains self-interest."[78]

The Wealth of Nations[edit]
Main article: The Wealth of Nations
A brown building
Later building on the site where Smith wrote The Wealth of Nations
There is disagreement between classical and neoclassical economists about the central message of Smith's most influential work: An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Neoclassical economists emphasise Smith's invisible hand,[79] a concept mentioned in the middle of his work – Book IV, Chapter II – and classical economists believe that Smith stated his programme for promoting the "wealth of nations" in the first sentences, which attributes the growth of wealth and prosperity to the division of labour.

Smith used the term "the invisible hand" in "History of Astronomy"[80] referring to "the invisible hand of Jupiter," and once in each of his The Theory of Moral Sentiments[81] (1759) and The Wealth of Nations[82] (1776). This last statement about "an invisible hand" has been interpreted in numerous ways.

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

Those who regard that statement as Smith's central message also quote frequently Smith's dictum:[83]

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

The first page of a book
The first page of The Wealth of Nations, 1776 London edition
Smith's statement about the benefits of "an invisible hand" may be meant to answer[citation needed] Mandeville's contention that "Private Vices ... may be turned into Public Benefits".[84] It shows Smith's belief that when an individual pursues his self-interest under conditions of justice, he unintentionally promotes the good of society. Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services. Nevertheless, he was wary of businessmen and warned of their "conspiracy against the public or in some other contrivance to raise prices".[85] Again and again, Smith warned of the collusive nature of business interests, which may form cabals or monopolies, fixing the highest price "which can be squeezed out of the buyers".[86] Smith also warned that a business-dominated political system would allow a conspiracy of businesses and industry against consumers, with the former scheming to influence politics and legislation. Smith states that the interest of manufacturers and merchants "in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public ... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention."[87] Thus Smith's chief worry seems to be when business is given special protections or privileges from government; by contrast, in the absence of such special political favours, he believed that business activities were generally beneficial to the whole society:

It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society. (The Wealth of Nations, I.i.10)

The neoclassical interest in Smith's statement about "an invisible hand" originates in the possibility of seeing it as a precursor of neoclassical economics and its concept of general equilibrium – Samuelson's "Economics" refers six times to Smith's "invisible hand". To emphasise this connection, Samuelson[88] quotes Smith's "invisible hand" statement substituting "general interest" for "public interest". Samuelson[89] concludes: "Smith was unable to prove the essence of his invisible-hand doctrine. Indeed, until the 1940s no one knew how to prove, even to state properly, the kernel of truth in this proposition about perfectly competitive market."

Very differently, classical economists see in Smith's first sentences his programme to promote "The Wealth of Nations". Using the physiocratical concept of the economy as a circular process, to secure growth the inputs of Period 2 must exceed the inputs of Period 1. Therefore, those outputs of Period 1 which are not used or usable as inputs of Period 2 are regarded as unproductive labour, as they do not contribute to growth. This is what Smith had heard in France from, among others, Quesnay. To this French insight that unproductive labour should be reduced to use labour more productively, Smith added his own proposal, that productive labour should be made even more productive by deepening the division of labour. Smith argued that deepening the division of labour under competition leads to greater productivity, which leads to lower prices and thus an increasing standard of living—"general plenty" and "universal opulence"—for all. Extended markets and increased production lead to the continuous reorganisation of production and the invention of new ways of producing, which in turn lead to further increased production, lower prices, and improved standards of living. Smith's central message is therefore that under dynamic competition a growth machine secures "The Wealth of Nations". Smith's argument predicted Britain's evolution as the workshop of the world, underselling and outproducing all its competitors. The opening sentences of the "Wealth of Nations" summarise this policy:

The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes ... . [T]his produce ... bears a greater or smaller proportion to the number of those who are to consume it ... .ut this proportion must in every nation be regulated by two different circumstances;

first, by the skill, dexterity, and judgment with which its labour is generally applied; and,
secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed [emphasis added].[90]
However, Smith added that the "abundance or scantiness of this supply too seems to depend more upon the former of those two circumstances than upon the latter."[91]

Criticism and dissent[edit]
Alfred Marshall criticised Smith's definition of the economy on several points. He argued that man should be equally important as money, services are as important as goods, and that there must be an emphasis on human welfare, instead of just wealth. The "invisible hand" only works well when both production and consumption operates in free markets, with small ("atomistic") producers and consumers allowing supply and demand to fluctuate and equilibrate. In conditions of monopoly and oligopoly, the "invisible hand" fails. Nobel Prize-winning economist Joseph E. Stiglitz says, on the topic of one of Smith's better-known ideas: "the reason that the invisible hand often seems invisible is that it is often not there."[92]

Other works[edit]
A burial
Smith's burial place in Canongate Kirkyard
Shortly before his death, Smith had nearly all his manuscripts destroyed. In his last years, he seemed to have been planning two major treatises, one on the theory and history of law and one on the sciences and arts. The posthumously published Essays on Philosophical Subjects, a history of astronomy down to Smith's own era, plus some thoughts on ancient physics and metaphysics, probably contain parts of what would have been the latter treatise. Lectures on Jurisprudence were notes taken from Smith's early lectures, plus an early draft of The Wealth of Nations, published as part of the 1976 Glasgow Edition of the works and correspondence of Smith. Other works, including some published posthumously, include Lectures on Justice, Police, Revenue, and Arms (1763) (first published in 1896); and Essays on Philosophical Subjects (1795).[93]

What is Career Development?
Career development is an ongoing process, one that you should be focused on as you approach a career and progress through it.
Career development helps you take stock of who you are and where you want to go in life. In order to achieve growth, continue learning, and achieve momentum in your career you must assess your situation and your goals frequently, otherwise you doom yourself to the fate of a robot working a daily routine. Here are a few career development questions you can ask yourself:

Where do I want to be in my career at the end of this year? What job would I like to retire from? It’s O.K. to think about next month or even 30 years from now. You can’t achieve career development without having a goal.
Do I like the field I’m working in? Career development doesn’t mean you have to develop the career you currently in, but can also mean changing careers, even changing environments. Perhaps you’ve always wanted to work in the big city. You can start thinking now about finding jobs in New York or jobs in Philadelphia. Remember, it is your career, your life, your choices. Answer your questions honestly (there are no rights or wrongs!) and reconsider the questions from time-to-time as your desires may change.
What would I like to learn more about? If you have strong interests in a particular area, you also probably have strengths and talents in that area. Your desire to learn more about a certain subject or field will propel you faster in your career. Find your niche!
Career Planning and Development – What is Career Planning?
Once you’ve answered these and other important questions about your career, it is time to come up with solutions.
For instance, if your ultimate goal is to become a Chief Financial Officer in a large corporation, you’ll need to map out the way to get there.
What will you need to do to qualify for such a position?

What kind of education and certifications are typically required?
What do the backgrounds of those who have achieved this position look like?
Which organizations are important to belong to? How can you network with other financial professionals?
What steps will you need to take to move in this direction and what goals will you need to set to reach this goal by a certain time?
Your goals and solutions need to be very specific. This isn’t to say that you can’t revisit your planning and development and make adjustments (after all, life isn’t 100% predictable and we are not, in fact, robots) but writing out your career plan will make your goals more attainable because they become concrete and will remind you of the steps necessary to achieve what you desire.

What is Career Management?
Development and planning are all part of career management. Make no mistake, you are in charge of your career and personal development.
Employers will not make sure you are keeping up with current trends, skill development, and other things necessary to ensure you are an employable candidate. They will do so only as far as it suits their own needs. If your personal career goals do not align with your employer’s career opportunities, you must take control by assessing, developing, planning, and maintaining an upward track.

Many things both internally at your place of employment and externally (who you meet, courses you take, decisions you make) will affect your career.
You can still meet your goals if you manage your career by constantly coming back to your development plans, looking at your goals, and re-answering your questions. You may need to come up with new solutions as you take unexpected turns in your path, but you’ll still be moving onwards and upwards if you follow a career plan.

Finance / Finance
« on: July 25, 2018, 01:27:23 PM »

Finance is a field that is concerned with the allocation (investment) of assets and liabilities over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the science of money management. Market participants in the market aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be broken into three sub-categories: public finance, corporate finance and personal finance.
1   Areas of finance
1.1   Personal finance
1.2   Corporate finance
1.2.1   Financial services
1.3   Public finance
2   Capital
3   Financial theory
3.1   Financial economics
3.2   Financial mathematics
3.3   Experimental finance
3.4   Behavioral finance
4   Professional qualifications
5   Unsolved problems in finance
6   See also
7   References
8   External links
Areas of finance[edit]

Financial position: is concerned with understanding the personal resources available by examining net worth and household cash flows. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flows total up all from the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished.
Adequate protection: the analysis of how to protect a household from unforeseen risks. These risks can be divided into the following: liability, property, death, disability, health and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract. Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals, athletes and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning.
Tax planning: typically the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax. Typically, as one's income grows, a higher marginal rate of tax must be paid. Understanding how to take advantage of the myriad tax breaks when planning one's personal finances can make a significant impact in which it can later save you money in the long term.
Investment and accumulation goals: planning how to accumulate enough money – for large purchases and life events – is what most people consider to be financial planning. Major reasons to accumulate assets include purchasing a house or car, starting a business, paying for education expenses, and saving for retirement. Achieving these goals requires projecting what they will cost, and when you need to withdraw funds that will be necessary to be able to achieve these goals. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which typically will subject the portfolio to a number of risks. Managing these portfolio risks is most often accomplished using asset allocation, which seeks to diversify investment risk and opportunity. This asset allocation will prescribe a percentage allocation to be invested in stocks (either preferred stock or common stock), bonds (for example mutual bonds or government bonds, or corporate bonds), cash and alternative investments. The allocation should also take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person.
Retirement planning is the process of understanding how much it costs to live at retirement, and coming up with a plan to distribute assets to meet any income shortfall. Methods for retirement plans include taking advantage of government allowed structures to manage tax liability including: individual (IRA) structures, or employer sponsored retirement plans, annuities and life insurance products.
Estate planning involves planning for the disposition of one's assets after death. Typically, there is a tax due to the state or federal government at one's death. Avoiding these taxes means that more of one's assets will be distributed to one's heirs. One can leave one's assets to family, friends or charitable groups.
Corporate finance[edit]
Main article: Corporate finance

Jack Welch an American retired business executive, author, and chemical engineer. He was chairman and CEO of General Electric between 1981 and 2001. During his tenure at GE, the company's value rose 4,000%.
Corporate finance deals with the sources funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms. Corporate finance generally involves balancing risk and profitability, while attempting to maximize an entity's assets, net incoming cash flow and the value of its stock, and generically entails three primary areas of capital resource allocation. In the first, "capital budgeting", management must choose which "projects" (if any) to undertake. The discipline of capital budgeting may employ standard business valuation techniques or even extend to real options valuation; see Financial modeling. The second, "sources of capital" relates to how these investments are to be funded: investment capital can be provided through different sources, such as by shareholders, in the form of equity (privately or via an initial public offering), creditors, often in the form of bonds, and the firm's operations (cash flow). Short-term funding or working capital is mostly provided by banks extending a line of credit. The balance between these elements forms the company's capital structure. The third, "the dividend policy", requires management to determine whether any unappropriated profit (excess cash) is to be retained for future investment / operational requirements, or instead to be distributed to shareholders, and if so, in what form. Short term financial management is often termed "working capital management", and relates to cash-, inventory- and debtors management.

Corporate finance also includes within its scope business valuation, stock investing, or investment management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value over time that will in hope give back a higher rate of return when it comes to disbursing dividends. In investment management – in choosing a portfolio – one has to use financial analysis to determine what, how much and when to invest. To do this, a company must:

Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
Identify the appropriate strategy: active versus passive hedging strategy
Measure the portfolio performance

James Harris Simons American mathematician, hedge fund manager, and philanthropist. He is known as a quantitative investor and in 1982 founded Renaissance Technologies, a private hedge fund based in East Setauket, NY.
Financial management overlaps with the financial function of the accounting profession. However, financial accounting is the reporting of historical financial information, while financial management is concerned with the allocation of capital resources to increase a firm's value to the shareholders and increase their rate of return on the investments.

Financial risk management, an element of corporate finance, is the practice of creating and protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. (Other risk types include foreign exchange, shape, volatility, sector, liquidity, inflation risks, etc.) It focuses on when and how to hedge using financial instruments; in this sense it overlaps with financial engineering. Similar to general risk management, financial risk management requires identifying its sources, measuring it (see: Risk measure#Examples), and formulating plans to address these, and can be qualitative and quantitative. In the banking sector worldwide, the Basel Accords are generally adopted by internationally active banks for tracking, reporting and exposing operational, credit and market risks.[2]

Financial services[edit]
Main article: Financial services
An entity whose income exceeds its expenditure can lend or invest the excess income to help that excess income produce more income in the future. Though on the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower—a financial intermediary such as a bank—or buy notes or bonds (corporate bonds, government bonds, or mutual bonds) in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance) and by a wide variety of other organizations such as schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Finance is one of the most important aspects of business management and includes analysis related to the use and acquisition of funds for the enterprise.

In corporate finance, a company's capital structure is the total mix of financing methods it uses to raise funds. One method is debt financing, which includes bank loans and bond sales. Another method is equity financing – the sale of stock by a company to investors, the original shareholders (they own a portion of the business) of a share. Ownership of a share gives the shareholder certain contractual rights and powers, which typically include the right to receive declared dividends and to vote the proxy on important matters (e.g., board elections). The owners of both bonds (either government bonds or corporate bonds) and stock (whether its preferred stock or common stock), may be institutional investors – financial institutions such as investment banks and pension funds  or private individuals, called private investors or retail investors.

Public finance[edit]
Main article: Public finance
Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It usually encompasses a long-term strategic perspective regarding investment decisions that affect public entities.[3] These long-term strategic periods usually encompass five or more years.[4] Public finance is primarily concerned with:

Identification of required expenditure of a public sector entity
Source(s) of that entity's revenue
The budgeting process
Debt issuance (municipal bonds) for public works projects
Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.[5]

Main article: Financial capital
Capital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service. (Capital has two types of sources, equity and debt).

The deployment of capital is decided by the budget. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment.

A budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.

Budgets will include proposed fixed asset requirements and how these expenditures will be financed. Capital budgets are often adjusted annually (done every year) and should be part of a longer-term Capital Improvements Plan.

A cash budget is also required. The working capital requirements of a business are monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.

The cash budget is basically a detailed plan that shows all expected sources and uses of cash when it comes to spending it appropriately. The cash budget has the following six main sections:

Beginning cash balance – contains the last period's closing cash balance, in other words, the remaining cash of the last year.
Cash collections – includes all expected cash receipts (all sources of cash for the period considered, mainly sales)
Cash disbursements – lists all planned cash outflows for the period such as dividend, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortization, etc.)
Cash excess or deficiency – a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.
Financing – discloses the planned borrowings and repayments of those planned borrowings, including interest.
Financial theory[edit]
Financial economics[edit]
Main article: Financial economics
Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to goods and services. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centres on managing risk in the context of the financial markets, and the resultant economic and financial models. It essentially explores how rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and hence also contributes to corporate finance theory. Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.

Although they are closely related, the disciplines of economics and finance are distinct. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.

Financial mathematics[edit]
Main article: Financial mathematics
Financial mathematics is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory that is involved in financial mathematics. Generally, mathematical finance will derive, and extend, the mathematical or numerical models suggested by financial economics. In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Arguably, these are largely synonymous, although the latter focuses on application, while the former focuses on modelling and derivation (see: Quantitative analyst). The field is largely focused on the modelling of derivatives, although other important subfields include insurance mathematics and quantitative portfolio problems. See Outline of finance: Mathematical tools; Outline of finance: Derivatives pricing.

Experimental finance[edit]
Main article: Experimental finance
Experimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions and therefore prove them, and attempt to discover new principles on which such theory can be extended and be applied to future financial decisions. Research may proceed by conducting trading simulations or by establishing and studying the behavior, and the way that these people act or react, of people in artificial competitive market-like settings.

Behavioral finance[edit]
Main article: Behavioral economics
Behavioral finance studies how the psychology of investors or managers affects financial decisions and markets when making a decision that can impact either negatively or positively on one of their areas. Behavioral finance has grown over the last few decades to become central and very important to finance.[6]

Behavioral finance includes such topics as:

Empirical studies that demonstrate significant deviations from classical theories.
Models of how psychology affects and impacts trading and prices
Forecasting based on these methods.
Studies of experimental asset markets and use of models to forecast experiments.
A strand of behavioral finance has been dubbed quantitative behavioral finance, which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of these endeavors has been led by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Among other topics, quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets.

Finance / What is Finance? Meaning Definition Features of Finance
« on: July 25, 2018, 01:24:44 PM »
What is Finance? Meaning Definition Features of Finance

Before we begin, first let’s understand the origin of word “FINANCE.”

If we trace the origin of finance, there is evidence to prove that it is as old as human life on earth. The word finance was originally a French word. In the 18th century, it was adapted by English speaking communities to mean “the management of money.” Since then, it has found a permanent place in the English dictionary. Today, finance is not merely a word else has emerged into an academic discipline of greater significance. Finance is now organized as a branch of Economics.

Furthermore, the one word which can easily replace finance is “EXCHANGE." Finance is nothing but an exchange of available resources. Finance is not restricted only to the exchange and/or management of money. A barter trading system is also a type of finance. Thus, we can say, Finance is an art of managing various available resources like money, assets, investments, securities, etc.

At present, we cannot imagine a world without Finance. In other words, Finance is the soul of our economic activities. To perform any economic activity, we need certain resources, which are to be pooled in terms of money (i.e. in the form of currency notes, other valuables, etc.). Finance is a prerequisite for obtaining physical resources, which are needed to perform productive activities and carrying business operations such as sales, pay compensations, reserve for contingencies (unascertained liabilities) and so on.

Hence, Finance has now become an organic function and inseparable part of our day-to-day lives. Today, it has become a word which we often encounter on our daily basis.

square Definition of Finance

Finance is defined in numerous ways by different groups of people. Though it is difficult to give a perfect definition of Finance following selected statements will help you deduce its broad meaning.

1. In General sense,

"Finance is the management of money and other valuables, which can be easily converted into cash."
2. According to Experts,

"Finance is a simple task of providing the necessary funds (money) required by the business of entities like companies, firms, individuals and others on the terms that are most favourable to achieve their economic objectives."
3. According to Entrepreneurs,

"Finance is concerned with cash. It is so, since, every business transaction involves cash directly or indirectly."
4. According to Academicians,

"Finance is the procurement (to get, obtain) of funds and effective (properly planned) utilisation of funds. It also deals with profits that adequately compensate for the cost and risks borne by the business."

square Features of Finance

The main characteristics or features of finance are depicted below.

features of finance

Article and Image Credits © Moon Rodriguez.

1. Investment Opportunities

In Finance, Investment can be explained as a utilisation of money for profit or returns.

Investment can be done by:-

Creating physical assets with the money (such as development of land, acquiring commercial assets, etc.),
Carrying on business activities (like manufacturing, trading, etc.), and
Acquiring financial securities (such as shares, bonds, units of mutual funds, etc.).
Investment opportunities are commitments of monetary resources at different times with an expectation of economic returns in the future.

2. Profitable Opportunities

In Finance, Profitable opportunities are considered as an important aspiration (goal).

Profitable opportunities signify that the firm must utilize its available resources most efficiently under the conditions of cut-throat competitive markets.

Profitable opportunities shall be a vision. It shall not result in short-term profits at the expense of long-term gains.

For example, business carried on with non-compliance of law, unethical ways of acquiring the business, etc., usually may result in huge short-term profits but may also hinder the smooth possibility of long-term gains and survival of business in the future.

3. Optimal Mix of Funds

Finance is concerned with the best optimal mix of funds in order to obtain the desired and determined results respectively.

Primarily, funds are of two types, namely,

Owned funds (Promoter Contribution, Equity shares, etc.), and
Borrowed funds (Bank Loan, Bank overdraft, Debentures, etc).
The composition of funds should be such that it shall not result in loss of profits to the Entrepreneurs (Promoters) and must recover the cost of business units effectively and efficiently.

4. System of Internal Controls

Finance is concerned with internal controls maintained in the organisation or workplace.

Internal controls are set of rules and regulations framed at the inception stage of the organisation, and they are altered as per the requirement of its business.

However, these rules and regulations are monitored at various intervals to accomplish the same which have been consistently followed.

5. Future Decision Making

Finance is concerned with the future decision of the organisation.

A "Good Finance” is an indicator of growth and good returns. This is possible only with the good analytical decision of the organisation. However, the decision shall be framed by giving more emphasis on the present and future perspective (economic conditions) respectively.

square Conclusion on Finance

Finance to be more precise is concerned with the management of,

Owned funds (promoter contribution),
Raised funds (equity share, preference share, etc.), and
Borrowed funds (loans, debentures, overdrafts, etc.).
At the same time, Finance also encompasses wider perspective of managing the business generated assets and other valuables more efficiently.


Finance / Finance
« on: July 25, 2018, 01:22:42 PM »
Definition: Finance


At its most fundamental level, finance is the business discipline concerned with managing money efficiently. It often is rightly categorized as a branch of applied economics. Accordingly, people who are well-versed in the principles of economics typically grasp financial concepts quite readily, if not intuitively. Some of the most essential topics in finance include:


In the application of financial principles and methods, there tend to be specialized considerations based on the type of entity in question. As a result, finance often is described as comprising four main categories:

Individual finance or household finance or consumer finance
Business finance or corporate finance
Nonprofit finance
Government finance or public finance
Financial Services and Financial Management:
Yet another distinction must be drawn between the financial services industry and the financial management function. Follow the link for details.

In short, the financial services industry plays these key roles:

Moving funds efficiently between savers and borrowers
Raising capital for businesses and governments
Offering investment advice
Managing investment accounts
Mitigating the risks of financial loss (the essence of insurance)
Meanwhile, the financial management function exists in various forms within businesses, nonprofits and government entities alike. People in this line of work are responsible for the wise, legal, proper and efficient use of organizational funds. In the case of for-profit businesses, financial managers play a key role in finding and implementing strategies to increase profitability.

Financial Data:
Finance is heavily dependent on the collection, maintenance and analysis of data on money flows, assets (what is owned) and liabilities (what is owed). Accordingly, many conventions have been established regarding financial record keeping and reporting, and the best organizations are constantly seeking improvements in their internal management reporting systems. Likewise, individuals and households that manage their own finances most effectively tend to be highly organized and precise in their own record keeping.

Measuring and Managing:
A very old adage in business is that you cannot manage what you cannot measure. Finance has a long history as being an especially data-driven field, and general managers in a wide variety of enterprises typically look to their financial organizations to supply and to interpret the data that is so essential to managing an enterprise intelligently.

Accounting and the Language of Business:
Accounting long has been described as the language of business. In fact, a classic textbook in the field had precisely that as its title. Established accounting principles guide financial record keeping and reporting. As a result, having at least a passing familiarity with basic accounting concepts is highly beneficial, if not essential, for most financial professionals.

Public accounting firms, meanwhile, are entrusted with verifying the accuracy of financial reports upon which the investing public, money managers, securities analysts and financial advisors (among many others) rely. Many of them also offer management consulting services that include giving advice on financial management methods and techniques.

Finance as an Academic Discipline:
Courses in finance are core offerings of every school of business, at both the undergraduate and graduate levels. Moreover, at many business schools, finance long has been both the most popular major and finance courses tend to be heavily subscribed with students pursuing other majors. It is reflective of the proven utility of financial knowledge in the job market.

An interesting historical footnote regards the world's first collegiate school of business, The Wharton School of the University of Pennsylvania. At its founding in 1881, its full name was The Wharton School of Finance and Economy, changed to The Wharton School of Finance and Commerce in 1902. Since 1972 it has simply been The Wharton School. Nonetheless, many people continue to call it The Wharton School of Finance, reflecting what has remained its most popular and notable course of study.

More significantly, this history indicates that the importance of finance as a discipline goes back to the very start of formal business education. Also note the implied affinity between finance and economics as courses of study, in the school's first name.

Interestingly, while graduates of Wharton's MBA program get degrees in majors such as finance, accounting, marketing or management (among many others), all undergraduates get a BS in economics, despite most of their coursework being in true business fields such as finance, accounting, marketing and management, rather than in the theoretical economics as taught in liberal arts colleges. Wharton explains this by saying that these business-related fields fundamentally involve practical applications of economic theory.

The researcher as an outsider or an insider

The researcher’s perspective is not only related to philosophical questions of subjectivity and objectivity but also to the researcher’s position with respect to the subject researched. This is particularly relevant for work-based projects where researchers are looking at their own organisation, group or community. In relation to the researcher’s position, s/he can be an insider or an outsider. Here the term ‘insider’ will include the semi-insider position, and the term ‘outsider’ will include the semi-outsider position. If you belong to the group you want to study, you become an ‘insider-researcher’. For example, if you want to conduct your research project with HR managers and you are a HR manager yourself you will have a common language and a common understanding of the issues associated with doing the same job. While, on one hand, the insider perspective allows special sensitivity, empathy and understanding of the matters, which may not be so clear to an outsider, it may also lead to greater bias or to a research direction that is more important to the researcher. On the other hand, an outsider-researcher would be more detached, less personal, but also less well-informed.

Rabe (2003) suggests that once outsider and insider perspectives in research are examined, three concepts can lead to a better understanding. First, the outsider and insider can be understood by considering the concept of power: there is power involved in the relationship between the researcher and the people and organisations participating in the research. As researchers are gathering data from the research participants, they have the power to represent those participants in any way they choose. The research participants have less power, although they can choose what to say to the researchers. This has different implications for insiders and outsiders. It is obvious that in the case of work-based projects conducted in your organisation, the ways in which you choose to represent your colleagues and your organisation places you in a position of power.

Second, insider and outsider perspectives can be understood in the context of knowledge: the insider has inside knowledge that the outsider does not have. If you conduct research in your organisation, institution or profession you will have access to inside knowledge that an outsider will not be able to gain.

The third way in which the insider/outsider concept can be understood is by considering the role of the researcher in the field of anthropology. In fact, anthropologists approach those being studied (e.g. remote cultures, tribes, social groups) as outsiders. As researchers experience the life of those studied by living with them, they acquire an insider’s perspective. The goal is to obtain both insider and outsider knowledge and to maintain the appropriate detachment. This approach applies to participatory research in general, not only anthropology.

Business Research Methodology / Research design
« on: July 18, 2018, 11:53:58 AM »
Research design


In planning your project you need to think about how you will design and conduct the study as well as how you will present and write up the findings. The design is highly dependent upon the research strategy. It refers to the practical choices regarding how the strategy is implemented in practice. You need to think about what type of data (evidence) would best address the research questions; for example, when considering case study research, questions of design will address the choice of the specific methods of data collection, e.g. if observation, what to observe and how to record it? For how long? Which department or work environment to observe? If interviews are chosen, you need to ask yourself what type? How many? With whom? How long should they be? How will I record them? Where will they be conducted?

The following list (adapted from Cameron and Price, 2009) shows some of the different types of data, or sources of evidence, available to draw on:

statistics (e.g. government)
focus groups
organisational records
documents (e.g. organisational policies)
secondary data.

Objective and subjective research perspectives

Research in social science requires the collection of data in order to understand a phenomenon. This can be done in a number of ways, and will depend on the state of existing knowledge of the topic area. The researcher can:

Explore a little known issue. The researcher has an idea or has observed something and seeks to understand more about it (exploratory research).
Connect ideas to understand the relationships between the different aspects of an issue, i.e. explain what is going on (explanatory research).
Describe what is happening in more detail and expand the initial understanding (explicatory or descriptive research).
Exploratory research is often done through observation and other methods such as interviews or surveys that allow the researcher to gather preliminary information.

Explanatory research, on the other hand, generally tests hypotheses about cause and effect relationships. Hypotheses are statements developed by the researcher that will be tested during the research. The distinction between exploratory and explanatory research is linked to the distinction between inductive and deductive research. Explanatory research tends to be deductive and exploratory research tends to be inductive. This is not always the case but, for simplicity, we shall not explore the exceptions here.

Descriptive research may support an explanatory or exploratory study. On its own, descriptive research is not sufficient for an academic project. Academic research is aimed at progressing current knowledge.

The perspective taken by the researcher also depends on whether the researcher believes that there is an objective world out there that can be objectively known; for example, profit can be viewed as an objective measure of business performance. Alternatively the researcher may believe that concepts such as ‘culture’, ‘motivation’, ‘leadership’, ‘performance’ result from human categorisation of the world and that their ‘meaning’ can change depending on the circumstances. For example, performance can mean different things to different people. For one it may refer to a hard measure such as levels of sales. For another it may include good relationships with customers. According to this latter view, a researcher can only take a subjective perspective because the nature of these concepts is the result of human processes. Subjective research generally refers to the subjective experiences of research participants and to the fact that the researcher’s perspective is embedded within the research process, rather than seen as fully detached from it.

On the other hand, objective research claims to describe a true and correct reality, which is independent of those involved in the research process. Although this is a simplified view of the way in which research can be approached, it is an important distinction to think about. Whether you think about your research topic in objective or subjective terms will determine the development of the research questions, the type of data collected, the methods of data collection and analysis you adopt and the conclusions that you draw. This is why it is important to consider your own perspective when planning your project.

Subjective research is generally referred to as phenomenological research. This is because it is concerned with the study of experiences from the perspective of an individual, and emphasises the importance of personal perspectives and interpretations. Subjective research is generally based on data derived from observations of events as they take place or from unstructured or semi-structured interviews. In unstructured interviews the questions emerged from the discussion between the interviewer and the interviewee. In semi-structured interviews the interviewer prepares an outline of the interview topics or general questions, adding more as needs emerged during the interview. Structured interviews include the full list of questions. Interviewers do not deviate from this list. Subjective research can also be based on examinations of documents. The researcher will attribute personal interpretations of the experiences and phenomena during the process of both collecting and analysing data. This approach is also referred to as interpretivist research. Interpretivists believe that in order to understand and explain specific management and HR situations, one needs to focus on the viewpoints, experiences, feelings and interpretations of the people involved in the specific situation.

Conversely, objective research tends to be modelled on the methods of the natural sciences such as experiments or large scale surveys. Objective research seeks to establish law-like generalisations which can be applied to the same phenomenon in different contexts. This perspective, which privileges objectivity, is called positivism and is based on data that can be subject to statistical analysis and generalisation. Positivist researchers use quantitative methodologies, which are based on measurement and numbers, to collect and analyse data. Interpretivists are more concerned with language and other forms of qualitative data, which are based on words or images. Having said that, researchers using objectivist and positivist assumptions sometimes use qualitative data while interpretivists sometimes use quantitative data. (Quantitative and qualitative methodologies will be discussed in more detail in the final part of this course.) The key is to understand the perspective you intend to adopt and realise the limitations and opportunities it offers. Table 1 compares and contrasts the perspectives of positivism and interpretivism.

Business Research Methodology / Research methodology
« on: July 18, 2018, 11:50:19 AM »
Research methodology

The most important methodological choice researchers make is based on the distinction between qualitative and quantitative data. As mentioned previously, qualitative data takes the form of descriptions based on language or images, while quantitative data takes the form of numbers.

Qualitative data is richer and is generally grounded in a subjective and interpretivist perspective. However, while this is generally the case, it is not always so. Qualitative research supports an in-depth understanding of the situation investigated and, due to time constraints, it generally involves a small sample of participants. For this reason the findings are limited to the sample studied and cannot be generalised to other contexts or to the wider population. Popular methods based on qualitative data include semi-structured or unstructured interviews, participant observations and document analysis. Qualitative analysis is generally more time-consuming than quantitative analysis.

Quantitative data, on the other hand, might be easier to collect and analyse and it is based on a large sample of participants. Quantitative methods are based on data that can be ‘objectively’ measured with numbers. The data is analysed through numerical comparisons and statistical analysis. For this reason it appears more ‘scientific’ and may appeal to people who seek clear answers to specific causal questions. Quantitative analysis is often quicker to carry out as it involves the use of software. Owing to the large number of respondents it allows generalisation to a wider group than the research sample. Popular methods based on quantitative data include questionnaires and organisational statistical records among others.

The choice of which methodology to use will depend on your research questions, the formulation of which is consequently informed by your research perspective. Generally, unstructured or semi-structured interviews produce qualitative data and questionnaires produce quantitative data, but such a distinction is not always applicable. In fact, language-based data can often be translated into numbers; for example, by reporting the frequency of certain key words. Questionnaires can produce quantitative as well as qualitative data; for example, multiple choice questions produce quantitative data, while open questions produce qualitative data.

Research and Publication / Why Research is Important for Students?
« on: July 17, 2018, 12:13:13 PM »
Why Research is Important for Students?

The research is important for the students because it helps them to have a detailed analysis of everything. When you have proper in depth analysis on any topic, the result comes out to be fruitful and also the knowledge is enhanced. Other benefits of research to the students are as follows:

1. Enhances the knowledge:
When you do research on any topic, you get to know detailed information about that topic. The more the knowledge of the topic, the more successful is the research. So, in order to get good output, the student needs to do maximum research.

2. Clarifies confusion:
The research helps in clarifying the complicated facts and figures. If the student has any doubt on the subject, the student must research and study on it in detail so as to remove all sorts of confusion and get the proper understanding of the content.

3. To have a proper understanding of the subject:
To understand the subject, one needs to go in depth of the lines. The scanning of the content will never do any good for the students.

In order to learn the subject and to know the unknown facts, research, detail study and full analysis are must.

4. To learn about the methods and issues:
Proper reading, finding is the only way by which you can learn about the methods and the current issues. Not just the current issues, rather the previous past issues can also be learned in detail through the research. The research includes various methods by which it can be done.

5. Understand the published work:
Research is done through the work already published. The experts and the researchers had already done some of the research and the students are asked to go through that published material to know the idea and the vision of those researchers.

6. Learn to create a balance between the collaborative and individual work:
When the students do research, they get to learn how to create a balance between the collaborative and the individual work. Individual work is which the student has to do, while the collaborative work means that work which has already been done by the previous researchers.

So, in this manner, the students get to know which points are to be taken into the consideration and which points are to be ignored.

7. To know the interest:
The students also get to know their area of interest. Sometimes, the students aspire to become researchers only in their near future which is quite helpful.

So, through this we come to know that the research not only helps with the accomplishment of the work, but also helps in knowing what needs to be done in their future.

8. To know how the original study originated:
Research is done to know the concept from the scratch. Like, if you wish to know from where has the concept originated, then this could be done only through the research work.

It can also be defined as an investigation, because the student eventually ends up with expanded research.

9. Understanding of the rationale:
By engaging in the process of research, the students understands the concept in an easier manner as the rationale of the topic is known in a better manner.

For example, by preparing the hypothesis, one truly understands the nuances of the research topic. Not just this, the research also helps in being a source of one on one mentorship which also plays a vital role in the brain development of the individual.

So, above are the reasons by which we come to know the benefits of the research for the students.

What is the Importance of Research to Humankind:
Humankind involves everything from a pin to an elephant. Every bit of information, the things to live and survive are needed for the mankind, should be known.

As if the essentials will not be known then we will remain illiterate, unaware of what is happening in the society or around the world. Research is important for the humankind because of the various factors:

1. Helps in understanding the society:
When one does some research related to the society, the man becomes aware and also alert of the good and bad things. In order to know the society’s norms, policies, code of conduct, one needs to do proper research or it may become difficult to survive in the society.

2. Helps in knowing the culture:
Every society has its own culture. In order to understand the culture of particular society, research about that society is needed.

If you do not do research or read maximum about any topic, you will fail to know the hidden meanings and the concepts about the society’s culture and will remain unaware about the same. So, if you are curious to know and learn something new, then the research work will help.

3. For more awareness, research is needed:
To make yourself aware, reading is the key. Read the published books and the research already done by any expert.

Once you have gone through the research work of great alumni, you feel like being on the top of the world as the information flows into your head. Not just this, if you wish to plan any holiday, you become aware of the weather and the requirements of that particular place. This way also research is very helpful.

4. For making the right choices for a career:
Research is needed in all fields, i.e. it is pervasive. For even the smallest information, one needs to research and understand.

For example, if you need to know about the careers with greater scope overseas, you will have to do research for that too. So, this way research is of great importance to everyone, be it a student, a traveler, teacher, professor, researcher himself.

5. Knowing the truth:
If you wish to know the truth about anything, reading, learning and research is the only way. When you read and research on any topic, you get to know the truth.

The real facts and statistics come across which enlightens the person and also increases ones knowledge.

6. Update about the technology:
If there comes any new technology, the human gets to know about that also through the research work.

So, basically research is helpful to human to know what new is coming in the market. Also, it helps in being updated about the present scenario of the society one is living into.

7. Differences between good and bad:
When a person reads the already published material, it builds trust and also enlightens one’s mind. The person is able to differentiate between right and the wrong which further helps in decision making process.

So, above are the reasons which says why one should do research or what is importance of research. It is for the whole mankind, which involves individuals from every group and age. Whatever an individual reads, it somewhere and at sometime surely helps as it gets accumulated in the knowledge bank of an individual.

Why is Research Important in Education:
As earlier said, research is important in all fields, in the similar manner, the importance of research in education is very vital. This is because of various reasons like:

1. It is a systematic analysis:
In education, research is essential as it gives the systematic analysis of the topic. Also the objectives are clearly defined through the research process. One needs to study in a systematic and controlled manner, and this is exactly what the research work provides an individual.

2. Leads to great observations:
In the field of education, the research helps in coming to one conclusion. That conclusion can be achieved by observing the facts and figures in depth.

So, such in depth knowledge is provided by following various research methods only. In this way, research also assists in leading to greater observations.

3. Results in predications, theories and many principles:
The researchers come up with the valid predictions, theories and great results through the observations, hypothesis and the research queries. So, this way also it helps researchers to come up with the great conclusions.

4. Improving practices:
The educational research is important for the students to improve practices and at the same time, it helps in improving those individuals who really wish to bring improvement in those practices.

So, this way educational research helps in overall improvement of the individual. Be it a student or any teacher who is researching on some topic, it is of great help to them. It acts as a lighthouse and empowers the individual.

5. Develops new understanding related to the learning, teaching etc:
The educators are benefited through various research as it helps them in having a better understanding of the subject. Along with this, it develops greater understanding related to the teaching, learning and other educational administration.

The new knowledge further helps in improving educational practices of the teachers and the professors.

6. Helps in initiating the action:
The research you do, should result in performing some action or practice. So, the research should aim to produce the highest result which compliments the study. Also, you should make sure your study ensures the applicable findings so as to match the result.

Research helps in performing well and also sheds away all the problems. This way, you are able to understand the role of research which further helps in decision making process.

7. Helps in decision making:
The good research requires proper time and effort. It prepares the person in taking essential decisions which further necessitates the same from all the participants involved in the process.

For better results, it is important for the participants to consider the required consequences and all the risks involved in the whole process.

8. Brings consistency in the work:
When the work is done with full in depth analysis, it tends to be right and accurate. The process of research help brings consistency in the work, which lessens the flaws and mistakes in the final outcome of the process.

The consistency is needed in all sorts of work or you might have to end up getting wrong and inaccurate result. The research takes lots of time and effort, so it is the duty of the researcher to be specific and sure with the facts so that the end result is clean and without any silly mistakes.

9. Motivates others:
The educational research builds patience because it is a lengthy process. In order to get fruitful results, you need to build patience and only then you will be able to motivate others.

Also, if your research is full of right facts and figures, it will ultimately motivate others. Not just this, an accurate research assists in enhancing the reader’s knowledge which might not be possible for any other person.

So, above are some of the benefits which research provides in the field of education. Every kind of research, every kind of method has been always useful and gives a positive result. In case, you find something fishy during the research work, it is advisable to consult someone superior to you, or some expert.

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