California Management Review

Social Ventures Fail to Raise Sufficient Funds: While social ventures make up only 3% of all startups, they are crucial for the global economy and sustainable business development: social ventures employ more than 200 million people with social missions, are a crucial driver of female business ownership, and the top 500 social ventures alone have improved more than a billion lives over the past 25 years (World Economic Forum, 2024). However, despite their relevance for solving the world’s grand challenges, social ventures face a funding gap of more than $1 trillion in 2024 alone. This gap is particularly problematic for early-stage ventures, as only 2% of the already limited social funding goes to new ventures (Hand et al., 2023). The social venture funding gap is commonly blamed on financially motivated investors who refuse to accept the typically lower financial returns of social ventures. However, new research on the topic (Wesemann & Antretter, 2023), based on a quantitative analysis of 19,757 early-stage investment decisions and interviews with private investors and entrepreneurs, suggests that greed for financial returns is not the main reason for the lack of social investments. In fact, most early-stage investors will accept lower investment returns from social ventures, but do not invest in them because they struggle to assess their impact and goal hierarchy. One investor told us: “I understand the business side; that’s easy. When I built my company, I was the CFO. But I struggle to understand the true social impact of a venture when I invest in it. Like, does it really work? How much good can I buy for a dollar?” The difficulty of communicating social missions is also visible on the entrepreneurs’ side, where the CFO of a clean water venture from Uganda told us about his struggle: “With the rather intangible focus , it is quite challenging to convey our message effectively.” This company only managed to get fundraising off the ground once they adopted an integrated Enterprise Resource Planning (ERP) approach that also quantified the social bottom line. Factors that Limit Social Investments: Overall, our research identified three factors that are associated with low social investment rates. Lack of investor training. Most investors have made their money in for-profit businesses and lack experience in the social sector. While the processes seem similar at first, management and investment processes often cannot be transferred. As a result, angels lack relevant investment training and a solid understanding of double-bottom lines. On average, a one standard deviation increase in investor training was associated with a 12.0% increase in their social venture investment probability. Lack of prior social investment experience. Before their first social investment, most investors are somewhat apprehensive about the sector but warm up quickly once they made their first deal. However, the sector is still so small that it can be difficult to find initial experiences with which to gain experience. Getting angels’ feet wet is important, though: an increase of one standard deviation in social investment experience increases the investment likelihood on additional social opportunities by 13.1%. Lack of professional networks. While early-stage investments are becoming increasingly social activities (e.g., Wesemann & Antretter, 2022), investor collaboration is still rare. However, teaming up increases the likelihood of social investments: according to our research, broadening the breadth of investors’ networks by one standard deviation increases the average social venture investment probability by 15.1%. Social ventures do not have to offer higher returns to investors; they must communicate their purpose better and integrate investors in the impact space.   Three Strategies Help Social Ventures Attract More Social Angel Investments: Ventures can take several steps to improve their chances of investment: Get your finances right. Understand how important financial metrics are to investors. Most have a better understanding of finances than social targets, so expect deeper questions on the finance front. Even entrepreneurs with untested business models must be prepared to engage in hard conversations about cash flows and unit economics. Simplify social metrics. Devote extra time to explaining your social goals; early-stage investors are often puzzled by the mechanisms behind social goals. Use frameworks like the Theory of Change to outline causal effects that connect your actions to broader societal goals. Also clarify the hierarchy between potentially competing goals explicit. What will be prioritized in tradeoff situations? Word-of-mouth referrals. Use existing investor networks to recruit additional ones. Since many investors who want to get involved want to feel a sense of belonging and often even status, making word-of-mouth referrals far superior to cold calls in social investment contexts. Two steps can help investors get started with social investments: For investors, it is perfectly normal to be hesitant to start with social investments. The underlying logics are different, the goals are hard to quantify, and prioritization between social and financial goals is unclear. While social ventures really tend to have more complex and ambiguous goals, uncertainty can still be reduced through mentoring and the use of proven frameworks. Get mentoring. When presented with potentially interesting social venture investment opportunities, use more experienced impact investors as a sounding board and mentors. Ideally, you even make your first social investment in collaboration with other investors. Guidance from more experienced social investors can help you avoid most of the usual pitfalls. The first social investment is the hardest. Initial guidance ensures clarity at the start; experience ensures clarity in later investment evaluations. Learn about frameworks. Familiarize yourself with the most common frameworks (that best align with your approach to impact) of social ventures like the Theory of Change or the Balanced Scorecard Model. There are rich online resources on websites and YouTube that can help you get started.  Collectively, our research shows that low social investment rates by angel investors are not due because they demand impossible profits but because of communication issues. Fixing this can help us close the social venturing gap and get investor money where it is most needed. References: Hand, D., Sounderji, S., & Prardo, N. (2023), “2023 Impact Investing Allocations, Activity & Performance.” Wesemann, H., & Antretter, T. (2022), “Internationalization, Co-Investment Networks, and Business Angel Investment Returns,” Venture Capital, https://doi.org/https://doi.org/10.1080/13691066.2022.2082898 Wesemann, H., & Antretter, T. (2023), “Why don’t you like me? Exploring the social venture funding gap in angel investing,” Journal of Business Venturing Insights, 20, e00433. World Economic Forum (2024), “10 million enterprises putting people and planet first.”

Organizations want to move from understanding artificial intelligence (AI) to implementing this technology. At the same time, they are struggling to come to terms with its rapidly evolving nature, governance, and risk landscape. In this context, the AI Agenda of the International Olympic Committee (IOC) provides an exemplary model for other organizations to follow. As members of the committee that crafted the AI Agenda, we had a close view of this journey. In this article, we provide a roadmap, which we illustrate in Figure 1 and detail below, for other organizations seeking to define their own AI strategy. Figure 1: A visual summary of the guiding principles for an effective AI policy. Strategic Foundation Before an organization commences the process of developing an AI policy, it must introspect on the following two issues: 1. Clarify the main guiding principles and goals of our organization. The potential use cases of AI-based technologies are vast, and organizations must start with a clear understanding of their strategic goals. What is the value of AI to our organization? What kinds of outcomes would we like to inhibit? These foundational elements inform the development of AI policies that align with the organization’s mission. A central component of the IOC’s agenda is the definition of its guiding principles, offering a pertinent example of how to address these questions. They focus on fostering an ethos of integrity, improving access and fairness, scaling the creation of memorable moments, honoring traditions while embracing innovation, and collaborating for shared impact. By grounding its AI policy in these pillars, the IOC has created a robust framework that aligns AI use with the Olympic values. 2. Understand the business we are really in, and who are our stakeholders. In determining their agenda, firms need to avoid narrowly defined policies that may become obsolete as the organization evolves. The IOC recognized the importance of catering to country associations, athletes, fans, and other stakeholders to continuously serve its global mission. This broad scope leads to AI policies that address the diverse needs of the organization’s members, ensuring comprehensive and long-term coverage. The manifestation of these two principles can be seen in the coverage of the Paris Olympic Games. Focus Area 4 in the IOC policy is “Growing Engagement with People.” Consequently, the official broadcasting partner for the games offer daily AI-enabled highlight packages.1 Each reel will be customized in over seven million ways and enhanced with an AI-generated voiceover from Al Michaels, a legendary US sports commentator. Policy Development Once the above questions are resolved, we can proceed to formulate the AI policy document. 3. Involve a broad group of experts and provide them with clear instructions on expectations. Creating effective AI policies is not a task for the IT or the data team alone. Formulating these policies requires input from diverse stakeholders, including technology specialists, subject matter experts, ethicists, and business leaders. It necessitates a 360-degree view of the organization. The IOC’s AI Working Group exemplifies this approach. Comprised of AI pioneers, academics, athletes, and industry representatives from technology providers, the group brought together a wealth of expertise and perspectives. The panel also reflected the truly global nature of the Olympic movement, with experts from the US, Europe, and Australasia, facilitating an inclusive agenda that holistically considers AI deployment, from technical feasibility to ethical implications. 4. Strive for a forward-thinking and inclusive AI policy. Given the rapid evolution of data-driven tools, organizations must adopt a forward-thinking approach to different technology specifications when formulating AI policies. These policies should anticipate future developments and impacts on the organization’s ecosystem due to the fast-changing nature of the technology. For instance, the IOC identifies ensuring equal access to AI’s benefits as one of its focus areas. However, it does not specify the type of AI model to be used, recognizing that the means to achieve access can vary significantly depending on the sport and the societal context. This flexibility allows for using novel AI technologies, maintaining the policy’s relevance across future advancements. Implementation Once the AI policy document is ready, there is a tendency for the process to slow down significantly. 5. Regulate the downside but also incentivize upside applications. When creating AI policies, organizations often focus on mitigating risks. However, it is equally important to incentivize the adoption of AI to drive growth. The IOC’s AI agenda highlights the importance of balancing regulation with incentives. While it addresses the need to mitigate risks, it also emphasizes leveraging AI to drive operational efficiency, sustainability, and an enhanced Olympic experience. Establishing a robust yet flexible governance framework with a clear definition of the organization’s role regarding the use of technology is central to achieving both safety and innovation. For instance, the IOC will act as a Pioneer by leading the creation of AI assets, as a Catalyst by nurturing external AI initiatives, and as a Guardian by ensuring the ethical use of AI across its ecosystem. 6. Don’t create an AI organization, but embed AI into the current organization. Don’t add bureaucracy. Large firms are often tempted to hand over the policy implementation to a specialized ‘AI’ committee. This often has the unintended consequence of introducing roadblocks that are particularly harmful in areas where failing fast and learning are the mainstay. Instead, embedding the policy application within existing workflows avoids additional red tape. For this reason, the IOC incorporates AI across its existing structure by optimizing event management, enhancing athlete support, and improving fan engagement. This requires horizontal and vertical integration, allowing the IOC to leverage AI without creating additional layers of management. Conclusion While the IOC AI Agenda serves as a valuable blueprint for an effective AI policy, it also underscores that organizations must tailor these principles to their unique context. The process behind forming the IOC’s policy demonstrates the importance of a well-rounded, inclusive, and human-centered AI strategy that enables organizations to harness the technology’s potential. https://www.nbcnews.com/news/nbc-use-ai-generated-version-al-michaels-voice-summer-olympics-rcna159108

Executives who believe that their company’s organization never needs redesigning are few and far between: Since an organization is a means to achieve business ends, and since these ends do change over time, the organization design is bound to evolve as well. For example, structural contingency theory opposes the notion that there is one best structural form; instead it states that the most appropriate structural form depends on the specific set of conditions under which the firm operates.1 Hence, when the firm’s external context changes, its organization may have to change as well. So, the need for organizational design changes is not an issue. The real issue is about the optimal pace of change. It breaks down into three sub-questions whenever the concrete need for an organizational redesign emerges: Magnitude: How drastic should the change be, on a scale from “incremental” to “radical”? Frequency: At which intervals should changes occur, on a scale from “continually” to “rarely”? Timing: Should the change be made in anticipation of an emerging need (“proactive”) or after confirmation of a proven need (“reactive”)? There is not a simple algorithm that provides the answer for all particular situations that executives face. Fortunately most executives do not need such an algorithm: They sense quite well what pace of change is the most suitable for any particular situation. What they may lack, however, are metaphors and visuals for convincing stakeholders about the chosen pace of change. Sticky metaphors in particular have proven to be powerful.2 In this article we will share a menu of metaphors and visuals that we have borrowed and adapted or developed through our long advisory work with executives at organizations in a wide variety of situations. An adaptation of the “rugged landscapes” metaphor Daniel Levinthal introduced the “rugged landscapes” metaphor in the context of organizational design.3 Imagine a multi-dimensional map in which each dimension corresponds with one possible design feature, for each of which one can choose a specific position along a scale. For example, the company’s degree of centralization could be one dimension, and its scale could range from highly centralized to highly decentralized. Each combination of chosen positions across the dimensions then corresponds with a different location on the map, and represents a particular organization design. Finally, one adds a dimension indicating the fitness level of the designs. Lest you get a headache from trying to visualize the above abstraction, and for the sake of illustration, let’s limit the number of features to two. One then sees a varied 3D-landscape consisting of lowlands and mountains, with the mountain peaks pointing to alternative designs that fit well with the company’s needs. Exhibit 1 shows an example where design 2, which features a medium level of centralization and a rather strong product focus, appears to be the best fitting design. Depending on its starting position in the landscape, the company may of course discover and go for a different peak. Exhibit 1: A landscape of alternative organization designs This is a genuinely fabulous metaphor. But even with only two design features, it takes quite some 3D-drawing skills to use the metaphor on the fly. That is why we like to convert it into the simple visual shown in Exhibit 2, whereby the positions along the horizontal axis correspond with alternative designs, and the height of the bar indicates the fit of a particular design for the company. Exhibit 2: Fit of alternative organization designs You can use this visual to address questions about the pace of change (see Exhibit 3). For example, if you want to talk about incremental change, you could point to “seismic vibrations”: factors that are leading to slight variations in the height of some adjacent bars, thus the need for the organization design to evolve, a bit toward the left or the right. If you want to talk about radical change, you could point to a “tectonic shift” and the risk of “mountain collapse”: factors that are leading to a drastic shrinkage of the bars at one’s current location and their rise at a distant location, thus the need for migration. Exhibit 3: Visualizing incremental and radical change The magnitude-frequency grid To address questions about the magnitude and/or frequency of change, you can also use a grid combining these two variables (see Exhibit 4). The zone of sensible approaches in most situations stretches from the upper right quadrant (radical + rarely) to the lower left (incremental + continually). A radical design change may be needed at some point, but should not be undertaken lightly. Much as you may aspire rupture with the current way of working, you cannot afford disruption: You have to safeguard the ongoing business, which critically depends on the continuity of your people, processes and networks. Continual radical change leads to exhaustion (“We have barely gotten used to the new way of working, and they’ve changed their mind again.”) Conversely, frequent incremental changes are unavoidable or even desirable: You have to align with external developments and offset design imperfections. Forsaking regular incremental change leads to disfunction and instills a culture of abdication (“I have given up trying to shake up things in this place – nothing ever changes.”) Exhibit 4: Visualizing the varying pace of change To clarify the path to follow when making a radical organization design change, you can also use the rugged landscape visual (see Exhibit 5). In the case of radical change, the option of a long trek – descending from your current peak and climbing toward the targeted peak – doesn’t appear wise: People may constantly look backward while going downhill (possibly not all at the same speed), and then grumble while sweating their way uphill; furthermore, by the time they arrive at destination, the landscape may have shifted again. Therefore, a direct helicopter airlift from the current to the target peak may be the better option. Exhibit 5: Visualizing the paths toward a radical new design The “leap-and-hops” metaphor The magnitude-frequency grid also implies that companies tend to go through cycles consisting of an occasional radical design change followed by a series of incremental changes. We call this the leap-and-hops pattern: Senior management purposefully decides on a major rearrangement of the organization (“deliberate leap”), after which a series of adjustments (“emergent hops”) are made to course-correct and compensate for the inevitable imperfections of the design (see Exhibit 6).4 A leap may be triggered by a major strategic event such as a change of business model or a merger. It may also be triggered by the finding that the accumulation of past hops has made the organization overly complex or unwieldy. This pattern is totally normal, since the company’s environment changes all the time and the perfect design is elusive. You can use the visual, for example, to characterize your current redesign either as a hop or a leap, and compare it to previous redesigns with which people can associate. Michael Tushman and Charles O’Reilly observed the same pattern of “periods of incremental change punctuated by discontinuous or revolutionary change”, which led to the concept of the “ambidextrous organization”.5 Exhibit 6: A pattern of deliberate leaps and emergent hops An adaptation of the “dominant logic” concept When advocating incremental change, the question about the magnitude of the increments pops up immediately. One can easily visualize the situation where the increment is too large: When the applied tension exceeds the breaking point, the landing may be painful and the change will not materialize; therefore, it is safer to progress in smaller increments (see Exhibit 7). Exhibit 7: Visualizing change staying below breaking point But going for too small increments carries risks as well. To demonstrate that risk, we have adapted the concept of “dominant logic”, as explained by Richard Bettis and C.K. Prahalad.6 They describe it as a logic that invisibly permeates the company, with a pervasive influence on how people undertake to solve problems. The logic predisposes them to certain types of solutions, as if it were a genetic factor. It makes them stay close to familiar organization designs and an equilibrium that feels comfortable. To make a decisive shift toward a new equilibrium, the company should unlearn its old dominant logic and move substantially away from its original equilibrium. The foregoing means that change is to be visualized not as a rectilinear but a bumpy path, and the increments have to be sufficiently large to avoid rollback (see Exhibit 8). Exhibit 8: Visualizing change along a bumpy path The thermostat metaphor So far we have talked about the magnitude (incremental vs. radical) and frequency (continually vs. rarely) of change. To address the third aspect of the pace of change, namely its timing (proactive vs. reactive), the thermostat metaphor is quite powerful.7 A thermostat regulates room temperature by comparing the actual temperature with the setpoint, say, 20°C, and then switching a heating device on or off. In order to prevent excessive on-off cycling of the device – which increases wear and tear – the thermostat is designed to exhibit what physicists call hysteresis: It only switches the device on when the temperature has dropped to 19°C, and only switches it off when the temperature has reached 21°C. You can apply the notion of hysteresis also to organizational redesign (see Exhibit 9). Imagine that you expect an important development in your company’s business context from A to B (e.g., an updated strategy) and sense that your organization design will have to change accordingly from X to Y. You may nevertheless wait with the organizational redesign from X to Y until the business context has changed from A to B conclusively. The drawback is that the ultimate design change may be overdue and require a scramble to catch up, leading to an opportunity cost, as indicated by the shaded area. This reactive approach shows up as organizational “hysteresis”. The opposite alternative is to start the organizational redesign well ahead of the anticipated change of the business context. The drawback is that the design change may be premature and create confusion or even chaos. The cost of such disarray may be high, as indicated by the shaded area. This proactive approach shows up as “inverse hysteresis”. To minimize the opportunity and disarray cost, yet without having your company undergo a constant flux of change, you may consider a mixed reactive-proactive approach. Exhibit 9: Hysteresis in organizational redesign You should look at the above collection of metaphors and visualizations as a menu from which to pick and choose. Depending on your specific circumstances and personal appetite, you may prefer the one to the other. For example, if someone questions the need for a redesign (“Why change – our current design is serving us well, after all?”), you may sketch and talk about a shift in the rugged landscape. If someone is adamant about imitating your competitor’s organization model (“Doesn’t their success speak for itself?!”), you may point out that the competitor went for a different and distant mountain peak because of their different origin and development path. If someone cynically moans about a redesign decision (“Oh no, here we go again …”), you may encourage them to think about the nuances of hops and leaps. If someone advocates extreme care when starting a redesign (“All fine, but above all let’s not rock the boat”), you may draw a bumpy road and remind them that smooth progress requires jumping. Generally, when preparing your narrative about the organizational redesign, remember the adage “A picture is worth a thousand words”. An apt metaphor makes it stick. H. Mintzberg, “The Structuring of Organizations” (Englewood Cliffs, NJ: Prentice-Hall, 1979). C. Gallo, “How Great Leaders Communicate,” Harvard Business Review, November 23, 2022. D. A. Levinthal, “Adaptation on Rugged Landscapes,” Management Science 43, no. 7 (1997): 934-950. H. Vantrappen and F. Wirtz, “A Smarter Process for Managing and Explaining Organization Design Change,” Strategy & Leadership 46, no. 5 (2018): 36-43. M.L. Tushman and C.A. O’Reilly, “Ambidextrous Organizations: Managing Evolutionary and Revolutionary Change,” California Management Review 38, no. 4 (1996): 8-29. R. A. Bettis and C. K. Prahalad, “The Dominant Logic: Retrospective and Extension,” Strategic Management Journal 16, no. 1 (1995): 5-14. H. Vantrappen and F. Wirtz, “The Organization Design Guide: A Pragmatic Framework for Thoughtful, Efficient and Successful Redesigns” (New York: Routledge, 2024).

International policymaking has a fundamental role in influencing the operations of multinational enterprises (MNEs) and affecting cross-border investments and sustainable development. Understanding how these policymaking areas, as they relate to the international marketplace, interact with the core transnational disciplines is essential to more effectively recognize the impacts of international policy on globalization, economic growth, social equity, and environmental sustainability. Cross-border investments are part of the global mechanisms that facilitate capital flow across country borders. More or less capital that flows across nations has a direct effect on economic integration and international development. In parallel, MNEs leverage the global networks that they are value-added partners in to optimize resources, innovate products and processes, and expand international market reach. Sustainable development adds another important layer of complexity by arguing for international policies that balance economic growth with environmental stewardship and social inclusion. Given the importance of these multifaceted interplays, rigorous analysis and discussion are warranted of the reinforcing and overlapping dynamics involving cross-border investments, MNEs, and sustainable development and the core disciplines that contribute to international policymaking (i.e., international business, international innovation, development studies, international law, international economics, political science, international finance, political economy, and economic geography). Policymaking Crossroads  A comprehensive policy-oriented analysis of the implications at the intersections (“crossroads”) of the nine core transnational disciplines and the dynamics of (1) cross-border investments, (2) multinational enterprises (MNEs), and (3) sustainable development can serve as a business-driven managerial guide to well-thought-of and effective international policymaking. As a brief guide to the discussion, Table 1 provides descriptions of the transnational disciplines along with summaries of the intersections with international policymaking. Table 1: International Policymaking Implications (Click to Expand) International Business  Cross-border investments play pivotal roles in international business by, for example, making available capital for MNEs to expand operations globally, enter new international markets, and enhance their competitive edge vis-à-vis both local and global competitors. Local and regional policies that facilitate foreign direct investment (FDI) often attract new businesses and, if available, motivate existing businesses to stay. Such cross-border investments typically accelerate economic growth and create additional job opportunities. MNEs are part of the global infrastructure that utilizes and leverages resources and capabilities across countries. MNEs often navigate complex regulatory environments, adapt to unique cultural contexts (relative to their home markets), and optimize global supply chains to maximize revenue (while covering costs). Effective international policies support MNEs by making certain that the marketplace they operate in has stable and predictable laws and regulations. Policies can also facilitate a seamless entry into markets. Sustainable development is increasingly becoming a priority in international business. MNEs are more often recognizing the importance of integrating, even positively leveraging, environmental and social considerations in global operations. To nurture this marketplace shift, policymakers can advocate, via laws and regulations, these sustainable business practices but also by incentivizing green investments and encouraging corporate-social-responsible initiatives. International Innovation Cross-border investments can have an immense effect on the international innovation that takes place worldwide, or in parts of the world, by channeling resources to R&D projects that foster the development and diffusion of new global technologies. Policymakers can facilitate this scenario by creating an environment – an innovation ecosystem – that is conducive to investments in innovation (e.g., tax incentives and protection of intellectual property). MNEs have an important role in this respect. They drive innovation across borders by leveraging their resources and by leveraging their extensive networks to develop and implement cutting-edge innovations and technologies. Naturally, policies that support collaborations and partnerships across country (and region) borders are important as facilitators of these innovation capabilities, resources, and strategic assets. Sustainable development, within the context of international innovation, focuses on the creation of innovations and technologies that target sustainability challenges (e.g., climate change, resource scarcity). National governments, regional governments (e.g., the EU), and policymakers can facilitate sustainable innovations by encouraging and funding green technologies. They can also establish facilitators in the form of optimal environmental standards as well as encourage MNE operations that reduce carbon footprints and promote resource efficiency. International Development Studies Cross-border investments are among the most important aspects of international development, as such investments oftentimes provide the capital for infrastructure projects, facilitate industrial growth, and, by extension, create employment opportunities in developing and emerging nations. International policies that attract, nurture, and manage these investments can drive economic growth and continued international development. MNEs contribute to international development by transferring technology, knowledge, and skills to host countries. By doing so, they facilitate the growth of local capacities while also fostering economic integration. Policymakers often take on the role of ensuring that these investments are aligned with national developments and that they benefit local communities. Consequently, the dynamic between MNEs and host governments can sometimes be strained because the parties continually strive to negotiate the best value and benefits for their side. Sustainable development connects directly with international development. International developments do not have to take on a “sustainable” nature but given the policymaking that is wrapped around such developments, they often do (and more so in recent years). Ultimately, this means that sustainable developments also connect with economic growth, social equity, and environmental sustainability. Such developments often promote the reduction in poverty, improvement in education and healthcare, and protection of the marketplace environment. International Law The nature of and what is possible in terms of cross-border investments are heavily influenced by international law. Laws establish the frameworks and treaties that govern cross-border transactions and activities. Consequently, international policies that facilitate transparent and fair legal processes set the stage for attracting investors. If the marketplace actors can be governed by a predictable investment climate, international investments by design are more likely to grow. Successful MNEs are fortunate in that they have navigated the international marketplace for a variety of stakeholders, but they must also continually navigate complex webs of international laws (e.g., trade regulations, investment treaties, labor laws) to operate across different legal jurisdictions. Policymakers (those engaging within and between countries) have important roles in negotiating, creating (and getting approved), and enforcing these laws. Sustainable development is a key consideration in international law. The connection is typically to laws that encourage increased attention by MNEs and other international actors to infuse environmental and social governance standards into corporate strategies. Effective international policies can facilitate MNEs’ sustainability efforts but also act as an enforcing mechanism to protect resources, advocate for fair labor practices, and encourage responsible MNE behaviors. International Economics Cross-border investments are core elements of international economics, and vice versa, that have direct two-way influences on capital flows, trade balances, and economic growth. As such, international policymakers should strive to design economic policies that continuously attract investments while also ensuring that these investments contribute positively to each of the national economies that are targeted. MNEs are likewise central to international economics, as MNEs have a direct effect on international trade and international investments. Essentially, the world is constructed as a cogwheel of countries, where each country either directly or indirectly is interconnected to each other. Consequently, policies that support MNEs’ activities are important in the context of facilitating organic economic growth (e.g., reduction of trade barriers and investment incentives). Sustainable development, as it relates to international economics, involves, for example, environmental and social considerations that can be embedded into economic policies. International policymakers should be mindful of economic practices that can potentially benefit all segments of the global society (e.g., green investments, setting environmental standards, and facilitating inclusive growth). International Political Science Cross-border investments intersect with international political science at the point of geopolitical relationships and regarding foreign policy decisions. International policymakers have the responsibility to both understand and leverage positive political implications while handling (potential) negative implications of foreign investments. The focus should be on balancing national interests with the marketplace benefits of economic internationalization. MNEs impact international political dynamics via their economic power as well as via their influence on policy-making processes in various countries (e.g., lobbying efforts). The governments’ responsibilities in this dynamic interaction include creating policies that align with the host country’s security interests and also encourage MNEs to contribute to both host-country (and regional) economic stability. Sustainable development at the intersection with international political science involves knowledge generation and being a part of creating policies that target global challenges (e.g., climate change, poverty, inequality). International policymakers can be part of the equation in the sense of helping to promote international cooperation in addition to developing frameworks that integrate sustainable development into international policy and international agreements. International Finance Cross-border investments are fundamental aspects of international finance. International finance drives international capital flows and influences currency exchange rates and the overall financial stability of all corners of the international marketplace. International policymakers have the important tasks of creating laws and regulations that facilitate, and perhaps also hinder when warranted, foreign investments and at the same time making sure that the world has financial stability and mitigates the risks associated with capital mobility. MNEs are key actors in the international marketplace as it relates to international finance, as MNEs manage large-scale production and supply chain investments and navigate multi-country financial markets. Policies that support MNEs’ financial activities (e.g., access to capital markets and reducing regulatory barriers) can be instrumental to their positive effects on investment-related international operations. Sustainable development and international finance intersect for environmental, social, and governance (ESG) criteria. In this context, international policymakers can facilitate “sustainable finance” by encouraging cross-border investments in green projects, setting standards for corporate social responsibility (CSR), and facilitating clear transparency in financial markets. International Political Economy Cross-border investments are central to the international political economy. Political-economy knowledge affects several cross-border issues, but mainly the (1) distribution of wealth and (2) power among countries. International policymakers need to navigate the consequences of the political and economic implications of cross-border investments to ensure that such investments contribute to national goals and do not exacerbate inequalities. MNEs have an outsized role in shaping the political economy through the companies’ investment decisions and business-related economic activities. As such, governments and policymakers must be aware of and implement policies that effectively (optimally) regulate the activities of MNEs to maintain fairness in the marketplace and to promote ethical practices. Political economy-related sustainable development focuses on how to integrate economic growth by, for example, MNEs with social equity and environmental protection targets. Policymakers have an important role in both promoting sustainable development and a duty to facilitate (1) economic policies for involved actors and (2) agreements that address sustainability challenges. International Economic Geography Cross-border investments influence the spatial distribution of economic activities and the regional development patterns that are researched in economic geography. Broadly, this means that international policymakers often focus on attracting investments to certain countries or regions through their influences on the “international ecosystem” (e.g., developing infrastructure, offering incentives,  and creating favorable regulatory paths). MNEs shape economic geography by determining the location of production facilities, headquarters, regional and local operations, and how they engage in global supply chain networks. Policymakers often try to directly influence MNEs’ location of value-added activities, with the most obvious being incentivizing where to locate factories. Policies that support the strategic placement of MNEs’ operations can have positive effects on local development. Economic geography-related sustainable development involves facilitating spatial strategies that balance economic growth with environmental sustainability and social equity for affected actors. Policymakers can facilitate, for example, sustainable urban and regional development by encouraging green infrastructure projects, protecting natural resources, and making sure that economic growth plans by MNEs and involved actors benefit relevant stakeholders. Conclusion The integration of international policymaking with the holistic view that is represented by the combined intersections of the core transnational disciplines (i.e., international business, international innovation, development studies, international law, international economics, political science, international finance, political economy, and economic geography) is an important driver to achieving sustainable economic growth in the international marketplace. This intersection approach – which has unique and very nuanced consequences when considering deeper and more comprehensive discipline characteristics – can also help ensure that international policymakers and relevant stakeholders jointly and synergistically collaborate on measures that align micro (e.g., MNE) and macro (e.g., international policy) goals that deal with (1) cross-border investments, (2) MNE operations, and (3) sustainable development.

In an era where artificial intelligence can generate polished, comprehensive business proposals at the click of a button, business-to-business (B2B) and business-to-government (B2G) procurement teams face a new challenge: how to differentiate genuine capability and understanding from well-crafted but potentially hollow submissions. As procurement offices are inundated with AI-generated proposals, a powerful yet underutilized tool emerges as the solution: oral presentations. The Rise of AI in Proposal Writing The advent of advanced language models like GPT-4 and Claude3.5 Sonnet has revolutionized the way companies approach proposal writing. These AI systems can generate coherent, well-structured proposals in a fraction of the time it would take a human team. For businesses, especially smaller firms with limited resources, this technology levels the playing field, allowing them to compete with larger, more established companies in terms of proposal quality and comprehensiveness. However, this AI-driven approach comes with a significant downside for procurement teams. As more companies leverage AI to craft their proposals, the submissions become increasingly homogeneous. Contracting officers are left to sift through reams of technically proficient but often soulless proposals, struggling to discern which companies truly understand the project requirements and have the genuine capability to deliver. The Power of Real-Time Human Interaction Oral presentations offer a dynamic, interactive platform that AI simply cannot replicate. While AI excels at compiling information and formatting it into coherent written proposals, it lacks the ability to engage in real-time dialogue, demonstrate genuine understanding, and adapt on the fly. These human elements are precisely what make oral presentations so valuable in the modern procurement landscape. We recently published a study in the Journal of Contract Management that sheds light on the potential of this underutilized tool. Although currently used in only 8% of source selections, oral presentations offer unique advantages that directly address the shortcomings of AI-generated content: 1. Demonstrating True Understanding During an oral presentation, contractors can showcase their deep comprehension of the project requirements in ways that go beyond regurgitating the request for proposal (RFP) language – a common feature of AI-generated proposals. Presenters can: Articulate nuanced interpretations of the project goals Provide relevant examples from past experiences Offer innovative approaches tailored to the specific context This level of engagement allows procurement teams to assess whether a contractor truly grasps the project’s complexities or is simply adept at producing a polished written response. 2. Real-Time Problem Solving One of the most powerful aspects of oral presentations is the opportunity for real-time problem solving. Procurement teams can present hypothetical scenarios or unexpected challenges, observing how potential contractors: Think on their feet Apply their expertise to novel situations Collaborate and brainstorm solutions in real-time This dynamic interaction reveals critical thinking and adaptability skills that no AI-generated proposal can demonstrate. 3. Assessing Cultural Fit and Team Dynamics Oral presentations provide a window into the human side of contracting. They allow procurement teams to: Observe team dynamics and communication styles Assess cultural fit with the buyer’s organization Evaluate the expertise and roles of key personnel These interpersonal factors, crucial for successful project execution, are impossible to gauge from a written proposal, regardless of how well-crafted it may be by AI. 4. Clarifying Ambiguities and Addressing Concerns The interactive nature of oral presentations allows for immediate clarification of any ambiguities or concerns. This two-way communication: Reduces misunderstandings that could lead to contract disputes Allows contractors to address specific concerns or reservations Provides an opportunity for procurement teams to dig deeper into areas of particular interest This real-time exchange of information leads to a more thorough and accurate evaluation than what’s possible through static, AI-generated proposals. 5. Revealing Genuine Expertise and Passion Oral presentations give contractors a platform to demonstrate their genuine expertise and passion for the project. Through their presentations, teams can: Share anecdotes and lessons learned from relevant past experiences Express enthusiasm and commitment to the project goals Showcase unique insights and innovative ideas These human elements are difficult to fake and impossible for AI to replicate, providing a true differentiator in the evaluation process. 6. Adapting to Audience Engagement Skilled presenters can read the room and adapt their presentation style and content based on the audience’s reactions. This ability to: Emphasize points that resonate with the evaluation team Elaborate on areas that generate more interest or questions Adjust the technical depth based on the audience’s level of understanding Demonstrates a level of responsiveness and adaptability that static, AI-generated proposals cannot match. The Limits of AI Disclosure Requirements While some firms and agencies have begun to require disclosure of AI use in proposal generation, this approach alone is insufficient to determine best value. Simply knowing whether AI was involved in creating a proposal does not provide insight into a contractor’s true capabilities or understanding of the project. In fact, AI-generated content can be just as representative (or unrepresentative) of a company’s abilities as proposals crafted by hired capture teams. Many firms already outsource proposal writing to specialized capture teams who may not be directly involved in project execution. These teams are skilled at crafting compelling narratives and addressing RFP requirements, but their work doesn’t necessarily reflect the day-to-day capabilities of the implementing team. Similarly, a company using AI to generate a proposal might still possess the expertise and resources to execute the project effectively. Conversely, a human-written proposal doesn’t guarantee superior performance. The key issue is not whether AI or humans wrote the proposal, but whether the submitting company truly understands the project requirements and has the capability to deliver. This is where oral presentations shine. They provide a dynamic, interactive platform for evaluators to probe beyond the written word - whether AI-generated or human-crafted - and assess the real-time problem-solving abilities, project understanding, and team dynamics that are crucial for successful project execution. By focusing on oral presentations, agencies can move beyond the surface-level distinction of AI versus human authorship and delve into the substance of a contractor’s capabilities. This approach allows for a more nuanced and accurate assessment of best value, cutting through the noise of polished proposals to reveal the true potential for project success. Insights from the Research Our study provides valuable insights into the current state and potential of oral presentations in public B2G procurement: 1. Reducing Uncertainty in Service Contracts The research shows that buyers are more likely to use oral presentations when purchasing services rather than goods. This preference aligns with the inherent challenges of service procurement, which often involves intangible deliverables and greater performance uncertainty. In an era where AI can easily generate detailed technical specifications for products, the ability to articulate and demonstrate service capabilities becomes a crucial differentiator. Oral presentations allow companies to showcase their understanding of the buyer’s needs, their proposed approach, and the expertise of their key personnel in a way that AI-generated text simply cannot replicate. 2. Mitigating Protest Risk The study found a marginally significant relationship between the use of oral presentations and high protest risk procurements. This finding suggests that face-to-face interactions can increase trust and transparency in the procurement process, potentially reducing the likelihood of bid protests. As AI-generated proposals become more sophisticated, the risk of protests based on technical merits of written submissions may increase. Oral presentations offer a human touchpoint that can clarify misunderstandings, demonstrate commitment, and build rapport – factors that are difficult to protest and impossible for AI to replicate. 3. Facilitating Better Decision-Making While the quantitative data didn’t show a significant relationship between oral presentations and improved supplier performance or buyer satisfaction, the qualitative interviews painted a different picture. Procurement professionals consistently reported that oral presentations led to better decision-making and improved supplier performance. This discrepancy suggests that the benefits of oral presentations may be more nuanced and context-dependent than previously thought. In an environment saturated with AI-generated content, the ability to directly question and interact with potential suppliers could prove invaluable in assessing true capabilities and cultural fit. Overcoming Barriers to Adoption Despite the potential benefits, the study revealed several barriers to the widespread adoption of oral presentations: Fear of Protests: Many buyers expressed concern that oral presentations, if not meticulously conducted, could invite bid protests. This fear stems from the potential for unequal treatment of offerors or inadvertent disclosure of information during the presentations. Lack of Experience and Training: Buyers reported feeling uncomfortable using oral presentations if they lacked prior experience or proper training in conducting them effectively. Resource Intensity: Oral presentations require significant preparation and coordination from both buyers and sellers, which can be perceived as an additional burden in an already complex procurement process. Strategies for Effective Implementation To leverage oral presentations as a differentiating strategy in the age of AI, buying firms and contractors should consider the following approaches: Develop Clear Guidelines: Agencies should create comprehensive guidelines for conducting oral presentations, addressing common concerns such as maintaining fairness and avoiding inadvertent discussions. These guidelines can help alleviate buyers’ fears of protests and provide a consistent framework for implementation. This should cover conducting presentations, asking probing questions, and evaluating responses. Evaluators should also prepare a consistent format and set of standard questions for all offerors, while reserving the right to ask additional questions as needed. Invest in Training: Both B2B and B2G buyers and industry professionals should receive training on effective oral presentation techniques. This training should cover not only the logistical aspects of conducting presentations but also strategies for asking probing questions and evaluating responses while providing fair opportunity to all offerors. Leverage Technology: While the goal is to cut through AI-generated noise, technology can still play a role in enhancing oral presentations. Video conferencing tools can reduce logistical challenges, while recording capabilities can aid in documentation and review processes. Include interactive elements like Q&A sessions or scenario-based questions to assess offerors’ adaptability and depth of understanding. Focus on Key Personnel: Oral presentations offer a unique opportunity to assess the capabilities and dynamics of the team that will actually perform the work. Evaluators should structure oral presentation requirements to allow offerors to highlight key personnel and their specific roles in the project. Encourage offerors to highlight their unique strengths, innovative approaches, and value-added services that distinguish them from competitors. Encourage Dialogue: Rather than treating oral presentations as one-way information flows, buyers should use them as opportunities for meaningful dialogue. This approach can reveal a supplier’s ability to think on their feet, adapt to changing requirements, and collaborate effectively. Ensure a diverse and balanced evaluation team with relevant expertise to provide comprehensive assessment. Integrate with Written Proposals: Instead of viewing oral presentations as a replacement for written proposals, agencies should consider how the two can complement each other. For example, oral presentations could be used to clarify and expand upon key points from the written submission. Develop and use detailed scoring rubrics that allow evaluators to objectively assess each presentation against established criteria, acknowledging that while striving for objectivity, some subjectivity may remain. Provide Feedback and Promote Fairness: After the evaluation process, provide constructive feedback to all offerors, highlighting strengths and areas for improvement. This fosters transparency and helps offerors develop their skills for future opportunities. The Future of Human-Centric Procurement As AI continues to evolve, its role in proposal writing and evaluation will likely expand. However, the human elements of judgment, creativity, and interpersonal dynamics will remain crucial in complex procurement decisions. Oral presentations offer a way to preserve and highlight these human elements in an increasingly automated process. Moreover, the use of oral presentations can serve as a deterrent to over-reliance on AI-generated content. Companies that invest in developing their teams’ presentation and communication skills will have a distinct advantage over those that rely primarily on AI to craft their proposals. Conclusion In an era where AI-generated proposals threaten to overwhelm procurement professionals with a flood of indistinguishable submissions, oral presentations emerge as a powerful tool for cutting through the noise. By providing a platform for human interaction, demonstration of expertise, and real-time problem-solving, oral presentations offer a way to assess qualities that AI cannot easily replicate or evaluate. The research by Hawkins et al. highlights both the potential benefits and the current underutilization of this approach. As buying organizations and contractors navigate the evolving landscape of AI in procurement, embracing oral presentations can provide a competitive edge and lead to more informed, effective contracting decisions. To fully realize the benefits of oral presentations, both buyers and sellers must invest in developing the necessary skills and processes. Agencies should work to overcome the barriers to adoption by providing clear guidelines, comprehensive training, and supportive policies. Contractors, in turn, should prepare their teams to excel in face-to-face interactions, showcasing the human expertise and adaptability that set them apart from AI-generated content. By leveraging the power of oral presentations, the procurement and supply chain communities can ensure that the procurement process remains a human-centered endeavor, even as AI plays an increasingly prominent role in proposal development. In doing so, agencies can make more informed decisions, select better-suited contractors, and ultimately deliver greater value to the taxpayers they serve. In the face of AI’s growing capabilities, the ability to articulate, demonstrate, and adapt in real-time becomes the true differentiator. Oral presentations provide this critical platform, allowing procurement teams to look beyond the polished surface of written proposals - whether AI-generated or human-crafted - and truly gauge a contractor’s capability, understanding, and fit for the project. This human-centric approach is key to navigating the complexities of modern procurement and ensuring the selection of partners who can deliver not just on paper, but in practice.