Alexander Kern, Researcher, Managing Partner at Euro-Institute Monaco On Shared Capitalism, Startups & Sustainability

Dinis Guarda interviews Alexander Kern, a Ph.D. in Corporate Finance  Innovation Management Science and Managing Partner of the Euro-Institute Monaco about shared capitalism, the current state of Europe’s business ecosystem and the road to sustainability.

Dr. Alexander Kern is currently the Managing Partner of the Euro-Institute Monaco, a M&A Consulting Firm. Dr. Kern, a German citizen living in the Principality of Monaco, holds a Ph.D. in Corporate Finance & Innovation Management Science, with the University Aix-Marseille. Dr Kern’s dissertation investigates the outcome of ‘shared capitalism’ – employee stock ownership – on the weighted average cost of capital at listed firms such as Silicon Valley IT-companies.

Alexander Kern Interview Focus

1. An introduction from you – background, education…
2. As an academic in corporate finance and innovation management science, you have been researching the wealth distribution and the “shared capitalism” concept. Can you tell us more about your research?
3. The current situation of crisis is challenging and is affecting all layers of society. Many doubt that the capitalist system works for everyone since wealth is not distributed equally. How do you see these challenges and how can we improve the capitalist system? Also the differences between the US and Europe?
4. How do you see the dynamics related to entrepreneurship and innovation in Europe compared to the rest of the world?
5. The European Union is facing significant challenges and has multiple fronts open. Entrepreneurship, for instance, is the backbone of innovation and a key driver of economic growth and jobs. What do you think Europe does well and what areas can be improved?
6. Can you tell us more about your current research and future projects, both academically and business-wise?
7. You have been working with start-ups as an advisor among other roles. Can you tell us more about it?
8. Any specific academic research you would like to highlight?
9. To wrap up the interview, what are your views on technology development, sustainability and smart cities?

Alexander Kern Key Takeaways

About your background. I have been living in Monaco for 14 years. I was quite active in politics in Germany after high school. I run for the parliament when I was 18 and I was elected. After a while, I felt I wanted to expand my academic background. I did a business school degree in Monaco and after I did my master in Nize and finally did a Ph.D. in Corporate Finance. While doing my Ph.D. I had the opportunity to do one year at Harvard.

While I was doing my PhD. I was researching wealth distribution and other economic anomalies, so I focused my research on that topic. I became a research assistant to Professor Dr. Richard Freeman, one of the world’s leading economists. We researched and wrote a white paper on the concept of “shared capitalism”. The results of my research were presented at international conferences, at the European Commission and at the German Ministry of Finance. After that, I started working as a teacher and advisor to help start-ups consolidate and grow.

At that time I also explored how technology would affect corporations and the economy as a whole. An eye-opening experience was when I had an interesting conversation with one of my teachers. He asked me what would happen if the robots were going to take over the world… At first, I was shocked by the question as he was a professor of economics. But I soon realized the importance of technology in the economy of the future as well as all the implications of these developments in the economy. In fact, it will turn everything upside down, a disruption that can change the way wealth is created and distributed.

How can we improve the capitalist system? My research was about shared capitalism, which basically means that employees become a shareholder of the company they work for. This is a way to merge the relationship between employee and owner. If employees become shareholders, the decision-making process would change radically as these will be made according to a plan that benefits the company in the long term. In parallel, these companies are less scared of change of management, they are more focused on their long-term goals, and are more stable. That can change the way a company performs and how profits are distributed, and as I have found in my research, normally is for the good of the company.

About Europe losing its dominant position in the world. Europe is still one of the regions of the world where innovation happens. It has a long tradition of education and entrepreneurship. The problem comes when these companies and entrepreneurs start in Europe but soon move to the US, for example. And one reason is that in the US the investors are more willing to take risks and invest in new companies whereas in Europe they are more reluctant to do that. This makes the US a much more pro-active business market. That is one of the main challenges for Europe in the coming years.

In Asia, their culture plays a great part. For starters, in Asia they have long-term plans and that vision is also applied to companies. So by having this security, companies have long roadmaps and can add long term goals to their vision.

Is Europe collapsing? I am a supporter of the European Union. However, there is this widespread feeling that the way Europe operates is not beneficial for most people living across European countries. So that is one thing that Europe needs to address in the near future. We need to renovate the European Parliament, the Commission and most institutions. European institutions have to be able to improve the visibility of their actions and make people more involved at a European level.

And although startups that want to grow are moving to other markets where they find they will have more opportunities, Europe has a very strong medium enterprise environment which in fact are the backbone of the European economy. These are the ones to look at at the moment, the ones that create wealth and jobs. And this has an explanation, Europe’s economy is very local-focused.

About your current projects. I recently published a new paper about the role of employees in companies worldwide and how a shared capitalism model could be implemented, saving capital resources. Likewise, as an academic, I understand that my main job is to open minds and for my students to think critically. And as an advisor, I try to help new startups grow, scale and make sure their business operations are efficient and profitable. I am very excited about this one project about the real estate market. It is a European-wide project starting in Germany in an innovative way that hasn’t been seen before in Europe. But I can’t tell more about it.

About Fintech. I have this feeling that fintech is too market-driven so it lacks a long term vision. The real problem behind these new industries is that they rely almost exclusively in investment, so that makes it highly volatile and not-reliable, at least in the beginning. And the same happens with other market trends such as Caltech, Regtech, etc.

What are your views on Smart Cities and Sustainability? Sustainability and smart cities are extremely important for the future of society in general. Thinking about the European market, I feel like many governments and cities are struggling to develop smart cities. Smart cities require building new infrastructure and that is very costly and requires consensus and resources and finding that holistic strategy has become problematic in some areas of Europe.

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Alexander Kern Biography

Before Alexander Kern became a Managing Partner of the Euro-Institute Monaco, he spent a year at Harvard University, and the National Bureau of Economic Research, where he worked as a Research Assistant of Professor Dr. Richard Freeman. Dr Kern’s dissertation investigates the outcome of ‘shared capitalism’ – employee stock ownership – on the weighted average cost of capital at listed firms such as Silicon Valley IT-companies. The research hypothesis is that shared capitalism increases productivity at firms while decreasing their cost of capital. The results of his research were presented, for example, at international conferences, at the European Commission, and to the German Finance Ministry.

In addition, Alexander Kern has several years of experience in high-performance environments such as consulting, finance, international politics, and online start-ups. Alexander Kern enjoys leading, and working in, teams, maintaining a clear vision of objectives, and keeping up the team spirit. He describes himself as a result-driven person with an entrepreneurial and pioneering spirit with strong structured and analytical skills combined with a hands-on approach.