Brain in Business:
The Economics of Neuroscience
Zainal Ariffin Ahmad
Business Research for Applied Innovations in
Neurosciences (BRAIN) Lab, Graduate School of
Business, Universiti Sains Malaysia,
11800 Minden, Penang, Malaysia
As a business educator, I am enthralled
with the recent advancements by scientists who
integrated neuroscience (the study of the anatomy
and physiology of the brain) and psychology (the
study of the human mind and human behaviour).
Such convergence has given birth to a plethora of
new interdisciplinary business fields with neuroprefix
such as neuroeconomics, neuromarketing,
neuroaccounting, neurogovernance, neuroethics,
and neuroleadership. Such an exotic union
of science and the arts may provide better
understanding of human nature and behaviour
change. Imaging technologies such as functional
magnetic resonance imaging (fMRI) and positron
emission tomography (PET) reveal unseen neural
connections in the living human brain along
with brain wave analysis technologies such as
quantitative electroencephalography (QEEG). We
can even theoretically link the brain (the physical
organ) with the mind (the human consciousness
that thinks, feels, acts, and perceives) through an
advanced computer to analyse these connections.
As economists and business people always strive
for better, faster, cheaper means of production,
and demand higher productivity from their
employees through effective leadership and
supervision, neuroscience is relied upon to
provide answers to questions like:
• How can we leverage our brain in
business?
• Capitalise/invest on the brain?
• Make the best decision?
• Find the productivity “hot buttons” in
the brain?
• Encourage creative and ethical brain?
Such questions give rise to exciting symbiotic
developments of business and neuroscience.
Neuroeconomics as an emerging
discipline combines neuroscience, economics,
and psychology; and uses research methods
from cognitive neuroscience and experimental
economics. It is “the application of neuroscientific
methods to analyse and understand economically
relevant behaviour” (1). such as evaluating
Editorial
1 Malaysian J Med Sci. Apr-Jun 2010; 17(2): 1-3
www.usm.my/mjms
decisions, categorising risks and rewards,
and interactions among economic agents.
Neuroeconomics research draws on the
convergence of three major trends. First, using
fMRI we can measure brain activity associated
with discrete cognitive events and study higher
cognitive processes like decision making and
reward evaluation. Second, by incorporating
economic variables into electrophysiological
experiments, we can encode motivationally
relevant information through novel recognition of
neurons at multiple levels of processing pathways.
Third, neuroeconomics draws on behavioural
economics to consider psychological variables
into economic and decision-making models.
Neuroaccounting is a new way to
scientifically view accounting and the brain’s
central role in building economic institutions.
The measure of brain activity during economic
decision-making using neuroscientific methods
can prove useful for evaluating the desirability
of implementing new policies that run contrary
to long-established accounting principles (2).
Dickhaut et al. (3) reviewed neuroscientific
evidence that suggest the emergence of modern
accounting principles based on the mapping
of brain function to the principles of modern
accounting.
Neuromarketing is the application of
neuroscientific methods to analyse and understand
human behaviour in relation to markets and
marketing exchanges. Applying neuroscience to
marketing may form a basis for understanding
how human beings create, store, recall, and relate
to information such as brands in everyday life.
Neuromarketers now use cognitive neuroscience
in marketing research that bears implications for
2 www.usm.my/mjms
Malaysian J Med Sci. Apr-Jun 2010; 17(2): 1-3
understanding organisational behaviour in a social
context (4), for example whether certain aspects
of advertisements and marketing activities trigger
negative effects such as overconsumption. Going
beyond focus groups in traditional advertising
methods, we can now use EEG to detect putative
“branding moments” within TV commercials and
apply brain imaging to discover the “buy button”
(5). In notable research emerging from Stanford
University, Carnegie Mellon University and the
Massachusetts Institute of Technology, scientists
are using fMRI to identify parts of the brain that
influence buying decisions.
Neuroethics is the investigation of altruism
in neuroeconomic research, which suggests that
cooperation is linked to activation of reward
areas (5). Investigations into such problems could
in fact be among the most compelling within
neuromarketing. As a new field, it has triggered
heated debate and questioned the ethics behind
neuromarketing in a 2004 editorial of Nature
Neuroscience. Now that we have identified certain
key regions of the brain that would be implicated
in consumer preferences, it may be possible for
marketers to “manipulate” their advertisements
and target the brain areas that mediate reward
processing. One example is the perennial war
of the colas (Coca-Cola vs. Pepsi-Cola) whereby
studies indicate that Coca-Cola had a more
efficient advertising campaign (6). Similar studies
were done on the attractiveness of cars or human
faces, and how they trigger or activate these
“pleasure centres” in the brain that drive social
behaviour. As for the marketers themselves, the
neuroethical question that arises is whether there
is any difference between the brain activity of
highly ethical and less ethical salespeople?
Neuroscience has the potential to
influence corporate governance; the study
of this phenomenon is neurogovernance.
Neurogovernenance is a growing field. In
Germany, we now have the Institute for Corporate
Governance (ICG Germany) (http://web.dmz.uniwh.
de/icg/Forschung.html). Further, since 2001,
the Malaysian Code on Corporate Governance
has been published by the Malaysian Institute
of Corporate Governance (7). Neurogovernance
seeks to explain behaviours of directors, auditors,
or even those who breach corporate governance.
The same explanations can be applied to
managers, leaders, and other business people
or other professions. For example at Emory,
researchers asked 16 executives to respond to
PowerPoint slides concerning moral quandaries,
such as acting on privileged information, while
inside an MRI machine. They found that managers
weighing ethical dilemmas use the part of their
brain associated with early memories, which
could mean moral thinking is formed early in life.
(8).
Stepping away from economics and business
sub-disciplines like marketing and accounting, a
more recent development is neuroleadership,
a term coined in 2006 by David Rock, a leadership
consultant. Neuroleadership is the study of
leadership through the lens of neuroscience and
explores central elements of leadership, including:
(a) self-awareness (b) awareness of others, (c)
insight, (d) decision making, and (e) influencing
(9). As a new field of study, neuroleadership
brings neuroscientific knowledge into the area of
leadership development, management training,
education, consulting and coaching. Rock and
his collaborator Jeffrey M. Schwartz, a research
psychiatrist at the University of California at Los
Angeles, apply broader themes from neuroscience
to leadership that suggest mindful, focused
attention on new management practices, rather
than on old habits, can rewire the brain. Another
way of applying neuroscience is mapping the
individual managers’ brains. In “The Leadership
Neuroscience Project”, Pierre A. Balthazard
and David A. Waldman from the Arizona State
University School of Global Management &
Leadership work with neuroscientists to monitor
the brains of 44 business leaders while they
discussed scenarios such as layoffs. Balthazard
seeks to identify brain patterns, and then train
managers to replicate the patterns within their
own brains (10).
At Universiti Sains Malaysia, we are
interested in the study neuroleadership
from the perspectives of transformational
neuroleadership based on Bass (11) and Burns
(12). Unlike transactional leadership, which
focuses on exchange that motivates followers by
providing rewards and benefits for productivity,
transformational leaders make decision based
on cognitive rewards, provide a climate of trust,
and draw out followers’ higher order needs to
perform beyond expectations. Transformational
leaders inspire their followers to make decision
that transcend self-interests. Can neuroimaging
show how transformational versus transactional
managers make decision (13)?
The symbiotic development of neuroscience
in business is not without challenges. Of primary
concern for business researchers in developing
countries is the access to EEG and fMRI since
these types of equipment are usually in the
domain of neuroscientists from the medical
faculty. One strategy to overcome this dilemma is
Editorial | Brain in Business
www.usm.my/mjms 3
to use interdisciplinary research teams. Another
challenge is that the design of experiments
required by these projects, which may not agree
well with the scientific methods in business—
especially in the interpretation of data of the
neuroimages for which business researchers have
no expertise. Whereas business research and
scientific research uphold high ethical standards,
the use of neuroscientific methods involving
human subjects raises strict ethical issues to
which business researchers are unaccustomed. As
an academic exercise, after conducting research,
interdisciplinary issues arise about where to
publish and who to supervise pseudo-science or
pseudo-arts candidates.
In conclusion, I am moved by the simple
argument by Renvoise and Morin (13) about brain
and marketing that captured the essence of brain
in business:
The new brain thinks. It processes rational data.
The middle brain feels. It processes emotions and
gut feelings.
The old brain decides. It takes into account the
input from the other two brains, but the old brain is
the actual trigger of decision.
Correspondence
Associate Professor Dr Zainal Ariffin Ahmad
BSc (Northern Illinois), MBA, EdD
Business Research for Applied Innovations in
Neurosciences (BRAIN) Lab
Graduate School of Business
3rd Floor, Hamzah Sendut Library 2
Universiti Sains Malaysia
11800 Penang
Malaysia
Tel: +604-653 2605
Fax: +604-653 2605
Email: zaba@usm.my
References
1. Kenning P, Plassmann H. NeuroEconomics: an
overview from an economic perspective. Brain Res
Bull. 2005;67:343–354.
2. Dickhaut JW, Basu S, McCabe KA, Waymire GB.
Neuroaccounting, Part I: The Primate Brain and
Reciprocal Exchange. [Internet]. Rochester, NY:
Social Science Electronic Publishing. [updated 2009
Oct 6; cited 2010 03 17]. Available from: http://ssrn.
com/abstract=1336526
3. Dickhaut JW, Basu S, McCabe KA, Waymire GB.
Neuroaccounting, Part II: Consilience between
Accounting Principles and the Primate Brain
[Internet]. Rochester, NY: Social Science Electronic
Publishing. [updated 2009 Oct 6; cited 2010 03 17].
Available from: http://ssrn.com/abstract=1336517
4. Lee N, Broderick AJ, Chamberlain L. What is
‘neuromarketing’? A discussion and agenda for future
research. Int J Psychophysiol. 2007;63(2):199–204.
5. Rilling JK, Zeh ZK, Berns GS, Kilts CD. A neural basis
for social cooperation. Neuron. 2002;35(2):395–
405.
6. McClure SM, Li J, Tomlin D, Cypert KS, Montague
LM, Montague PR. Neural correlates of behavioural
preferences for culturally familiar drinks. Neuron.
2004;44(2):2379–2387 .
7. Ahmad ZA. Corporate Governance: Research Agenda
for Malaysia. Presentation at the 2nd International
Research Workshop, University of New South Wales,
Australia, 18-20th February 2008.
8. The Business Brain In Close-Up: Can neuroscience
offer insights into the ‘soft’ art of leadership?
BusinessWeek. July 23, 2007.
9. Neuroleadership Institute. [Internet] New South
Wales (Australia): NeuroLeadership Institute Pty Ltd;
2010. [cited 2010 03 17]. Available from: http://www.
neuroleadership.org
10. McGregor J. The business brain in close-up: Can
neuroscience offer insights into the ‘soft’ art of
leadership? [Internet]. New York (USA): Bloomberg
LP; 2007 July 23. [cited 2010 03 17]. Available
from: http://www.businessweek.com/magazine/
content/07_30/b4043084.htm
11. Bass BM. Leadership and performance beyond
expectations. New York: Free Press; 1985.
12. Burns JM. Leadership. New York, NY: Harper & Row
Publishers; 1978.
13. Ahmad ZA, Tajasom A, Saimi R. Neuroleadership and
Managerial Decision Making. Presentation at the
2nd International Research Workshop, University of
New South Wales, Australia, 18-20th February 2008.
14. Renvoise P, Morin C. Neuromarketing. Nashville,
TN: Thomas Nelson; 2007
The Economics of Neuroscience
Zainal Ariffin Ahmad
Business Research for Applied Innovations in
Neurosciences (BRAIN) Lab, Graduate School of
Business, Universiti Sains Malaysia,
11800 Minden, Penang, Malaysia
As a business educator, I am enthralled
with the recent advancements by scientists who
integrated neuroscience (the study of the anatomy
and physiology of the brain) and psychology (the
study of the human mind and human behaviour).
Such convergence has given birth to a plethora of
new interdisciplinary business fields with neuroprefix
such as neuroeconomics, neuromarketing,
neuroaccounting, neurogovernance, neuroethics,
and neuroleadership. Such an exotic union
of science and the arts may provide better
understanding of human nature and behaviour
change. Imaging technologies such as functional
magnetic resonance imaging (fMRI) and positron
emission tomography (PET) reveal unseen neural
connections in the living human brain along
with brain wave analysis technologies such as
quantitative electroencephalography (QEEG). We
can even theoretically link the brain (the physical
organ) with the mind (the human consciousness
that thinks, feels, acts, and perceives) through an
advanced computer to analyse these connections.
As economists and business people always strive
for better, faster, cheaper means of production,
and demand higher productivity from their
employees through effective leadership and
supervision, neuroscience is relied upon to
provide answers to questions like:
• How can we leverage our brain in
business?
• Capitalise/invest on the brain?
• Make the best decision?
• Find the productivity “hot buttons” in
the brain?
• Encourage creative and ethical brain?
Such questions give rise to exciting symbiotic
developments of business and neuroscience.
Neuroeconomics as an emerging
discipline combines neuroscience, economics,
and psychology; and uses research methods
from cognitive neuroscience and experimental
economics. It is “the application of neuroscientific
methods to analyse and understand economically
relevant behaviour” (1). such as evaluating
Editorial
1 Malaysian J Med Sci. Apr-Jun 2010; 17(2): 1-3
www.usm.my/mjms
decisions, categorising risks and rewards,
and interactions among economic agents.
Neuroeconomics research draws on the
convergence of three major trends. First, using
fMRI we can measure brain activity associated
with discrete cognitive events and study higher
cognitive processes like decision making and
reward evaluation. Second, by incorporating
economic variables into electrophysiological
experiments, we can encode motivationally
relevant information through novel recognition of
neurons at multiple levels of processing pathways.
Third, neuroeconomics draws on behavioural
economics to consider psychological variables
into economic and decision-making models.
Neuroaccounting is a new way to
scientifically view accounting and the brain’s
central role in building economic institutions.
The measure of brain activity during economic
decision-making using neuroscientific methods
can prove useful for evaluating the desirability
of implementing new policies that run contrary
to long-established accounting principles (2).
Dickhaut et al. (3) reviewed neuroscientific
evidence that suggest the emergence of modern
accounting principles based on the mapping
of brain function to the principles of modern
accounting.
Neuromarketing is the application of
neuroscientific methods to analyse and understand
human behaviour in relation to markets and
marketing exchanges. Applying neuroscience to
marketing may form a basis for understanding
how human beings create, store, recall, and relate
to information such as brands in everyday life.
Neuromarketers now use cognitive neuroscience
in marketing research that bears implications for
2 www.usm.my/mjms
Malaysian J Med Sci. Apr-Jun 2010; 17(2): 1-3
understanding organisational behaviour in a social
context (4), for example whether certain aspects
of advertisements and marketing activities trigger
negative effects such as overconsumption. Going
beyond focus groups in traditional advertising
methods, we can now use EEG to detect putative
“branding moments” within TV commercials and
apply brain imaging to discover the “buy button”
(5). In notable research emerging from Stanford
University, Carnegie Mellon University and the
Massachusetts Institute of Technology, scientists
are using fMRI to identify parts of the brain that
influence buying decisions.
Neuroethics is the investigation of altruism
in neuroeconomic research, which suggests that
cooperation is linked to activation of reward
areas (5). Investigations into such problems could
in fact be among the most compelling within
neuromarketing. As a new field, it has triggered
heated debate and questioned the ethics behind
neuromarketing in a 2004 editorial of Nature
Neuroscience. Now that we have identified certain
key regions of the brain that would be implicated
in consumer preferences, it may be possible for
marketers to “manipulate” their advertisements
and target the brain areas that mediate reward
processing. One example is the perennial war
of the colas (Coca-Cola vs. Pepsi-Cola) whereby
studies indicate that Coca-Cola had a more
efficient advertising campaign (6). Similar studies
were done on the attractiveness of cars or human
faces, and how they trigger or activate these
“pleasure centres” in the brain that drive social
behaviour. As for the marketers themselves, the
neuroethical question that arises is whether there
is any difference between the brain activity of
highly ethical and less ethical salespeople?
Neuroscience has the potential to
influence corporate governance; the study
of this phenomenon is neurogovernance.
Neurogovernenance is a growing field. In
Germany, we now have the Institute for Corporate
Governance (ICG Germany) (http://web.dmz.uniwh.
de/icg/Forschung.html). Further, since 2001,
the Malaysian Code on Corporate Governance
has been published by the Malaysian Institute
of Corporate Governance (7). Neurogovernance
seeks to explain behaviours of directors, auditors,
or even those who breach corporate governance.
The same explanations can be applied to
managers, leaders, and other business people
or other professions. For example at Emory,
researchers asked 16 executives to respond to
PowerPoint slides concerning moral quandaries,
such as acting on privileged information, while
inside an MRI machine. They found that managers
weighing ethical dilemmas use the part of their
brain associated with early memories, which
could mean moral thinking is formed early in life.
(8).
Stepping away from economics and business
sub-disciplines like marketing and accounting, a
more recent development is neuroleadership,
a term coined in 2006 by David Rock, a leadership
consultant. Neuroleadership is the study of
leadership through the lens of neuroscience and
explores central elements of leadership, including:
(a) self-awareness (b) awareness of others, (c)
insight, (d) decision making, and (e) influencing
(9). As a new field of study, neuroleadership
brings neuroscientific knowledge into the area of
leadership development, management training,
education, consulting and coaching. Rock and
his collaborator Jeffrey M. Schwartz, a research
psychiatrist at the University of California at Los
Angeles, apply broader themes from neuroscience
to leadership that suggest mindful, focused
attention on new management practices, rather
than on old habits, can rewire the brain. Another
way of applying neuroscience is mapping the
individual managers’ brains. In “The Leadership
Neuroscience Project”, Pierre A. Balthazard
and David A. Waldman from the Arizona State
University School of Global Management &
Leadership work with neuroscientists to monitor
the brains of 44 business leaders while they
discussed scenarios such as layoffs. Balthazard
seeks to identify brain patterns, and then train
managers to replicate the patterns within their
own brains (10).
At Universiti Sains Malaysia, we are
interested in the study neuroleadership
from the perspectives of transformational
neuroleadership based on Bass (11) and Burns
(12). Unlike transactional leadership, which
focuses on exchange that motivates followers by
providing rewards and benefits for productivity,
transformational leaders make decision based
on cognitive rewards, provide a climate of trust,
and draw out followers’ higher order needs to
perform beyond expectations. Transformational
leaders inspire their followers to make decision
that transcend self-interests. Can neuroimaging
show how transformational versus transactional
managers make decision (13)?
The symbiotic development of neuroscience
in business is not without challenges. Of primary
concern for business researchers in developing
countries is the access to EEG and fMRI since
these types of equipment are usually in the
domain of neuroscientists from the medical
faculty. One strategy to overcome this dilemma is
Editorial | Brain in Business
www.usm.my/mjms 3
to use interdisciplinary research teams. Another
challenge is that the design of experiments
required by these projects, which may not agree
well with the scientific methods in business—
especially in the interpretation of data of the
neuroimages for which business researchers have
no expertise. Whereas business research and
scientific research uphold high ethical standards,
the use of neuroscientific methods involving
human subjects raises strict ethical issues to
which business researchers are unaccustomed. As
an academic exercise, after conducting research,
interdisciplinary issues arise about where to
publish and who to supervise pseudo-science or
pseudo-arts candidates.
In conclusion, I am moved by the simple
argument by Renvoise and Morin (13) about brain
and marketing that captured the essence of brain
in business:
The new brain thinks. It processes rational data.
The middle brain feels. It processes emotions and
gut feelings.
The old brain decides. It takes into account the
input from the other two brains, but the old brain is
the actual trigger of decision.
Correspondence
Associate Professor Dr Zainal Ariffin Ahmad
BSc (Northern Illinois), MBA, EdD
Business Research for Applied Innovations in
Neurosciences (BRAIN) Lab
Graduate School of Business
3rd Floor, Hamzah Sendut Library 2
Universiti Sains Malaysia
11800 Penang
Malaysia
Tel: +604-653 2605
Fax: +604-653 2605
Email: zaba@usm.my
References
1. Kenning P, Plassmann H. NeuroEconomics: an
overview from an economic perspective. Brain Res
Bull. 2005;67:343–354.
2. Dickhaut JW, Basu S, McCabe KA, Waymire GB.
Neuroaccounting, Part I: The Primate Brain and
Reciprocal Exchange. [Internet]. Rochester, NY:
Social Science Electronic Publishing. [updated 2009
Oct 6; cited 2010 03 17]. Available from: http://ssrn.
com/abstract=1336526
3. Dickhaut JW, Basu S, McCabe KA, Waymire GB.
Neuroaccounting, Part II: Consilience between
Accounting Principles and the Primate Brain
[Internet]. Rochester, NY: Social Science Electronic
Publishing. [updated 2009 Oct 6; cited 2010 03 17].
Available from: http://ssrn.com/abstract=1336517
4. Lee N, Broderick AJ, Chamberlain L. What is
‘neuromarketing’? A discussion and agenda for future
research. Int J Psychophysiol. 2007;63(2):199–204.
5. Rilling JK, Zeh ZK, Berns GS, Kilts CD. A neural basis
for social cooperation. Neuron. 2002;35(2):395–
405.
6. McClure SM, Li J, Tomlin D, Cypert KS, Montague
LM, Montague PR. Neural correlates of behavioural
preferences for culturally familiar drinks. Neuron.
2004;44(2):2379–2387 .
7. Ahmad ZA. Corporate Governance: Research Agenda
for Malaysia. Presentation at the 2nd International
Research Workshop, University of New South Wales,
Australia, 18-20th February 2008.
8. The Business Brain In Close-Up: Can neuroscience
offer insights into the ‘soft’ art of leadership?
BusinessWeek. July 23, 2007.
9. Neuroleadership Institute. [Internet] New South
Wales (Australia): NeuroLeadership Institute Pty Ltd;
2010. [cited 2010 03 17]. Available from: http://www.
neuroleadership.org
10. McGregor J. The business brain in close-up: Can
neuroscience offer insights into the ‘soft’ art of
leadership? [Internet]. New York (USA): Bloomberg
LP; 2007 July 23. [cited 2010 03 17]. Available
from: http://www.businessweek.com/magazine/
content/07_30/b4043084.htm
11. Bass BM. Leadership and performance beyond
expectations. New York: Free Press; 1985.
12. Burns JM. Leadership. New York, NY: Harper & Row
Publishers; 1978.
13. Ahmad ZA, Tajasom A, Saimi R. Neuroleadership and
Managerial Decision Making. Presentation at the
2nd International Research Workshop, University of
New South Wales, Australia, 18-20th February 2008.
14. Renvoise P, Morin C. Neuromarketing. Nashville,
TN: Thomas Nelson; 2007
No comments:
Post a Comment