Archive for 26 March 2008
Maybe Sociology Is Worth Something After All
| Peter Klein |
This passage from yesterday’s WSJ front-pager on Sheraton’s attempt to upgrade its image should delight Brayden and the Boys:
[Sheraton’s Hoyt] Harper, whose father was a psychologist, says he takes an inclusive approach to negotiating with [franchisees]. Instead of issuing blanket instructions, he has brought in major Sheraton owners, such as Host, early on in the design process to get their input and help tweak the final plan. This means that Starwood must endure a lot of criticism from its hotel owners and that the owners must endure criticism from Starwood. “My sociology major was much more appropriate for this job than my business degree,” he says.
On a more serious note, the article contains interesting general information about the hotel industry and the dominant franchise model. It should have mentioned Francine Lafontaine’s work on franchising, particularly this recent paper (with Renata Kosova and Rozenn Perrigot) on the hotel industry and a chain’s choice to own or franchise particular units.
A Picture Is Worth a Thousand Bullet Points
| Peter Klein |
An alert reader directs me to slide 241 of the slide pack for Dick Langlois’s Economics of Organization course. Click the image below for a look. Dick seems to be raising the point that Williamson’s TCE (as well as other theories of economic organization) pays insufficient attention to the processes by which firms reach their “optimal” organizational structures. TCE holds that firms try to minimize (or should minimize) the sum of production and transaction costs. But do firms actually do this? Do they make mistakes? Do they experiment and learn? Is the selection environment strong enough that inefficient organizational choices are quickly eliminated, or do inefficiencies persist? (The problem is particularly important for empirical literature on organizational form — see pp. 440-42 of this paper.) Or, can we assume, with Dr. Pangloss, that whatever is, is optimal?
To illustrate the point, Dick includes a photo of Williamson giving a seminar, with some additional background art — an etching from Candide — added to the frame. If you’re not paying attention you might think the etching is part of the original. I give Dick points for cleverness, but my anonymous correspondent finds the illustration a bit too subliminal. What do you think?
Intelligence Doping
| Peter Klein |
Posner and Becker weigh in on “intelligence doping,” using drugs to increase cognitive performance (see our earlier remarks here). Both argue, on utilitarian grounds, against regulating Provigil and similar stimulants. I bet they’d go for the new Snickers bar too.
Organizations and Markets 
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