Norway Workshop on Org Econ and Org Capabilities

30 May 2010 at 6:32 am 1 comment

| Nicolai Foss |

With Nick Argyres, Teppo Felin, and Todd Zenger, I am editing a special issue of Organization Science on “Organizational Capabilities and Organizational Economics: From Opposition and Complementarity to Real Integration.” We received 84 submissions and invited a fair amount of R&Rs. To help improve those R&Rs and to stimulate discussed, we organized, with the (practical) help of Professor Sven Haugland and (financial help) the Norwegian School of Economics and Business Administration, a small workshop that took place this Friday and Saturday (28-29 May) at the magnificent Hotel Solstrand, outside of Bergen. The discussions were informative, high-level, and friendly; the weather behaved (Bergen is the most rainy city in Europe); the food was excellent; etc. A model workshop, in short. 

A few key points (I will refrain from commenting on the R&R  papers):

  • Out of 11 papers, 1 was theoretical, 2 were simulation papers, and the rest  were empirical. All creatively brought both capabilities and OE ideas to bear on issues of economic organization (including internal organization).
  • I argued that virtually all debate on capabilities and economic organization had been dominated by a “capabilities first” heuristic, in which capabilities are primary and transaction costs were, as it were, second-order (e.g., transaction costs moderate the relation between capabilities and vertical scope). It is time to reverse causality and examine how capabilities emerge from “transacting.”
  • Nick Argyres and Todd Zenger presented a paper that followed up on this by showing how capabilities can be understood as reflecting specific investments.
  • Nevertheless, there was some skepticism regarding whether it is useful to talk about a debate, not just because of the dominance of the capabilities view in that debate, but also because it was better to consider problems “agnostically” and choose flexibly among the available tools, whether drawn from the capabilities or the TCE toolbox. Michael Jacobides argued this point with so much passion that everyone cracked up when Teppo Felin observed that Michael was more of a high-priest than an agnostic.  
  • “OE” was generally interpreted as “transaction cost economics”; not a single paper brought agency and property rights issues to bear on these issues.

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Economics of Creativity SMS Competitive Strategy Junior Faculty and Paper Development Workshop

1 Comment Add your own

  • 1. David Hoopes  |  1 June 2010 at 1:07 pm

    Danny Miller and I discuss the relationship between governance and capabilities in, “Ownership Preferences, Competitive Heterogeneity, and Family-Controlled Businesses” (http://fbr.sagepub.com/cgi/reprint/19/2/89.pdf). We use agency theory to discuss how ownership (family-owned firms) seems to influence capability development. It was interesting to me that friends who work on what i would call “real” agency theory liked our simple “model.” Whereas some family business scholars didn’t like our conclusions very much (the fad at the time being to criticize family owned businesses).

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

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