Permeable Boundaries

30 November 2012 at 9:59 am 6 comments

| Dick Langlois |

The new table-of-contents alert from Industrial and Corporate Change carries an interesting new paper by Carliss Baldwin and her coauthors called “The Architecture of Transaction Networks: A Comparative Analysis of Hierarchy in Two Sectors.” Here’s the abstract:

Many products are manufactured in networks of firms linked by transactions, but comparatively little is known about how or why such transaction networks differ. This article investigates the transaction networks of two large sectors in Japan at a single point in time. In characterizing these networks, our primary measure is “hierarchy,” defined as the degree to which transactions flow in one direction, from “upstream” to “downstream.” Our empirical results show that the electronics sector exhibits a much lower degree of hierarchy than the automotive sector because of the presence of numerous inter-firm transaction cycles. These cycles, in turn, reveal that a significant group of firms have two-way “vertically permeable boundaries”: (i) they participate in multiple stages of an industry’s value chain, hence are vertically integrated, but also (ii) they allow both downstream units to purchase intermediate inputs from and upstream units to sell intermediate goods to other sector firms. We demonstrate that the 10 largest electronics firms had two-way vertically permeable boundaries while almost no firms in the automotive sector had adopted that practice.

As I was downloading the article from the ICC website, a link to the Best Twenty ICC Articles from First Twenty Years of Publication (1992-2011) caught my eye. Definitely some interesting and important articles on this list, which was chosen by the editors. But I was struck that there is no overlap at all between this list and the list of 20 most cited articles in ICC. On a quick and sloppy count, there is an overlap of only 3 with the top 50 most cited. (Similar story for most read, where there is one overlap with the top 20.) Given my interest in this odd fact, perhaps you can guess on which lists my own articles lie.

Entry filed under: - Langlois -, Papers, Theory of the Firm. Tags: .

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6 Comments Add your own

  • 1. Peter Klein  |  30 November 2012 at 10:13 am

    The people love you, even if the elites do not!

  • 2. Nicolai Foss  |  2 December 2012 at 3:52 am

    It is interesting that those “twenty best ICC” articles are virtually all authored by Americans. It may be a tactical move prompted by complants that ICC has “become too European” (a complaint I have heard many times over the last cpl of yrs).

  • 3. srp  |  5 December 2012 at 4:35 am

    Cheer up! Give the editors, citers, and downloaders a quiz about the contents of each paper on the respective lists. If they can accurately identify the thesis, argument for that thesis, and primary reservation about that thesis for more than 10% of the articles, I’d be very surprised.

  • 4. David Hoopes  |  8 December 2012 at 11:34 pm

    That’s really wild that none of the “best” papers are the most cited or downloaded.

  • 5. David Hoopes  |  8 December 2012 at 11:35 pm

    Maybe “best” papers should be labeled “papers written by well known scholars.”

  • 6. David Hoopes  |  8 December 2012 at 11:37 pm

    But then the most cited papers are written by well-known people too (I guess they would almost have to be).

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
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