Author Archive

Spender on Strategy

| Dick Langlois |

The always-interesting J.-C. Spender has kindly sent me a copy of his new book from Oxford, Business Strategy: Managing Uncertainty, Opportunity, and Enterprise. Not surprisingly, this very much the kind of book readers of this blog will find interesting. In addition to covering (and interpreting) standard practitioner and academic models of strategy, the book spends considerable time on language, persuasion, and rhetoric. Those of you who teach strategy should definitely have a look.

16 April 2014 at 12:18 pm Leave a comment

Epistemic Mind Games

| Dick Langlois |

I had a brief mental hiccup today when I received an email advertisement from Stanford University Press for a book called Epinets: The Epistemic Structure and Dynamics of Social Networks by Mihnea C. Moldoveanu and Joel A. C. Baum. Because the ad carried prominently the SUP logo — a stylized fir tree — and because epinette is the Canadian French word for spruce tree, I thought for a nanosecond that I was being offered a treatise on conifer biology, penned by a man whose name means “tree.” But no. It’s a book of organizational sociology. “Drawing on artificial intelligence, the philosophy of language, and epistemic game theory, Moldoveanu and Baum formulate a lexicon and array of conceptual tools that enable readers to explain, predict, and shape the fabric and behavior of social networks.” Might be worth glancing at, if only to find out what epistemic game theory is. (Perhaps it is as opposed to ontological game theory.)

Of course, the Palo Alto of the Stanford seal is not a spruce. It’s a coast redwood, also called a sequoia.

6 March 2014 at 7:50 pm Leave a comment

WINIR Conference in Greenwich: Deadline Approaching

| Dick Langlois |

February 28 is the deadline for submitting an abstract to the first conference of the World Interdisciplinary Network for Institutional Research (WINIR), which will take place 11-14 September 2014 at the Old Royal Naval College, Greenwich. Keynote speakers include Timur Kuran. Information and abstract submission at the WINIR website.

25 February 2014 at 10:21 am Leave a comment

Cheating and Public Service

| Dick Langlois |

Everyone knows that people who want to go into government jobs have high pro-social preferences and impeccable honesty. Well, not so in India, according to Rema Hanna from the Kennedy School at Harvard, who spoke in our department seminar series Friday. Here is the abstract:

In this paper, we demonstrate that university students who cheat on a simple task in a laboratory setting are more likely to state a preference for entering public service. Importantly, we also show that cheating on this task is predictive of corrupt behavior by real government workers, implying that this measure captures a meaningful propensity towards corruption. Students who demonstrate lower levels of prosocial preferences in the laboratory games are also more likely to prefer to enter the government, while outcomes on explicit, two-player games to measure cheating and attitudinal measures of corruption do not systematically predict job preferences. We find that a screening process that chooses the highest ability applicants would not alter the average propensity for corruption among the applicant pool. Our findings imply that differential selection into government may contribute, in part, to corruption. They also emphasize that screening characteristics other than ability may be useful in reducing corruption, but caution that more explicit measures may offer little predictive power.

I wonder what her colleagues at the Kennedy School think of this. Ask not what you can do for your country; ask what your country can do for you.

24 February 2014 at 6:09 pm 3 comments

The Modular Kimono

| Dick Langlois |

I recently ran across this interesting paper on vertical integration and subcontracting in the Japanese kimono industry of the late nineteenth and early twentieth centuries. By this period, most of the Japanese silk (and cotton) industries had adopted the factory system. But there remained a few industrial districts that relied on the putting-out system. This paper is most interested in presenting a risk-aversion model that explains why “premier subcontractors” got relational contracts in the putting-out system. I’m not sure I buy it, but in any case what caught my eye was something else — a modularity story:

In the weaving industry of Kiryu, the factory system equipped with hand looms had been chosen to weave the luxury fabrics, while the putting-out system had been used for most other fabrics, until the factory system equipped with power looms became dominant for most kinds of fabrics in the 1910s and later. Instead of being replaced, the putting-out system developed and dispersed within Kiryu, especially from the 1860s to the 1900s, when the main products of Kiryu were yarn-dyed silk fabrics. “Yarn dying” means material yarn is dyed before weaving. For the luxury fabrics that were dyed after weaving, the cleaning and finishing processes undertaken after weaving were important, and those processes were conducted inside the manufacturers’ workshops. In contrast, in the production of the yarn-dyed fabrics, dying, arranging warps, cleaning yarn, throwing, re-reeling, and other preparation processes were essential. Because those processes needed special skills, the craftsmen who specialized in each process were organized as subcontractors by manufacturers. … With the moving weight from production of traditional piece-dyed (dyed-after-weaving) fabrics to production of yarn-dyed (dyed-before-weaving) silk fabrics, the throwing process, the finishing process, and the designing process, as well as the weaving process, came to be put-out. Manufacturers decreased the production inside of their workshops and established subcontracting relations with independent artisans. This case suggests that the technological change induced by the change of products from piece-dyed fabrics to the yarn-dyed fabrics affected production organization.

This has a bit of a Christensen flavor to it. When “performance” needs were high — high-end kimonos — the industry used a non-modular technology (dyed-after-weaving) and an integrated organization. When performance needs were lower — lower-quality kimonos — it used a modular technology (dyed-before-weaving) and a vertically disintegrated structure.

14 January 2014 at 12:50 pm 1 comment

Gordon Winston

| Dick Langlois |

I was saddened to learn of the recent passing of Gordon Winston, an interesting economist who should have been better known (to readers of this blog) than he was.

I’m sure I knew of Gordon when I was a student at Williams in the early 1970s, but as I didn’t take any economics as an undergraduate, I never had any contact with him. I really first met him when he interviewed me for a job at Williams in 1983 (which I didn’t get — not his fault). We kept in contact for a number of years after that, including during at least one Liberty Fund conference in the 1980s.

Gordon is probably best known for his later work on the economics of higher education, which I use in teaching. But readers might be even more interested in his earlier work on the timing of economic activities, which resulted in a 1982 Cambridge book by that title. In essence, Gordon was trying to work out in detail how to think about time in a production-function model of economic activity, something that the late Armen Alchian had adumbrated in his famous paper “Costs and Output” (the original 1958 RAND working paper version of which is now available here). Gordon cites Lachmann and Shackle, but I think his biggest influence was Georgescu-Roegen. The book ought to be especially interesting to grad students, since I suspect it opens up a lot of ideas for further exploration.

9 January 2014 at 2:22 pm Leave a comment

Bulletin: Brian Arthur Has Just Invented Austrian Economics

| Dick Langlois |

Surprisingly, the following passage is not from O’Driscoll and Rizzo (1985). It is the abstract of a new paper by Brian Arthur called “Complexity Economics: A Different Framework for Economic Thought.”

This paper provides a logical framework for complexity economics. Complexity economics builds from the proposition that the economy is not necessarily in equilibrium: economic agents (firms, consumers, investors) constantly change their actions and strategies in response to the outcome they mutually create. This further changes the outcome, which requires them to adjust afresh. Agents thus live in a world where their beliefs and strategies are constantly being “tested” for survival within an outcome or “ecology” these beliefs and strategies together create. Economics has largely avoided this nonequilibrium view in the past, but if we allow it, we see patterns or phenomena not visible to equilibrium analysis. These emerge probabilistically, last for some time and dissipate, and they correspond to complex structures in other fields. We also see the economy not as something given and existing but forming from a constantly developing set of technological innovations, institutions, and arrangements that draw forth further innovations, institutions and arrangements. Complexity economics sees the economy as in motion, perpetually “computing” itself— perpetually constructing itself anew. Where equilibrium economics emphasizes order, determinacy, deduction, and stasis, complexity economics emphasizes contingency, indeterminacy, sense-making, and openness to change. In this framework time, in the sense of real historical time, becomes important, and a solution is no longer necessarily a set of mathematical conditions but a pattern, a set of emergent phenomena, a set of changes that may induce further changes, a set of existing entities creating novel entities. Equilibrium economics is a special case of nonequilibrium and hence complexity economics, therefore complexity economics is economics done in a more general way. It shows us an economy perpetually inventing itself, creating novel structures and possibilities for exploitation, and perpetually open to response.

Arthur does acknowledge that people like Marshall, Veblen, Schumpeter, Hayek, and Shackle have had much to say about exactly these issues. “But the thinking was largely history-specific, particular, case-based, and intuitive—in a word, literary—and therefore held to be beyond the reach of generalizable reasoning, so in time what had come to be called political economy became pushed to the side, acknowledged as practical and useful but not always respected.” So what Arthur has in mind is a mathematical theory, no doubt a form of what Roger Koppl – who is cited obscurely in a footnote – calls BRACE Economics.

9 October 2013 at 11:48 am 12 comments

World Interdisciplinary Network for Institutional Research

| Dick Langlois |

I have recently become involved with a new organization that many readers may be interested in. It’s called the World Interdisciplinary Network for Institutional Research (WINIR). From the website:

WINIR is a specialist but global network. It is set up to complement rather than rival other organisations that have the study of institutions on their agenda. Unconfined to any single academic discipline, it accepts contributions from any approach that can help us understand the nature and role of institutions. While other organisations are intended to act as broad forums for all kinds of research in the social sciences, WINIR aims to build an adaptable and interdisciplinary theoretical consensus concerning core issues, which can be a basis for cumulative learning and scientific progress in the exciting and rapidly-expanding area of institutional research.

You can learn more and sign up here. If you join now, you will be considered a founding member. WINIR is tentatively planning a conference for next year near London and one the year after that in Rio.

8 October 2013 at 1:24 pm Leave a comment

The Return of Max Planck

| Dick Langlois |

How failure to proofread can improve the quality of your coauthors. Note the use of “we” in the abstract. I suppose that Penrose’s idea that resources come in discrete bundles is a kind of quantum mechanics of the firm.

26 September 2013 at 10:50 am 2 comments

David Landes

| Dick Langlois |

As some readers may already have heard, David Landes passed away on August 17. The New York Times has not seen fit to publish an obituary, but here is one by Landes’s son Richard.

I only met Landes once, at the International Economic History Association meeting in Milan in 1994. I attended a session he chaired on the Industrial Revolution. Rondo Cameron, a real character, sat himself down in the front row near the podium. Cameron was one of the most vocal proponents of the idea that there was actually no such thing as the Industrial Revolution, based largely on the argument that income per capita did not rise dramatically during the late eighteenth and early nineteenth century (even though both the numerator and denominator were rising dramatically). Landes opened the session, and some hapless economic historian began presenting a paper on something or other during the Industrial Revolution. Cameron immediately put up his hand and announced that the presenter’s premise was mistaken – because there had been no Industrial Revolution! Landes then sprang back to the podium and delivered a wonderful extemporaneous speech on why it was indeed appropriate to talk about an Industrial Revolution, including an analysis of the word “revolution” and its first use in French. This session also sticks in memory because half-way through an audience member suffered and epileptic fit and had to be carted out to an ambulance.

I must say that, in the great debates in which Landes engaged, I most often found myself coming down on his side.

Addendum September 8, 2103: The New York Times now has an obituary here.

8 September 2013 at 7:23 am 1 comment

David Landes

| Dick Langlois |

As some readers may already have heard, David Landes passed away on August 17. The New York Times has not seen fit to publish an obituary, but here is one by Landes’s son Richard.

I only met Landes once, at the International Economic History Association meeting in Milan in 1994. I attended a session he chaired on the Industrial Revolution. Rondo Cameron, a real character, sat himself down in the front row near the podium. Cameron was one of the most vocal proponents of the idea that there was actually no such thing as the Industrial Revolution, based largely on the argument that income per capita did not rise dramatically during the late eighteenth and early nineteenth century (even though both the numerator and denominator were rising dramatically). Landes opened the session, and some hapless economic historian began presenting a paper on something or other during the Industrial Revolution. Cameron immediately put up his hand and announced that the presenter’s premise was mistaken – because there had been no Industrial Revolution! Landes then sprang back to the podium and delivered a wonderful extemporaneous speech on why it was indeed appropriate to talk about an Industrial Revolution, including an analysis of the word “revolution” and its first use in French. This session also sticks in memory because half-way through an audience member suffered and epileptic fit and had to be carted out to an ambulance.

I must say that, in the great debates in which Landes engaged, I most often found myself coming down on his side.

29 August 2013 at 11:30 am Leave a comment

The Coase Theorem in under 140 Characters

| Dick Langlois |

From the Stanford alumni newsletter:

Goodbye @SUAthletics, Hello @gostanford

Stanford athletics knows how to drive a hard bargain. The department recently traded its longtime Twitter handle, @SUAthletics, to Syracuse University in exchange for a yet-to-be determined order of local goods, including one case of oranges. The fruit will be used to refill Stanford’s 2011 Orange Bowl trophy. Athletics will now tweet as @GoStanford, which had emerged as a more popular choice.

18 July 2013 at 8:41 am Leave a comment

Bowling for Fascism

| Dick Langlois |

Speaking of Robert Putnam: Although I think the idea of social capital has its uses, Putnam’s claim that civic engagement in the US has been declining was long ago demolished by my late UConn colleague Everett Ladd. But I have also thought that social capital – and the Romantic “communitarian” movement in general – has been blind to the authoritarian side of community. The always-interesting Hans-Joachim Voth and his co-authors have illustrated this in a dramatic way in a new working paper. Here is the abtract.

Social capital – a dense network of associations facilitating cooperation within a community – typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially “dark side” of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Party’s triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations – veteran associations and non-military clubs, “bridging” and “bonding” associations – positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germany’s first democracy.

12 July 2013 at 1:53 am 2 comments

Do Prices Determine Vertical Integration?

| Dick Langlois |

The title of this paper, by Laura Alfaro, Paola Conconi, Harald Fadinger, and Andrew F. Newman, caught my eye. Then the abstract really caught my attention.

What is the relationship between product prices and vertical integration? While the literature has focused on how integration affects prices, this paper shows that prices can affect integration. Many theories in organizational economics and industrial organization posit that integration, while costly, increases productivity. If true, it follows from firms’ maximizing behavior that higher prices cause firms to choose more integration. The reason is that at low prices, increases in revenue resulting from enhanced productivity are too small to justify the cost, whereas at higher prices, the revenue benefit exceeds the cost. Trade policy provides a source of exogenous price variation to assess the validity of this prediction: higher tariffs should lead to higher prices and therefore to more integration. We construct firm-level indices of vertical integration for a large set of countries and industries and exploit cross-section and time-series variation in import tariffs to examine their impact on firm boundaries. Our empirical results provide strong support for the view that output prices are a key determinant of vertical integration.

The surprising part is not the empirical result, which is interesting. The surprising part is that the underlying theory of vertical integration in the paper is no more sophisticated than what’s in the abstract: vertical integration is always more efficient than using the market, because a lot of people like Williamson and Hart and Moore have said so. Since integration implies fixed costs, firms (in perfect competition) won’t engage in this wonderful and indisputably efficient practice unless prices are high enough to cover the fixed costs. Readers of this blog will not need me to tell them what’s wrong with this. But I like the empirical result, which is consistent with my own suspicion that tariffs provide cover for firms to engage in inefficient vertical integration. The right spin on this result may well be the Michael Jensen story: lack of competitive pressure from the product market enables managers to retain earnings, which they spend on buying divisions or integrating into things they could buy more cheaply on the market.

7 June 2013 at 2:47 pm Leave a comment

Steven Klepper

| Dick Langlois |

I just learned (via Rajshree Agarwal) of the passing, at a young age, of Steven Klepper. Steven was an acquaintance of many years, a stand-up guy as well as a great researcher. His work on the lifecycle of firms and the role of spinoffs is a model for how to do good empirical work in organization and technology. By coincidence, this new paper (with Russell Golman) crossed my screen only a few minutes after I learned the news.

Spinoffs and Clustering

Geographic clustering of industries is typically attributed to localized, pecuniary or non-pecuniary externalities. Recent studies across innovative industries suggest that explosive cluster growth is associated with the entry and success of spinoff firms. We develop a model to explain the patterns regarding cluster growth and spinoff formation and performance, without relying on agglomeration externalities. Clustering naturally follows from spinoffs locating near their parents. In our model, firms grow and spinoffs form through the discovery of new submarkets based on innovation. Rapid and successful innovation creates more opportunities for spinoff entry and drives a region’s growth.

28 May 2013 at 3:31 pm 3 comments

Institutions and Economic Change

| Dick Langlois |

In September I will be part of a symposium on “Institutions and Economic Change,” organized by Geoff Hodgson’s Group for Research in Organisational Evolution. The workshop will be held on 20-21 September 2013 at Hitchin Priory, Hitchin, Hertfordshire, England. Here is the program and call for participation:

Speakers:

Masahiko Aoki (Stanford University, USA)
“Between the Economy and the Polity: Causation or Correlation. Theory and a Historical Case from China”

Francesca Gagliardi (University of Hertfordshire, UK)
“A Bibliometric Analysis of the Literature on Institutional Complementarities”

Geoffrey Hodgson (University of Hertfordshire, UK)
“A Manifesto for Legal Institutionalism”

Jack Knight (Duke University, USA)
“Courts and Institutional Change”

Suzanne Konzelmann (Birkbeck College, University of London, UK)
“‘Picking winners’ in a Liberal Market Economy: Modern Day Heresy – or Essential Strategy for Competitive Success?”

Richard Langlois (University of Connecticut, USA)
“The Institutional Revolution: A Review Essay”

Ugo Pagano (University of Siena, Italy)
“Synergy, Conflict and Institutional Complementarities”

Abstracts are available on this GROE webpage: uhbs-groe.org/workshops.htm

This workshop is designed to provide in-depth discussion of cutting-edge issues, in a forum that permits the attention to detail and definition that is often lacking in larger, conference-style events. The expected maximum number of participants is 50. Our past Workshops have filled up rapidly, so please book early to avoid disappointment. The workshop will include a poster session where participants may present their research, as long as it is related to the workshop theme. To apply to be included in the poster session send an abstract of your paper to Francesca Gagliardi (f.gagliardi@herts.ac.uk). To reserve a place on the workshop please visit store.herts.ac.uk/groeworkshop

13 May 2013 at 10:28 am Leave a comment

Cognition and Capabilities

| Dick Langlois |

The title of this paper caught my attention.

“Cognition & Capabilities: A Multi-Level Perspective”
J. P. Eggers and Sarah Kaplan
Academy of Management Annals 7(1): 293-338

Research on managerial cognition and on organizational capabilities has essentially developed in two parallel tracks. We know much from the resource-based view about the relationship between capabilities and organizational performance. Separately, managerial cognition scholars have shown how interpretations of the environment shape organizational responses. Only recently have scholars begun to link the two sets of insights. These new links suggest that routines and capabilities are based in particular understandings about how things should be done, that the value of these capabilities is subject to interpretation, and that even the presence of capabilities may be useless without managerial interpretations of their match to the environment. This review organizes these emerging insights in a multi-level cognitive model of capability development and deployment. The model focuses on the recursive processes of constructing routines (capability building blocks), assembling routines into capabilities, and matching capabilities to perceived opportunities. To date, scholars have focused most attention on the organizational-level process of matching. Emerging research on the microfoundations of routines contributes to the micro-level of analysis. The lack of research on capability assembly leaves the field without a bridge connecting the macro and micro levels. The model offers suggestions for research directions to address these challenges.

The reason it caught my eye is that some 16 years ago I published a paper with exactly the same title (albeit with a different subtitle). Of course, I didn’t approach the issue in exactly the way these authors do, which is obviously close to Nicolai’s work on microfoundations. But I did arguably try to “link the two sets of insights,” and I did not do so “only recently.”

9 May 2013 at 12:35 pm 2 comments

Henderson on Business Ethics

| Dick Langlois |

Rebecca Henderson, one of my favorite management scholars, has a new paper (with Karthik Ramanna) on – Milton Friedman and business ethics. Here’s the abstract.

Managers and Market Capitalism

In a capitalist system based on free markets, do managers have responsibilities to the system itself, and, in particular, should these responsibilities shape their behavior when they are attempting to structure those institutions of capitalism that are determined through a political process? A prevailing view — perhaps most eloquently argued by Milton Friedman — is that managers should act to maximize shareholder value, and thus that they should take every opportunity (within the bounds of the law) to structure market institutions so as to increase profitability. We maintain here that if the political process is sufficiently ‘thick,’ in that diverse views are well-represented and if politicians and regulators cannot be easily captured, then this shareholder-return view of political engagement is unlikely to reduce social welfare in the aggregate and thus damage the legitimacy of market capitalism. However, we contend that sometimes the political process of determining institutions of capitalism is ‘thin,’ in that managers find themselves with specialized technical knowledge unavailable to outsiders and with little political opposition — such as in the case of determining certain corporate accounting standards that define corporate profitability. In these circumstances, we argue that managers have a responsibility to structure market institutions so as to preserve the legitimacy of market capitalism, even if doing so is at the expense of corporate profits. We make this argument on grounds that it is both in managers’ self-interest and, expanding on Friedman, managers’ ethical duty. We provide a framework for future research to explore and develop these arguments.

On the one hand, we might quibble about whether they get Friedman right. Friedman meant in the first instance that managers should pursue their self-interest within the framework of “good” institutions, not in the (Public Choice) context of changing the institutional framework itself. I haven’t actually gone back to see what Friedman says about this, but here is how Henderson and Ramanna interpret the Chicago tradition: “Friedman and his colleagues were keenly aware that capitalism can only fulfill its normative promise when markets are free and unconstrained, and that managers (and others) have strong incentives to violate the conditions that support such markets (e.g., Stigler, 1971). But they argued both that dynamic markets tend to be self-healing in that the dynamics of competition itself generates the institutions and actions that maintain competition and that government could be relied on to maintain those institutions—such as the legal system—that are more effectively provided by the state (on this latter point, see, in particular, Hayek, 1951).” There is a sense in which Chicago saw (and economic liberals in general see) the system as self-healing in the longest of runs: every inefficiency is ultimately a profit opportunity for someone who can transmute deadweight loss into producer’s surplus; and economic growth cures a lot of ills. But one can hardly accuse Chicago of being insensitive to those bad incentives for rent-seeking in the short and medium term.

On the other hand, Henderson and Ramanna make a valuable point when they draw our attention to the gray area in which market-supporting institutions (the same term I tend to use) are often forged through private action or through public action in which the private actors possess the necessary local knowledge. There is a scattered literature on this – the setting of technical standards, for example – but it is not a major focus of Public Choice or political economy. Perhaps it is naïve to say that managers in this gray area have an ethical duty to support institutions that make the pie bigger rather than institutions that transfer income to them. But what else can we say? It’s a lot better than blathering on about “public-private partnerships,” which are frequently cover for rent-seeking behavior. One (possibly embarrassing) implication of this stance is that it makes a hero of the much-reviled Charles Koch, who funds opposition to many of the rent-seeking institutions from which his own company benefits.

At one point Henderson and Ramanna mention the Great Depression as a “market failure” that incubated anti-capitalist sentiment. The second part of that assertion is certainly true, but the Depression was not a market failure but a spectacular failure of government. (Read Friedman (!), whose once-controversial view about this is now widely accepted by economic historians and monetary economists, including Ben Bernanke.) The Depression is actually an interesting case study in the gray area of institutions. Before the Fed, private financiers acted collectively to provide the public good of stopping bank panics. Now that role has fallen to the state, with private interests – and their asymmetrical local knowledge – influencing the bailout process. Which system was less corrupt? A more general question: are there any examples of fully private creation of institutions in which the self-interest of the participants led to inefficient rent-seeking?

27 March 2013 at 2:33 pm 2 comments

Rational Inattention

| Dick Langlois |

The idea of attention as a scarce resource goes back at least to Herbert Simon and Nelson and Winter. I hadn’t seen much application of this idea in a while until I ran across this interesting paper called “Rational Inattention and Organizational Focus” by Wouter Dessein, Andrea Galeotti, and Tano Santos. Here’s the abstract:

We examine the allocation of scarce attention in team production. Each team member is in charge of a specialized task, which must be adapted to a privately observed shock and coordinated with other tasks. Coordination requires that agents pay attention to each other, but attention is in limited supply. We show how organizational focus and leadership naturally arise as the result of a fundamental complementarity between the attention devoted to an agent and the amount of initiative taken by that agent. At the optimum, all attention is evenly allocated to a select number of “leaders”. The organization then excels in a small number of focal tasks at the expense of all others. Our results shed light on the importance of leadership, strategy and “core competences” in team production, as well as new trends in organization design. We also derive implications for the optimal size or “scope” of organizations: a more variable environment results in smaller organizations with more leaders. Surprisingly, improvements in communication technology may also result in smaller but more balanced and adaptive organizations.

Apparently, Dessein has been working on attention models for some time, though I hadn’t noticed. (But, of course, Peter had.) I should also note that this model is similar in spirit to the work of Sharon Gifford, now 20 years old, which Dessein et al. do not cite.

22 March 2013 at 2:49 pm Leave a comment

Trento Summer School on Modularity

| Dick Langlois |

This summer I am directing a two-week summer school on “Modularity and Design for Innovation,” July 1-12. I am working closely with Carliss Baldwin, who will be the featured speaker. Other guest speakers will include Stefano Brusoni, Annabelle Gawer, Luigi Marengo, and Jason Woodard.

The school is intended for Ph.D. students, post-docs, and newly minted researchers in technology and operations management, strategy, finance, and the economics of organizations and institutions. The school provides meals and accommodations at the beautiful Hotel Villa Madruzzo outside Trento. Students have to provide their own travel. More information and application here.

This is the fourteenth in a series of summer schools organized at Trento by Enrico Zaninotto and Axel Leijonhufvud. In 2004, I directed one on institutional economics.

12 March 2013 at 5:28 am 1 comment

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Our Recent Books

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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