Posts filed under ‘- Foss -’
| Nicolai Foss |
So, this year’s version of the Academy of Management Meetings, the major association of management researchers, took place in Orlando, Fl. The conference theme was “Capitalism in Question,” a theme with decidedly “lefty” connotations (see the official description of the theme here). The politization of the event was discussed in a Business Week blog that was dripping with irony.
Strikingly, however, I heard relatively few complain about the politization of the Academy implied by the theme (at least one very prominent scholar, however, erased “Capitalism in Question” from his badge, and so did I), but I heard lots of moaning, whining, and bickering about the location itself. In fact, I have never heard anything like it. So, there were complaints about the lack of decent restaurants, there not being enough coffee outlets, too many queques, sub-standard hotels, annoying American families, comments about Americans in general that, had the same thing been said about Europeans would …well … , and so on and so forth. Here is a pretty pathetic blog on the subject. And here is a lame and self-righteous letter to “Dear Minnie.”
Yes, Disney World may perhaps clash with the refined and elevated tastes of many a management professor (I didn’t myself particularly fancy those plastic baroque carpes (aka “dolphins”)), but, hey, this is a conference. You are supposed to be at work. To be sure, the Academy of Management is about hand-shaking and meeting friends, and building and maintaining networks are obviously productive input in any academic’s work process. And yet, 99% of the participants had their travel and stay and fee paid for by someone else (in many cases, the taxpayers). The sessions, PDWs, symposia, and so on were no worse than usual. No one presumably had to go hungry to bed. It was certainly possible to get the beers you wanted. The receptions were well-attended, noisy and alcoholic. In short, pretty much business as usual. So, perhaps it is time to cut the whining which fundamentally signals that you think of the AoM meetings as mainly about your own on-the-job consumption. It would have been much better to use energy spent on whining about diminished the consumption potential of Orlando on critique of the conference theme.
| Nicolai Foss |
Since the arguably first use of the “microfoundations” terminology in the context of macro management research in a 2005 Strategic Organization essay by Teppo Felin and me, the “microfoundations project” has gained considerable attention. Most recently, the Academy of Management Perspectives has featured a symposium on the subject with contributions from Sid Winter, Henrich Greve, Sid Winter, Andrew van de Ven, Jay Barney and Teppo, and Siegwart Lindenberg and me. One notable development is that positions have converged somewhat; notably, earlier outspoken critics, such as Winter, now see merit in the project. Another notable development is that the whole thing is moving from the admittedly preachy phase towards more of a “doing” phase.
An indication of not only the influence but also the acceptance of the project is that the Strategic Management Society now sponsors a “special conference” (so-called) in Copenhagen (specifically, at the Copenhagen Business School) on the subject of “Microfoundations for Strategic Management Research: Embracing Individuals.” FB page here. A full program should be up soon, but let me anticipate this a bit by noting that we have a fabulous line-up with keynotes by Richard Rumelt, one of our field’s most important thought-leaders; Europe’s perhaps most currently influential economist, Ernst Fehr; and sociology heavy-weight Ron Burt. In addition we will have a debate on microfoundations between Teppo Felin, Russ Coff, Michael Jacobides and Rodolphe Durand; a panel on foresight with Giovanni Gavetti, Sid Winter and Dan Lovallo, and much other juice stuff!
Paper proposals (5-7 pages) are due no later than December 5. (Check the conference site for instructions in a week or two). Hope to see you in Copenhagen next year!
| Nicolai Foss |
When I was a graduate student 20-25 years ago I remember transaction cost economics being routinely mocked by all and sundry for “being static,” “neglecting learning,” and “not saying anything about innovation and entrepreneurs,” in addition, of course, to the usual charges of working with an impoverished and overly cynical view of human nature.
While TCE still highlights opportunism as a key assumption, it is fair to say that over the last decade important work has brought dynamics, learning and innovation within the orbit of TCE. This has mainly been brought about by a coterie — some of which are former students of Oliver Williamson — such as Nicholas Argyres, Kyle Mayer, Todd Zenger, Steve Michael, O&M’s Peter Klein, and last, but certainly not least, Jackson Nickerson.
Jackson is the author of a large number of truly innovative papers in management research and economics, many of which have a TCE bent. Thus, with Todd Zenger he has done important work on envy (and other aspects of social comparison processes) as an antecedent of internal transaction costs, on why firms seem to switch between extremes in their organizational forms, and, again with Zenger, he has pioneered a “problem-solving approach” to economic organization.
My department will feature this extremely original thinker as a speaker in our seminar series on Friday (here). Jackson will present a novel take on the dominant design stream of thinking about industry evolution, building on the US auto industry data base that (his co-authors) Lyda Bigelow and Nick Argyres have successfully exploited in earlier publications. Will be exciting!!
| Nicolai Foss |
So, my school is now deep into discussing the results of the recent “employee satisfaction survey.” Thus, each department is expected to spend minimum 2,5 hours discussing the results, and to come up with an action plan to handle those problems that — per definition — exist. And in my capacity as department head I have just ended this round of annual reviews which focus on the “competence development” of faculty. The practice of management has changed, to be sure. An approach that is decidedly not acceptable anymore, at least in my part of the world, is exemplified by this great drummer chewing out the band he led (more here; here is the mandatory Hitler version; and, in case you really want to practice, here are the transcriptions). Bob Sutton wouldn’t like it.And yet, badass approaches to management may work — perhaps not for those autonomously motivated, self-directed types (i.e., us), but certainly for those with motivational issues (see Emily Bazelon’s Slate piece on Rutgers coach Mike Rice). Toughness has costs and benefits. It seems that much current management thinking focuses on the costs of tough management approaches and neglects the potential benefits. No?
| Peter Klein |
The econ and strategy literatures on multinational firms have grown dramatically since the pioneering works of Caves, Casson, Teece, and others. Besides established journals like the Journal of International Economics and Journal of International Business Studies, there is the new Global Strategy Journal and plenty of space in the general-interest journals for issues dealing with multinationals.
Pol Antràs and Stephen Yeaple have written a new survey paper for the Handbook of International Economics, 4th edition, and it’s available as a NBER working paper, “Multinational Firms and the Structure of International Trade.” The review focuses on the mainstream economics literature but should be useful for management and organization scholars as well — particularly section 7 on firm boundaries which includes both transaction cost and property rights theories. Here’s the abstract:
This article reviews the state of the international trade literature on multinational firms. This literature addresses three main questions. First, why do some firms operate in more than one country while others do not? Second, what determines in which countries production facilities are located? Finally, why do firms own foreign facilities rather than simply contract with local producers or distributors? We organize our exposition of the trade literature on multinational firms around the workhorse monopolistic competition model with constant-elasticity-of-substitution (CES) preferences. On the theoretical side, we review alternative ways to introduce multinational activity into this unifying framework, illustrating some key mechanisms emphasized in the literature. On the empirical side, we discuss the key studies and provide updated empirical results and further robustness tests using new sources of data.
The NBER version is gated but I’m sure our intrepid readers can dig up an open-access copy.
| Nicolai Foss |
Kathleen Eisenhardt’s 1989 Academy of Management Review paper is likely still the first, but hopefully not the last, exposure many management scholars have to agency theory. The paper is somewhat imprecise, and it shows its age, but as an introduction to the theory, one can do worse. However, much has in fact happened in agency theory since 1989 in terms of extensions and refinements of the theory, and also in terms of critical reactions, some of which have been partly aligned with the theory.
In particular, (some) economists and (more) management scholars (e.g., Wiseman and Gomez-Mejia) have tried to bring behavioral perspectives into agency theory. In a new paper (forthcoming in the Journal of Management), Alexander Pepper of the LSE and Julie Gore of the University of Surrey provide a useful overview of “behavioral agency theory,” somewhat in the style of Eisenhardt’s earlier review (i.e., with propositions that summarize the earlier literature). They include, for example, prospect theory, work on inequity aversion and even self-determination theory under the behavioral hat, and thus bring both cognitive and motivational issues into the orbit of behavioral agency theory.
A few mildly critical comments.
- There is no claim in the paper that the various behavioral ideas are consistent and “add up,” but this is something that should perhaps have been discussed. Standard theory may make extreme assumptions but it is a highly consistent and neat theory. In contrast, behavioral agency theory is a bouillabaise of very different ingredients that are linked to the standard theory in a somewhat ad hoc manner.
- The authors position and motivate the paper in terms of gaining more insight into executive compensation, but of course the scope of behavioral agency theory is much broader.
- The authors, like Eisenhardt, repeats Michael Jensen’s distinction between “positive agency theory” and “principal-agent theory,” which makes as little sense today as it did in 1983 ;-)
Still, Pepper and Gore’s paper is definitely worth a read and I highly recommend it.
| Nicolai Foss |
A few interesting links, Tyler-style:
- Too ephemeral, even for the Pomo Periscope, but fun nonetheless: Le Blog de Jean-Paul Sarte.
- Yes, blogging and tweeting (and FB’ing?) research is worth it.
- Vitorino Ramos’ blog. Interesting thoughts on self-organization, complexity, bounded rationality …
- Very interesting 1997 study on what matters most when it comes to explaining scientific “eminence” — quantity, quality or depth of research.
| Nicolai Foss |
In a SOapBox Essay in 2005, Teppo Felin and I called for “micro-foundations” for macro management theory, specifically the dominant routines and capabilities (etc.) stream in strategic management. (check Teppo’s site for the paper, commentaries by Jay Barney and Bruce Kogut, and various other Felin & Foss papers on the subject). We thought our argument was fairly simple, not really that novel (economists have been talking about micro-foundations for decades), and “obviously true.” Yet, the argument was apparently provocative (or, perhaps more correctly, our formulation of it was…), and it met with considerable hostility. For example, the DRUID 2008 conference in Copenhagen featured a panel on micro-foundations with opposing sides represented by Sidney Winter and Thorbjørn Knudsen, and Peter Abell and yours truly, respectively. I remember seeing several (extremely) prominent management scholars shaking their heads in disbelief about the folly of micro-foundations. (The debate, though not the head-shaking, can be accessed through the DRUID site).
And yet, 7 years later the micro-foundations project appears to have met with general acceptance, although it is sometimes referred to as the “Foss Fuss,” by at least one very prominent contributor to our field. In fact, some of the head-shaking persons from DRUID 2008 now themselves talk about micro-foundations. Both Sid Winter and Thorbjørn Knudsen (not headshakers) now embrace micro-foundations–albeit of the “right” kind (e.g., behavioralist and informed by neuroscience and experiments). Papers in leading journals have “micro-foundations” in the title. Specific examples: :
- The Journal of Management Studies just published a special issue on “Micro-origins of Routines and Capabilities,” edited by Teppo, me, Koen Heimeriks, and Tammy Madsen, and featuring contributions by various luminaries.
- The European Management Review’s December issue (not yet online) will feature a transcribed exchange between Sid Winter, me and Maurizio Zollo on micro-foundations.
- A leading association in our field will adopt “micro-foundations” as the theme of one its conferences (to be held in 2014). Details to be disclosed (soon).
Micro-foundations are “everywhere.” List der Vernunft, I reckon.
UPDATE: The Academy of Management Perspectives will feature a paper symposium next year on micro-foundations. Contributors: Jay Barney, Teppo Felin, Henrich Greve, Siegwart Lindenberg, Andrew van de Ven, Sid Winter, and me.
| Nicolai Foss |
From the official SMG blog, Strategy and Organization:
A long-standing discussion in management research concerns the relation between capabilities perspectives on the firm and organizational economics, including transaction cost economics and agency theory. In particular, proponents of capabilities ideas have criticized organizational economics for exaggerating the role of opportunism (and similar constructs), neglecting value creation and downplaying dynamics. Conversely, proponents of organizational economics have criticized the lack of a clear unit of analysis, causal mechanisms and micro-foundations in the capabilities approach.
“While these early debates clarified many things,” says SMG Professor Nicolai J Foss, “the field is increasingly moving towards a more conciliatory stance in which the two perspectives are seen as capable of cross-fertilizing each other. This is going further than merely stressing a relation of complementarity in which capabilities ideas lend themselves to the explanation of organizational heterogeneity while organizational economics provides the understanding of the organization of heterogeneous resources and capabilities. The new view is that, notably, organizational economics has the potential of illuminating capability emergence and therefore organizational heterogeneity.”
With Nicholas Argyres (Washington University), Teppo Felin (Brigham Young University), and Todd Zenger (Washington University) Foss is an editor of the September-October issue of the leading management research journal, Organization Science, titled “Organizational Economics and Capabilities: From Opposition and Complementarity to Real Integration” (http://orgsci.journal.informs.org/content/23/5.toc). This special issue contains a number of articles by leading contributors to the discussion, and mixes theoretical, empirical and modeling approaches, as well as an introduction by the editors that survey the debate and defines a new agenda for research in the field.
“We are pleased that we got so many high-level contributions for this special issue,” says Foss, “and in particular that these contributions truly manage to define a new, creative research frontier where the emphasis is on researching the interplay between theoretical mechanisms identified by the two perspectives.
| Nicolai Foss |
OK, my eleven weeks, Euro-style, full-tax-payer-paid, summer vacation starts today. In the time-honored tradition of narcissistic academic bloggers, here is what I plan to (hope to) read while frolicking on the beaches of the Riviera and relaxing in those small Spanish villages:
- Jonathan Haidt: The Righteous Mind. This will be a re-read. I read Haidt’s book 2 months ago and loved most of it, although I thought it was rather weak towards to the end. The whole argument is basically founded on the notion of group selection, and while group selection has made a huge comeback in terms of scientific respectability, perhaps Haidt is overdoing it?
- Mark Pagel: Wired for Culture. Interest in group selection is also why I will read Pagel’s book, which seems to be all about human group selection, written by a leading British expert on human evolution. A reason why I take an interest in group selection stems from my interest in Hayek’s work on cultural evolution which is basically a group selection story — and which has been strongly criticized for exactly this reason.
- Ezequiel Morsella, John A Bargh and Peter M. Gollwitzer: Oxford Handbook on Human Action. No, this is not a commentary on Mises, but a collection of essays that” … brings together the current thinking of eminent researchers in the domains of motor control, behavioral and cognitive neuroscience, psycholinguistics, biology, as well as cognitive, developmental, social, and motivational psychology. It represents a determined multidisciplinary effort, spanning across various areas of science as well as national boundaries.” Great and accessible reading for anyone with an interest in human action and behavior that goes beyond simplistic economics treatments.
- Steven Pinker: The Better Angels of Our Nature: Why Violence Has Declined. Pinker is always worth a read!
| Nicolai Foss |
As readers of this blog will know, the dialogue between the firm capabilities literature and organizational economics has a long history in management research and economics. Co-blogger Dick Langlois has been an important contributor in this space. The forty years long discussion (dating it from George B. Richardson’s 1972 hint that his newly coined notion of capability is complementary to Coasian transaction cost analysis) has proceeded through several stages. Thus, the initial wave of capabilities theory (i.e., beginning to mid-1990s) was strongly critical of organizational economic. This gave way to a recognition that perhaps the two perspectives were complementary in a more additive manner. Thus, whereas capabilities theory provided insight in which assets firms need to access to compete successfully, organizational economics provide insight into how such access is contractually organized. However, increasingly work has stressed deeper relations of complementarity: Capabilities mechanisms are intertwined with the explanatory mechanisms identified by organizational economists.
In a paper, “The Organizational Economics of Organizational Capability and Heterogeneity: A Research Agenda,” that is forthcoming as the Introduction to a special issue of Organization Science on the the relation between capabilities and organizational economics ideas, Nick Argyres, Teppo Felin, Todd Zenger and I argue, however, that the discussion has been lopsided—hardly qualifying as a real debate—and that a reorientation is necessary.Specifically, the terms of the discussion have largely been defined by capabilities theorists. Part of the explanation for this dominance is that capability theorists have had a rhetorical advantage, because everyone seems to have accepted that organizational economics has very little to say about organizational heterogeneity. We argue that this rests on a misreading of organizational economics: while it is true that organizational economics was not (directly) designed to address and explain organizational heterogeneity, this does not imply that the theory is and must remain silent about such heterogeneity. In fact, we discuss a number of ways in which organizational economics is quite centrally focused on explaining organizational heterogeneity. Specifically, we argue that organizational economics provides guidance around how organizational design and boundaries facilitate the formation of knowledge, insight, and learning that are central to the heterogeneity of firms. We also demonstrate how efficient governance can itself be a source of competitive heterogeneity. We thus call on organizational economists to actively and vigorously enter the discussion, turning something closer to a monologue into real dialogue. (more…)
| Nicolai Foss |
Economists have typically been suspicious of data generated by (mail, telephone) surveys and interviews, and have idolized register data. The former are soft and mushy data, the latter are hard and serious ones. I have always been a bit sceptical regarding whether the traditional economist’s suspicion of soft data is really that well-founded; after all, the statistical agencies of the world and other government institutions that are in the business of data collection are populated by fallible individuals and respondents are the same ones that respond to, say, a mail survey conducted by Prof. N. J. Foss, PhD. (Having recently conducted a major data collection effort with a public statistical agency, my skepticism has dramatically increased!)
The argument is sometimes made that there may be a legal duty to respond to the queries of a government agency and this means a high response rate and accurate reporting. However, it appears that we know rather little about the accuracy of data generated in this way, and it is quite conceivable that measurement error is high, exactly because the provision of data is “forced” (those anarcho-capitalist types out there may delight in providing errorneous data!). The serious content of the traditional economist’s prejudice is rather, I think, that surveys often have respondents reacting to subjective scales rather than providing absolute numbers. This is a warranted concern, but not a critique of surveys and interviews per se, because these methods do not imply commitment to subjective scales per se.
As a rule register data are not available that can be used to address numerous interesting issues in organizational economics, labor economics, productivity research and so on. Scholars working on these issues have to resort to those softy surveys and interviews that have been the workhorses of business school faculty for decades. This is a new recognition in economics. Case in point: A recent paper by Nicholas Bloom and John Van Reenen, “New approaches to surveying organizations.” There is absolutely nothing, I submit, in this short, well-written paper that would surprise virtually any empirically oriented business school professor (i.e., virtually all bschool professors) to whom this would not be anything “new” at all, but rather old hat.
This is not a critique of Profs. Bloom and Van Reenen at all (on the contrary, it is excellent that they educate their economist colleagues in this way). It is just striking and a little bit amusing, however, that we have had to wait until 2010 until empirical approaches that have been mainstream in management research for decades reach the pages of the American Economic Review.
| Nicolai Foss |
Over the last few years, CBS has bestowed honorary doctoral degrees on the likes of Jay Barney, Oliver Williamson, Oliver Hart, Michael Brennan, and other luminaries in strategy, the theory of the firm, and finance (in addition to a number of reps of pomo in management research that are of small interest to O&M readers). At a ceremony on 19 April a CBS honorary doctorate will be bestowed upon Birger Wernerfelt.
Wernerfelt is the JC Penney Professor of Management of the MIT Sloan School of Management. A Danish citizen, Wernerfelt holds degrees from the University of Copenhagen and Harvard. Wernerfelt’s best known work is no doubt “A Resource-based View of the Firm.” With more than 12,000 cites (google scholar) this paper is also one of the most cited social science research articles ever, and, of course, one of the founding papers of strategy’s (still) dominant view, the resource-based approach. The paper develops a conception of firms as bundles of heterogeneous and partly firm-specific resources, and links this conception to sustainable performance differences between firms as well as to growth strategies through resource-based diversification. These ideas opened up several paths of research in strategic management in the following decades, including Wernerfelt’s own influential empirical work (with Cynthia Montgomery) on diversification and its link to performance (e.g., here).
More recently, Wernerfelt has been working on other truly fundamental aspects of the theory of the firm, namely the reason why firms exist and what explains their boundaries and internal organization. Thus, in a series of papers, Wernerfelt has developed an argument that the employment relationship exists because it allows the parties to the contract to exploit economies of scale in bargaining costs (e.g., here) — a stream that may be seen as much more true to the original message in Coase’s (1937) “The Nature of the Firm” than the asset-specificity branch of the theory of the firm. Wernerfelt has extended the argument to the understanding of asset ownership, communication within and between firms, and the strength of incentives in firms versus markets. In addition to these contributions to strategic management and the theory of the firm, Wernerfelt has contributed to the economics of search and numerous important contribution to marketing theory.
| Nicolai Foss |
It is not yet online, but the University of Paris-Sorbonne is looking for a Full Professor in the Economics of Organization (see the ad text below). Importantly, proficiency in French is not a requirement … “upfront,” at least.
Very apropos (if I may) the Department of Strategic Management and Globalization will be hiring one assistant professor and three associate professors in “strategic and international management” over the next few months. Proficiency in French, or Danish for that matter, is not required at all. The job ads are here. Or, contact me directly on firstname.lastname@example.org (more…)
| Nicolai Foss |
Watching Rick Perry commit political harakiri made me wonder whether academia can report similar incidents (and with similar career-destroying results?). To be sure, many of us academics have engaged in Rick Perry-like behaviors — as is only to be expected when, as many of us do, we regularly talk to (student, executive, colleague) audiences of varying sizes, often several times a week.
I have certainly had my share of situations similar to the Perry episode. Thus, about a decade ago I was supposed to talk about the challenges of managing “knowledge workers” to a bunch of middle-aged (and beyond) medical professors, all with management responsibilities, very impressive scientific records, and all supremely arrogant and self-confident. I got 5 mins into my talk, before I was cut down. Totally. Decisively. Left dumbfounded. Another example, more research-oriented, derives one from one of the BYU-UUtah winter conferences on strategy. I gave a talk on transaction costs economics and competitive strategy. It was rather abstract. After the talk a very (in fact, extremely) prominent strategy scholar asked me in a very pointed and inquisitive manner: “What is in this that I can teach my MBA students?” Again, I was left dumbfounded, probably in awe of this person (and didn’t come up with the obvious answer: “So, do you think that is a good criterion for scientific progress?”).
Of course, there are other Rick Perry episodes from my career, but these two must suffice. Of course, these gaffes just emphasize my humanity. And your Rick Perry episodes?
| Peter Klein |
This is a placeholder page without much detail, but you can pre-order today! The best news is the price: just £55.00 for the hardback and a mere £19.99 for the paperback — less than a family outing to the cinema, and far more rewarding!
| Nicolai Foss |
A reviewer of a recent book proposal by Teppo Felin and me (which was accepted, BTW; details later) had the effrontery to note that “Felin and Foss get considerable pushback when they take a strong stand on methodology.” Of course, this reviewer got it all wrong. To wit:
- Teppo and I recently published “The endogenous origins of experience, routines and organizational capabilities: The poverty of stimulus” in the Journal of Institutional Economics, accompanied by critical comments by Sidney Winter, Brian Pentland, Geoff Hodgson and Thorbjørn Knudsen. Here is our response to the comments of our critics. The response has been accepted for publication in the Journal of Institutional Economics.
- In a recent paper in Sociological Theory, influential sociologists Ronald Jepperson and John W Meyer took issue with the rampant “micro-chauvinism” that, in their opionion, increasingly dominates social science, and called for multi-level explanation that admits a role for causation that (in some unexplained fashion) takes place at levels above that of individuals. In this brief note, Teppo and I (and Peter Abell of LSE) take issue with their arguments, and argue that they fundamentally misunderstand methodological individualism and its crucial role in understanding those phenomena that are “multi-level”, “complex” and “emergent.”
Thus, the macro chauvinists are the ones who are getting the pushback ;-)
| Nicolai Foss |
“Selective intervention” and the more narrow notion of the “impossibility of selective intervention” are among the more elusive notions in the theory of the firm. We have blogged on them a number of times (the most explicit treatment is here). Coined by Oliver Williamson, selective intervention simply means intervention to produce net gains. Thus defined, selective intervention is, of course, not “impossible.” The” impossibility” refers to the conjecture that firms cannot just be grown continuously by selective intervention; at some point various commitment and enforcement problems associated with managerial intervention kicks in, resulting in zero net gains. However, demonstrating this is a “puzzle.”
A new paper, “Solving the Selective Intervention ‘Puzzle’,” by noted French economist, Jacques Cremer, usefully places the problem in context, provides a nice overview of the extant literature, and argues that the problem has essentially been solved:
I have shown that the common thread to all the solutions is the fact that the principal stays in the game” after the contract is signed, and cannot commit himself to a policy which would make the world similar to the world in which there would be no vertical integration. On this basis, solutions that stress incompleteness of contracts, the change in the allocation of authority, the change in the amount of information available to the principal, all provide solutions that are theoretically consistent, and, furthermore, often not incompatible with each other. Determining which solution provides a better guide to applied analysis requires an examination of other features of the model.
| Nicolai Foss |
The late über-influential management thinker C K Prahalad would have been 70 this August. booz&co’s strategy+business magazine features an interesting interview with CK, “The Life’s Work of a Thought Leader.” It may surprise some that Prahalad was trained as a physicist, and in the beginning of his career worked as an industrial engineer. And for someone, like myself, who has criticized the absence of microfoundations for notions such as “core competence” (e.g., here), it certainly came as a surprise to find Prahalad stating that
If I had to characterize my deepest belief, I would say it’s the centrality of the individual…. Institutions are not central. Institutions are different ways of combining skills and capabilities of the moment. That, of course, is the opposite of the traditional way of thinking, starting from Max Weber and Frederick Taylor in the early 20th century. They posited that institutions were central to society, not individuals. I believe the contrary is true.
Another notable feature in the interview is Prahalad’s view of scientific progress in strategic management which does not come from the kind of cross-sectional studies that take up 93 % of the pages of the Strategic Management Journal, but, he says, from in-depth small-N research:
If you look historically at the strategy literature, starting with Alfred D. Chandler Jr.’s Strategy and Structure: Chapters in the History of the Industrial Enterprise [MIT Press, 1962], the most powerful ideas did not come out of multiple examples. They came out of single-industry studies and single case studies. Big impactful ideas are conceptual breakthroughs, not descriptions of common patterns. You can’t define the “next practice” with lots of examples. Because, by definition, it is not yet happening.