Posts filed under ‘Strategic Management’
| Peter Klein |
This review provides a critical survey of psychology-and-economics (“behavioral-economics”) research in contract theory. First, I introduce the theories of individual decision making most frequently used in behavioral contract theory, and formally illustrate some of their implications in contracting settings. Second, I provide a more comprehensive (but informal) survey of the psychology-and-economics work on classical contract-theoretic topics: moral hazard, screening, mechanism design, and incomplete contracts. I also summarize research on a new topic spawned by psychology and economics, exploitative contracting, that studies contracts designed primarily to take advantage of agent mistakes.
| Peter Klein |
Russ Coff has assembled an impressive list of syllabi and reading lists for PhD courses in strategy, innovation, research methods, and related subjects. Feel free to send him additional suggestions. Many useful references here for faculty and students teaching or taking these courses, and for anybody wishing to learn more about classic and contemporary literature in strategic management research.
| Nicolai Foss |
This Wednesday, 22 October 2014, is the Launch event for the CBS research program I co-direct with Anders Sørensen, “Human Capital, Organization Design, and Corporate Performance” (HOPE). The program includes Ed Lazear, Kathryn Shaw, Ben Campbell, and David Ross. HOPE is about organizational structure and productivity:
Many of the European economies suffer from sluggish productivity growth. Firms matter strongly to economic growth. However, the understanding of firm performance has many gaps — particularly concerning the role for performance of human resources, organizational design, and their interaction.
The scientific ambition of HOPE is to address these gaps based on an interdisciplinary approach, intensively cooperating with some of the world’s leading researchers in the fields that inform this proposal, and by making use of the state-of-the-art econometric methods, and high-quality register and survey data. HOPE will enter a still sparsely populated but highly important field, and will place CBS centrally in the international discussion of the causes of firm performance, such as firm-level productivity.
HOPE is a joint venture between Department of Strategic Management and Globalization, and Department of Economics at Copenhagen Business School
Hope you can join us!
Peter invited me to reply to [Warren Miller’s] comment, so I’ll try to offer a defense of formal economic modeling.
In answering Peter’s invitation, I’m at a bit of a disadvantage because I am definitely NOT an IO economist (perhaps because I actually CAN relax). Rather, I’m a strategy guy — far more interested in studying the private welfare of firms than the public welfare of economies (plus, it pays better and is more fun). So, I am in a much better position to comment on the benefits that the game-theoretic toolbox is currently starting to bring to the strategy field than on the benefits that it has brought to the economics discipline over the last four decades (i.e., since Akerlof’s 1970 Lemons paper really jump-started the trend).
Peter writes, “game theory was supposed to add transparency and ‘rigor’ to the analysis.” I have heard this argument many times (e.g., Adner et al, 2009 AMR), and I think it is a red herring, or at least a side show. Yes, formal modeling does add transparency and rigor, but that’s not its main benefit. If the only benefit of formal modeling were simply about improving transparency and rigor then I suspect that it would never have achieved much influence at all. Formal modeling, like any research tool or method, is best judged according to the degree of insight — not the degree of precision — that it brings to the field.
I can’t think of any empirical researcher who has gained fame merely by finding techniques to reduce the amount of noise in the estimate of a regression parameter that has already been the subject of other previous studies. Only if that improved estimation technique generates results that are dramatically different from previous results (or from expected results) would the improved precision of the estimate matter much — i.e., only if the improved precision led to a valuable new insight. In that case, it would really be the insight that mattered, not the precision. The impact of empirical work is proportionate to its degree of new insight, not to its degree of precision. The excruciatingly unsophisticated empirical methods in Ned Bowman’s highly influential “Risk-Return Paradox” and “Risk-Seeking by Troubled Firms” papers provide a great example of this point.
The same general principle is true of theoretical work as well. I can’t think of any formal modeler who has gained fame merely by sharpening the precision of an existing verbal theory. Such minor contributions, if they get published at all, are barely noticed and quickly forgotten. A formal model only has real impact when it generates some valuable new insight. As with empirics, the insight is what really matters, not the precision. (more…)
SMS Special Conference, “From Local Voids to Local Goods: Can Institutions Promote Competitive Advantage?”
| Peter Klein |
Please consider submitting a proposal to the upcoming SMS Special Conference in Santiago, Chile, 19-21 March 2015, on the theme “From Local Voids to Local Goods: Can Institutions Promote Competitive Advantage?” Here’s the description:
A recent stream of strategy research has examined how institutional voids pose fundamental challenges for industrial development in emerging markets, which bring detrimental effects to the competitiveness of local firms. Yet, in many countries, policymakers, to various degrees and levels, have adopted a rather positive agenda, to try and foster local firms through the provision of public resources, such as investments in infrastructure, specialized industrial policies, as well as knowledge-generation systems. Concomitantly, firms themselves have pursued collective synergies that individual firms alone would be able to attain. In sum, strategies embedded in the local environment may promote rather than limit competitive advantage. To advance this discussion, we are gathering a group of established scholars and practitioners in Santiago, one of the most modern Latin American cities. Chile is also well known for its distinctive institutional reforms, which promote a thriving business climate. The Conference will thus offer a unique opportunity to discuss how firms and institutions interact to spur entrepreneurship and development.
I am chairing the track on “Institutions and Local Entrepreneurship,” and looking for papers dealing broadly with the relationships among legal, political, and social institutions, entrepreneurship (broadly defined), public policy, and economic performance. I would love to see submissions from O&Mers. The submission deadline (extended abstract, not full paper) is 15 October 2014, just around the corner. Let me know if you have any questions.
| Nicolai Foss |
Here is a recent MIT Sloan Management Review piece by Peter and me, “Why Managers Still Matter.” We pick up on a number of themes of our 2012 book Organizing Entrepreneurial Judgment. A brief excerpt:
“Wikifying” the modern business has become a call to arms for some management scholars and pundits. As Tim Kastelle, a leading scholar on innovation management at the University of Queensland Business School in Australia, wrote: “It’s time to start reimagining management. Making everyone a chief is a good place to start.”
Companies, some of which operate in very traditional market sectors, have been crowing for years about their systems for “managing without managers” and how market forces and well-designed incentives can help decentralize management and motivate employees to take the initiative. . . .
From our perspective, the view that executive authority is increasingly passé is wrong. Indeed, we have found that it is essential in situations where (1) decisions are time-sensitive; (2) key knowledge is concentrated within the management team; and (3) there is need for internal coordination. . . . Such conditions are hallmarks of our networked, knowledge-intensive and hypercompetitive economy.
| Peter Klein |
Along with Gonçalo Pacheco de Almeida I am chairing the Competitive Strategy Interest Group Teaching Workshop at the upcoming Strategic Management Society conference in Madrid. The workshop is Saturday, 20 September 2014, 1:00-4:00pm at the main conference venue, the NH Eurobuilding, Paris Room. Our theme is “The Impact of New Technologies on Teaching and Higher Education” and we have an all-star lineup featuring Bharat Anand (Harvard), Peter Zemsky (INSEAD), Michael Leiblein (Ohio State), Michael Lenox (University of Virginia), Frank Rothaermel (Georgia Tech), Vivek Goel (Chief Academic Strategist at Coursera), and Andrea Martin (President of IBM Academy of Technology).
Background: The higher-education industry is abuzz with talk about MOOCs, distance learning, computer-based instruction, and other pedagogical innovations. Many of you are already using online exercises and assessments, simulations, and other activities in the classroom. How are these innovations best incorporated into the business curriculum, at the BBA, MBA, EMBA, and PhD levels? What can business scholars, say about the impact of these technologies on higher education more generally? Are they sustaining or disruptive innovations, and what do they imply for the structure of the business school, and the university itself?
The plan for this session is to discuss how leading companies and business schools are (a) driving innovation in the Higher Education teaching space, (b) thinking about the business model of virtual education (MOOCs, social learning, etc.), and (c) testing some of the assumptions behind globalization in the education industry.
The full schedule is below the fold. Additional information about the workshop, and the SMS itself, is available at the conference website.
If you’re coming to SMS this year, please plan to join us for the workshop. Pre-registration is encouraged but not required. If you’re planning to attend, please let us know by sending an email to email@example.com. Feel free to email Gonçalo or myself at the same address with questions or comments. (more…)