Posts filed under ‘Teaching’

Foss and Klein Interview on Entrepreneurial Judgment

| Peter Klein |

Nicolai and I are interviewed by Angel Martin for the Spanish-language site sintetia. An English-language version is here. We wax eloquent on entrepreneurship theory, research, teaching, policy, and more. Personally, I think I sound more profound in Spanish, but that’s probably because I can’t read Spanish.

9 July 2014 at 2:55 pm Leave a comment


| Peter Klein |

A clever and funny entry for our ongoing series on the use and abuse of PowerPoint. It’s aimed at classroom presentations but applies, a fortiori, to any professional meeting, including (especially?) academic conferences. I especially appreciate this:

If your audience can understand everything it needs to from your slide show only, . . . cut out about 50 percent of the slides and 90 percent of the text. . . . Your slide show by itself should be incomprehensible. Because, to paraphrase Ludwig Wittgenstein, its most important part is what’s not on it. (I.e., you actually talking with people.)

I  have a few quibbles, e.g., I generally avoid animations (having each point appear only as you mention it), but overall this is great advice, amusingly illustrated.


7 March 2014 at 9:54 am 4 comments

What Are “Transaction Costs” Anyway?

| Peter Klein |

A friend complains that management and entrepreneurship scholarship is confused about the concept of transaction costs. Authors rarely give explicit definitions. They conflate search costs, bargaining costs, measurement costs, agency costs, enforcement costs, etc. No one distinguishes between Coase’s, Williamson’s, and North’s formulations. “Transaction costs seem to be whatever the author wants them to be to justify the argument.”

It’s a fair point, and it applies to economics (and other social sciences and professional fields) too. I remember being asked by a prominent economist, back when I was a PhD student writing under Williamson, why transaction costs “don’t simply go to zero in the long run.” Indeed, contemporary organizational economics mostly uses terms like “contracting costs,” and since 1991 Williamson  has tended to use “maladaptation costs” (while retaining the term “transaction cost economics”).

When I teach transaction costs I typically assign Doug Allen’s excellent 2000 essay from the Encyclopedia of Law and Economics and Lee and Alexandra Benhams’ more recent survey from my Elgar Companion to Transaction Cost Economics (unfortunately gated). Doug, for example, usefully distinguishes between a “neoclassical approach,” in which transaction costs are the costs of exchanging well-defined property rights, and a “property-rights approach,” in which transaction costs are the costs of defining and enforcing property rights.

What other articles, chapters, and reviews would you suggest to help clarify the definition and best use of the “transaction costs”? Or should we avoid the term entirely in favor of narrower and more precise words and phrases?

6 February 2014 at 12:28 pm 17 comments

Disruptive Innovation and Job-Market Signaling

| Peter Klein |

The job-market value of education, as famously argued by Michael Spence (1974), derives from two sources: additions to human capital and signaling. By going to college, you learn some useful skills, but you also demonstrate to potential employers that you have the natural ability to earn a degree. Depending on the difficulty of obtaining a degree for students of varying abilities, a college degree may be valuable even if you don’t learn a thing — you distinguish yourself from those who weren’t clever or patient enough to jump through the necessary hoops.

Of course, the human-capital and signaling components aren’t mutually exclusive. But, as long as at least some part of the job-market value of education comes from signaling, the demand for higher education depends on its perceived signaling value, relative to the cost of signaling. And herein lies the rub: getting a college degree is a very costly signal. Suppose high-ability workers could demonstrate their value to the job market by obtaining some credential that low-ability workers can’t or won’t obtain, without forgoing the explicit and opportunity costs of 4+ years at college. This would be an attractive alternative for many, and bad news for the higher-education industry, which today has a virtual monopoly on credentialing.

Michael Staton makes precisely this argument in today’s HBR Blog: “The Degree Is Doomed.” Staton argues that new technologies increasingly allow the unbundling of the learning and signaling functions of higher education, and that alternative signals such as “work samples, personal representations, peer and manager reviews, shared content, and scores and badges” are undermining the value of the college degree.

There are sites — notably Degreed and Accredible — that adapt existing notions of the credential to a world of online courses and project work. But there are also entire sectors of the innovation economy that are ceasing to rely on traditional credentials and don’t even bother with the skeumorph of an adapted degree.  Particularly in the Internet’s native careers – design and software engineering — communities of practice have emerged that offer signals of types and varieties that we couldn’t even imagine five years ago.   Designers now show their work on Dribbble or other design posting and review sites.  Software engineers now store their code on GitHub, where other software engineers will follow them and evaluate the product of their labor.  On these sites, peers not only review each other but interact in ways that build reputations within the community. User profiles contain work samples and provide community generated indicators of status and skill.

These are specialized areas, and probably not substitutes for the credentialing function for other fields and industries. But low-cost, innovative, specialized signaling methods could pose a significant challenge to the university establishment.

Of course, even if higher education loses its credentialing function, it can still add value the old-fashioned way, through teaching.

8 January 2014 at 10:54 am 4 comments

Recent Videos from Top Business Professors

| Peter Klein |

Michael Porter: “Why Business Can Be Good at Solving Social Problems”

Costas Markides: “Strategy Is about Making Choices”

Clayton Christensen: “Disruptive Innovation”

22 October 2013 at 9:26 am 1 comment


| Peter Klein |

Via John Hagel, a story on MOOR — Massively Open Online Research. A UC San Diego computer science and engineering professor is teaching a MOOC (massively open online course) that includes a research component. “All students who sign up for the course will be given an opportunity to work on specific research projects under the leadership of prominent bioinformatics scientists from different countries, who have agreed to interact and mentor their respective teams.” The idea of crowdsourcing research isn’t completely new, but this particular blend of MOO-ish teaching and research constitutes an interesting experiment (see also this). The MOO model is gaining some traction in the scientific publishing world as well.

3 October 2013 at 8:48 am 1 comment

How Much Has Changed, Really?

| Peter Klein |

Henry of Germany lecturing at the University of Bologna, 14th century.

University of Bologna, 14th century

Come to the CSIG Teaching Workshop this Saturday in Atlanta and find out!

25 September 2013 at 1:46 pm 6 comments

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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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