Archive for June, 2006

African Entrepreneurship Blog

| Peter Klein |

From the PSD Blog I learn of Timbuktu Chronicles, a blog written by Emeka Okafor (him, not him) dealing with African entrepreneurship, innovation, and technology. Looks like an interesting read.

30 June 2006 at 12:33 pm 1 comment

Intelligent Design and the Sociology of Science

| Peter Klein |

Don’t worry, we’re not getting all weird on you and entering the fray on creationism and evolution. Today’s topic is the theory and practice of science. Specifically, consider the controversy over intelligent design (ID), the idea that purely natural forces — i.e., random mutation and natural selection — cannot explain the origin and diversity of life. What are the most common arguments against including ID in the science curriculum?

1. ID is wrong because it contradicts the scientific evidence.

2. ID is wrong because it isn’t science (e.g., it does not offer testable predictions). Leave it in the philosophy or theology classrooms.

3. ID is wrong because “serious scientists” all think it’s nonsense.

The second and third arguments seem to pop up the most in conversations I’ve seen and heard. They are taken by their proponents as self-evident. But #2 obviously presupposes a particular philosophy of science, and #3 a particular sociology of science. One rarely sees these philosophies articulated and defended. Is prediction the hallmark of science? Does neo-Darwinian theory make falsifiable predictions? How does scientific consensus emerge? On what grounds to scientists accept or reject theories? (Argument #3, in particular, seems to presuppose a charmingly pre-Kuhnian worldview.)

As an aside, I know several “heterodox” economists who reject ID primarily on ground #3, which I find highly ironic. They see themselves as (unjustifabily) outside the mainstream of their own discipline, but assume that in natural science the consensus is always right.

30 June 2006 at 11:53 am 6 comments

Uncle Milton Nostalgia

| Nicolai Foss |

Here is what Andrew Sullivan calls “intellectual porn for classical liberals and conservatives of doubt” — a 30 mins. interview with Milton Friedman.  Delightful. And in black&white.

HT to Peter Kurrild-Klitgaard at Punditokraterne.

30 June 2006 at 8:11 am 1 comment

A Doctoral Defence in Sweden

| Nicolai Foss | 

I have a hard time keeping up with my co-blogger’s blogging frenzy.  Of course, he is much smarter and more energetic than I am and that partly accounts for the increasing discrepancy between our respective blogging frequencies. However, the reason I didn’t blog yesterday on O&M was that I served as an external examiner on a doctoral thesis at the Jönköping International Business School in Sweden. Situated virtually at the brinks of the enormous lake Vättern, JIBS is a newly established and highly entrepreneurial place that aims at pushing its research to a serious international level.

The specific thesis I was asked to discuss was Carlo Salvato’s Micro-foundations for Organizational Capabilities. Salvato is an Associate Professor at Bocconi University and already has an Italian PhD degree, which is based on a thesis utilizing Swedish data. His Swedish thesis, on the other hand, is based on Italian data!

More specifically, its empirical setting is product development projects in Alessi. On the basis of a painstakingly detailed identification, analysis and classification of events in 90 product development projects in Alessi, Salvato applies optimal matching analysis to detect patterns in the projects that may be interpreted as routines and capabilities.  He also strongly adds to the notion of capabilities by decomposing that construct in a constituent elements (hence, the title of the thesis), although he does not go sufficiently micro for my taste (in this connection, Carlo claimed that his attempt to build micro foundations for capabilities was seen as heresy by one of the high priests of the evolutionary church, ehhh, approach in management).  Although I am no sucker for the capabilities view in management, this thesis impressed me greatly.  I am sure we will hear much more of Carlo Salvato in the future.

A peculiarity of the Swedish thesis defence procedure: The external examiner has to summarize the thesis, before he discusses it. After which the candidate has to tell the audience whether he can accept the summary. Odd.  And the newly minted Doctor receives an absolutely ridiculous black hat.

30 June 2006 at 6:01 am 6 comments

Copying the Physicists

| Peter Klein |

It’s no secret that mainstream economists hold up physics as the model science. (Critics say that economists never got much beyond nineteenth-century classical mechanics, but never mind.) So why should we be surprised that economists also copy the physicists’ style and manners? From T. A. Abinandanan of the Nanopolitan blog we learn that physicists are widely regarded, by their natural-science brethren, as bullies who wander into other fields without much knowledge of or appreciation for the work of specialists.

The natives of the other disciplines, of course, would grumble because they felt that many of these wandering physicists were promiscuous (with no long term commitment to their field) and, more importantly, arrogant. . . . Among the natives, the joke is that these promiscuous physicists were just looking for interesting problems, because there weren’t any in physics.

Just what we’ve been discussing here and here. Incidentally, on “econophysics,” profiled last year in the New York Times, Abinandanan wisely adds that “[g]iven the reputation of physics and economics in their respective domains (natural and social sciences), econophysics sounds like a marriage between two domineering individuals.”

29 June 2006 at 8:23 am 1 comment

Overview of Behavioral Economics

| Peter Klein |

Behavioral economics is profiled in “The Marketplace of Perceptions,” from the March-April 2006 Harvard Magazine. Not a puff piece, exactly, but certainly a very friendly account. Excerpt:

As recently as 15 years ago, the sub-discipline called behavioral economics — the study of how real people actually make choices, which draws on insights from both psychology and economics — was a marginal, exotic endeavor. Today, behavioral economics is a young, robust, burgeoning sector in mainstream economics, and can claim a Nobel Prize, a critical mass of empirical research, and a history of upending the neoclassical theories that dominated the discipline for so long.

(HT: Greg Mankiw)

29 June 2006 at 8:08 am 5 comments

Crowdsourcing and Switching Costs

| Peter Klein |

I blogged a while back about crowdsourcing, in which individuals, typically amateurs, complete to supply inputs to large producers or distributors via the web. Crowdsourcing is often likened to distributed computing, an age-old (in computer terms, anyway) method of sharing computationally intensive tasks over many CPUs.

The best-known example of distributed computing is SETI@home, in which individuals donate their spare processing power to the search for extraterrestrial life. There’s a problem, however, as Lee Gomes tells us in today’s Wall Street Journal ($): high switching costs. SETI@home users get points for donating computer time and, like frequent flyers who stick to one airline to rack up miles, many refuse to switch to other, equally worthy distributed computing projects (the search for an Alzheimer’s cure, a difficult problem in theoretical physics, etc.). As a result, says Gomes, SETI@home “is to distributed computing what AARP is to social-security reform.”

Moral of the story: If crowdsourcing projects attract mainly hobbyists, participating for fun or to impress their (virtual) friends, expect lock-in and substantial first-mover advantages. If participants do it for the money, however, the crowdsourcing landscape may be much more competitive.

28 June 2006 at 7:00 pm 4 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).