Archive for January, 2007

Entrepreneurship: Ameliorative or Transformative?

| Peter Klein |

Amar Bhide and Carl Schramm take the O&M position on microfinance in a Monday WSJ op-ed. Comparing the views of Nobel Laureates Mohammad Yunus and Edmund Phelps, they write:

Mr. Yunus’s ameliorative entrepreneurship however is very different from the transformative entrepreneurship that Mr. Phelps argues has been central to modern capitalism. . . .

Economic development does wonders for peace, but what does microfinanced entrepreneurship really do for economic development? Can turning more beggars into basket weavers make Bangladesh less of a, well, basket case? A few small port cities or petro-states aside, there is no historical precedent for sustained improvements in living standards without broad-based modernization and widespread improvements in productivity brought about by the dynamic entrepreneurship that Mr. Phelps celebrates.

In principle, microfinance does not preclude modern entrepreneurship. But in practice, we wonder if the romantic charm of the former might distract governments in impoverished countries from undertaking reforms needed to foster the latter.

It’s a nice piece — and how often do you see both F. A. Hayek and Frank Knight lauded in a newspaper editorial?

31 January 2007 at 8:42 am 2 comments

MBA Recruiters’ No. 1 Pet Peeve: Poor Writing and Speaking Skills

| Peter Klein |

Sure, leadership, team skills, and functional integration are important. But if MBA programs continue to graduate students who can’t write and speak clearly, employers will stop paying the MBA wage premium. The WSJ’s Career Journal quotes Whirlpool’s director of global university relations Chris Aisenbrey:

“It is staggering the frequency of typos, grammatical errors and poorly constructed thoughts we see in emails that serve as letters of introduction,” says Mr. Aisenbrey. “We still see a tremendous amount of email from students who are writing to the recruiter like they are sending a message to a friend asking what they are doing that evening.”

In the WSJ/Harris Interactive survey of corporate recruiters, the top complaint is inferior communication skills.

As part of his interviews with M.B.A. students, Darren Whissen, a financial-services recruiter in California, provides an executive summary of a fictitious company and asks them to write about 500 words recommending whether to invest in the business. At worst, he receives “sub-seventh-grade-level” responses with spelling and grammar errors. “More often than not,” he says, “I find M.B.A. writing samples have a casual tone lacking the professionalism necessary to communicate with sophisticated investors. I have found that many seemingly qualified candidates are unable to write even the simplest of arguments. No matter how strong one’s financial model is, if one cannot write a logical, compelling story, then investors are going to look elsewhere. And in my business, that means death.”

As a university teacher of undergraduates, MBA students, and PhD students, I share the recruiters’ frustration with shockingly bad reading, writing, and speaking skills. However, graduate school may be too late to correct such errors. Grammar should be learned in, well, grammar school. Should universities really be investing resources in teaching remedial English, math, and science? (HT: Craig Newmark)

30 January 2007 at 12:18 pm 11 comments

Ofek on Seabright’s Company of Strangers

| Peter Klein |

Haim Ofek reviews Paul Seabright’s The Company of Strangers: A Natural History of Economic Life (Princeton, 2004) for EH.Net. Some friends have highly recommended the book to me as a grand synthesis of market theory, institutional analysis, economic history, and evolutionary biology. I started reading it last year but my interest waned after a couple of chapters. (I guess I don’t have a taste for evolutionary biology; a lot of it reads like Just So Stories to me.)

Here is a 2005 interview with Seabright in Reason Magazine.

30 January 2007 at 12:19 am Leave a comment

The Dark Side of Open Source: Parenting Edition

| Peter Klein |

The open-source model works well when producers want to encourage collaboration. A potential downside is too much collaboration — sometimes project leaders just want to be left alone.

Who knows this better than parents of small children?

With all due respect to Ward Cunningham, I’d like to take issue, for a moment, with the claim that he is the originator of the wiki. Because anyone who’s had a child can assure you that collective public authorship, collaborative editing, and anonymous generative correction — those wiki hallmarks — have been around since Mrs. Cain first brought Baby Cain over to Uncle Abel’s house dressed only in a too-thin fig-leaf onesie.

That’s Slate’s Dahlia Lithwick reminding us that “babies invented community-based collaborative authorship.” When your kid is sick, all your friends and relatives try to re-write the owner’s manual, whether you want them to or not.

29 January 2007 at 9:29 am Leave a comment

Grad Skool Rulz, #2

| Peter Klein |

The second in Fabio Rojas’s new series. This week’s rule: Know the unspoken rules. E.g.,

  • Which courses & workshops are useful.
  • How to fulfill requirements in a straightforward and quick manner.
  • Certain personalities to approach or avoid.
  • How to pass the graduate exams, which topics are on the exams and how to answer them.
  • How to get financial and academic support in the program and from other units on campus.
  • How to approach professors, as students and possible collaborators.

27 January 2007 at 8:10 am Leave a comment

Capital and Its Structure in PDF

| Peter Klein |

Ludwig Lachmann, a colleague of F. A. Hayek at the LSE in the 1930s and later professor of economics at the University of the Witwatersrand in Johannesburg, made major contributions to the Austrian theory of capital. His most important book, Capital and Its Structure (1956), is now available on the web as a PDF file (courtesy of the Mises Institute, which continues to add to its impressive online book collection).

26 January 2007 at 4:19 pm 3 comments

Economists Are Not Entrepreneurs

| Peter Klein |

Edwin Cannan, writing in 1902:

I do not mean to argue that a knowledge of economic theory will enable a man to conduct his private business with success. Doubtless many of the particular subjects of study which come under the head of economics are useful in the conduct of business, but I doubt if economic theory itself is. It does not indeed in any way disable a man from successful conduct of business; I have never met a decent economist who was in a position of pecuniary embarrassment, and many good economists have died wealthy. But economic theory does not tell a man the exact moment to leave off the production of one thing and begin that of another; it does not tell him the precise moment when prices have reached the bottom or the top.

This is from Cannan’s Presidental Address to the Royal Economic Society, reprinted in the January 2007 issue of EconJournalWatch. I have spent most of my career teaching economics to business students, and I am always careful to emphasize that knowledge of economic theory, while valuable, is neither necessary nor sufficient for commercial success.

26 January 2007 at 12:55 am 3 comments

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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).
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