Archive for January, 2007

Mormons in Business

| Peter Klein |

HBS Dean Emeritus Kim Clark is among a group of Mormon executives profiled in Jeff Benedict’s The Mormon Way of Doing Business (Warner Books, 2007). Mitt Romney’s Presidential bid has generated a surge of interest in the Mormon faith (which, despite its 170-year history, is little known to most Americans), so expect this book to do well.

Most impressive passage so far: “During the same ten-year period [1974-84] that Clark graduated from Harvard University, earned a PhD in economics, and obtained tenure status as a faculty member at HBS, he and his wife had seven children.” Wow.

20 January 2007 at 5:21 pm 3 comments

Finally, I Understand the Capabilities Theory of the Firm

| Peter Klein |

Click to enlarge:

20 January 2007 at 1:53 pm 1 comment

How to Annoy People Using Instant Messaging

| Peter Klein |

I’m a big fan of instant messaging. (Email is soooo twentieth century!) I often use IM to communicate with a co-worker whose office happens to be two doors down from mine. I’ve even been known to text-message my spouse from one room in the house to another. (Why get up from your chair if you don’t have to?)

So I enjoyed WebWorkerDaily’s suggestions on How to Annoy People Using Instant Messaging. Valuable tips!

20 January 2007 at 1:13 am 2 comments

“Atheist” Academics

| Cliff Grammich | 

Peter kindly draws my attention to a study by Neil Gross at Harvard and Solon Simmons at George Mason, released last fall but discussed this week here, here, and here, about religiosity of American professors. Among the findings: (more…)

19 January 2007 at 10:40 pm 10 comments

The Case for Killing the FCC

| Peter Klein |

Jack Shafer has a very nice piece in Slate on the Federal Communications Commission:

Although today’s FCC is nowhere near as controlling as earlier FCCs, it still treats the radio spectrum like a scarce resource that its bureaucrats must manage for the “public good,” even though the government’s scarcity argument has been a joke for half a century or longer. The almost uniformly accepted modern view is that information-carrying capacity of the airwaves isn’t static, that capacity is a function of technology and design architecture that inventors and entrepreneurs throw at spectrum. To paraphrase this forward-thinking 1994 paper (PDF), the old ideas about spectrum capacity are out, and new ones about spectrum efficiency are in.

As every freshman economics student knows — but most regulators (and ecologists) do not — the degree to which a particular resource is “scarce,” in the economic sense, depends on consumer preferences and the state of technology. Oil was not a scarce resource until people learned how to refine it into useful products like kerosene and gasoline. The supply of a given resource, like spectrum, is not fixed, but varies with our knowledge of how, and for what, to use it.

Shafer also points out that the FCC has been not an enabler, but an obstacle, to technological advances in telecommunications. The Commission “stalled the emergence of such feasible technologies as FM radio, pay TV, cell phones, satellite radio, and satellite TV, just to name a few. As Declan McCullagh wrote in 2004, if the FCC had been in charge of the Web, we’d still be waiting for its standards engineers to approve of the first Web browser. ”

Update: James Delong likes it too.

19 January 2007 at 1:33 am 3 comments

Ode to the RIAA

| Peter Klein |

Regular readers will know that we are not entirely sympathetic to the concept, let alone current legal treatment, of intellectual property (1, 2, 3). Fellow IP-skeptics are sure to enjoy David Pogue’s “Ode to the R.I.A.A” (Recording Industry Association of America), to the tune of the Village People’s “YMCA.” (more…)

19 January 2007 at 12:34 am Leave a comment

Night Thoughts of a Strategy Instructor

| Steven Postrel |

1. Exactly what is accomplished by teaching (present or future) managers the five forces framework? It’s useful for investment and diversification decisions, but otherwise isn’t very actionable, unless you’re engaged in cartel management.

2. It’s a good bet that the term “barriers to entry” adds zero (or worse) to student understanding of when an incumbent has advantage over a new player (and when the anticipation of that advantage deters entry). Also, students are rightly confused about the distinction between entry and rivalry because realized entry contributes to future rivalry. At least in logical terms, I can avoid this confusion by stressing the “threat of entry” as a force separate from rivalry, but then we’re supposing individual firms coordinate their price and capacity decisions to keep out entrants, a view of industry collaboration and statesmanship that was musty in the 1980s (and often involves incredible threats). Maybe it would be better just to talk about the elasticity of long-run supply and not worry too much about whether new capacity comes from incumbents or from entrants.

3. Is it a good idea to teach positioning analysis using cost drivers without having a cost function that combines all the drivers together? Scale, learning, scope, product features, etc. — shouldn’t we worry a lot more about how they reinforce or conflict with one another in a given case?

4. Does it matter that it’s really hard to find good examples that fit the technical definition of economies of scope? Is it OK if I just keep passing off multiproduct scale as if it were scope since the students don’t know the difference?

5. Am I just getting old and curmudgeonly, or does it seem like the newer Harvard cases are more pre-digested than the classics? What’s up with constructing all the pro forma tables for the students instead of scattering the information around in the text and exhibits?

6. Will I be able to teach effectively tomorrow if I don’t fall asleep soon?

18 January 2007 at 7:38 pm 10 comments

The Galileo Legend

| Peter Klein |

We noted previously how little most practicing scientists know about the history and philosophy of science. In many cases this is harmless; does the average chemist really need to know Lavoisier from Priestly? However, when scientists speak and write about the meaning of science, the role of science in society, public policy toward science, and such broader issues, such ignorance can be devastating.

An example is the legend that Galileo Galilei was persecuted by the Catholic Church for his heretical belief that the earth revolves around the sun. In popular myth Galileo represents the lone crusader, the revolutionary with the courage to speak out against the Establishment and the popular fallacies of his day. Don Boudreaux titles an (otherwise excellent) item on free trade “What Galileo Must Have Felt,” writing that “[w]hen I read or hear protectionists such as Sen. Byron Dorgan, I think that I can imagine what Galileo felt as he listened to the Leaders of his day insist that the sun revolves around the earth.”

The problem is that the leaders of Galileo’s day didn’t think the sun revolves around the earth. My former colleague Thomas Lessl is an expert on Galileo, and from him I learned that virtually every aspect of the Galileo legend is false. (more…)

18 January 2007 at 1:23 pm 6 comments

The Procastinator’s Clock

| Peter Klein |

Thomas Schelling, in his 1984 paper on voluntary self-restraint, popularized the example of the man who tends to oversleep and, knowing he tends to hit the snooze button several times on his alarm clock, places the clock across the room where he can’t reach it. My grad-school buddy Ted O’Donoghue has written several papers (with Matt Rabin) applying behavioral economics to procrastination, addiction, and other cases of what Ted calls “time-inconsistent preferences,” showing how rational agents deal with problems of self-control.

A simple solution for the procrastinator is setting the clock 15 minutes fast, but that only works if you forget you did it. David Seah has come up with a better solution: the Procrastinator’s Clock. It’s “guaranteed to be up to 15 minutes fast. However, it also speeds up and slows down in an unpredictable manner so you can’t be sure how fast it really is.” Brilliant. (HT: WebWorkerDaily)

17 January 2007 at 2:49 pm 3 comments

Coase and Hayek in Law School

| Peter Klein |

My colleague, law professor Thom Lambert, begins his Business Organizations class with Hayek (1945) and Coase (1937). Coase is obviously extremely well known in legal circles, but I doubt Hayek is assigned in many law-school classes. Thom’s students are fortunate.

(Thom’s blog entry also alerts me to Henry Manne’s “Hayek, Virtual Markets, and the Dog that Did Not Bark,” which I hadn’t seen before, and which seems to deal with market-based management.)

16 January 2007 at 6:06 pm Leave a comment

In Which I Rise to the Bait

| Steven Postrel |

So I’m browsing some old posts on orgtheory.net, and I see a little discussion about whether organization theory has done much since 2000, and it mentions neo-institutionalism. And since neo-institutionalism kind of gives me the hives, I toss in a little comment about how what little I know about it seems to have been falsified by an empirical paper by Kraatz and Zajac.

What do I get for my troubles? Not exactly a gauntlet to the face, but since their post has such tempting flaws, I’ll bite. (more…)

16 January 2007 at 5:53 pm 6 comments

StrangEconomics

| Peter Klein |

Freakonomics not freaky enough for you? Try the papers listed at StrangEconomics. Learn the economics of olympic medals, primping (not pimping, though that has been studied too), toilet seat etiquette, long-distance running, and more. (HT: Bayesian Heresy)

Who says economists are attracted to puzzles, not problems?

16 January 2007 at 2:14 pm Leave a comment

Measuring Research Productivity

| Peter Klein |

The Chronicle of Higher Education reports rankings of 7,294 PhD programs in 104 disciplines at 354 US universities. The rankings are from the Faculty Scholarly Productivity (FSP) Index computed by Academic Analytics. Unlike the Business Week and US News and World Reports rankings, based largely on subjective, peer evaluations, the FSP purports to be an objective performance index. (I’m reminded of Frank Knight’s reported interpretation of Kelvin’s dictum: “If you can’t measure, measure anyway.”)

A few surprises: In economics, Johns Hopkins, Duke, and UC-San Diego make the top ten, ahead of Chicago, Stanford, and Berkeley. Iowa ranks #5 in management, behind heavyweights Columbia, Wharton, MIT, and Northwestern (Cornell and Florida also make the top ten). The top ten in finance includes Emory, Temple, Boston College, and Houston. No surprises in sociology (at least to my untrained eye).

Thanks to Rich Vedder for the pointer. Rich interprets these data as evidence that the traditional, subjective rankings are biased toward the elite universities. On the other hand, quantitative metrics for intangibles like knowledge creation can’t possibly incorporate quality in a satisfactory way.

16 January 2007 at 2:05 pm 5 comments

Bloggers versus Journal Editors

| Peter Klein |

Arnold Kling on the folksonomic nature of blogs:

I think that we’re at a point where blogs can legitimately crowd out other reading. That is, if you spend a few hours a week reading blogs and cut back on something else, you probably are better off. The “something else” that I think can be cut back is periodicals and journals. I can find bloggers who do a better job than journal editors of selecting what I should read.

16 January 2007 at 11:48 am Leave a comment

Chandler the Misesian?

| Peter Klein |

I spent some time a couple of summers ago reading through Murray N. Rothbard’s personal correspondence, housed with the rest of his papers at the Mises Institute in Auburn, Ala. Rothbard was an extremely prolific writer, and his many letters — long, detailed, provocative, and funny — are as valuable and informative as his published writings.

I came across one curious exchange of letters from the early 1950s between Rothbard and Alfred D. Chandler, Sr., father of Harvard’s Alfred D. Chandler, Jr. Rothbard is describing his plans for producing a textbook expounding Misesian principles (what became Man, Economy, and State). Chandler writes: “I would like to show you what I have already done on a popular Mises, as well as to discuss plans for its future. Also as you say it is time for all good ‘Misesians’ to come to the aid of the party.” In a subsequent letter Rothbard notes: “As a Misesian, I think you’ll be interested in learning that the latest issue of the American Economic Review, just published, has its lead book review devoted to [Mises’s] Human Action. . . .”

Chandler Jr. tells me he doesn’t recall his father working on any such “popular Mises.” Mises’s student Percy Greaves later came out with a glossary, Mises Made Easier, and Bob Murphy is currently preparing a study guide for Human Action. But no record of Chandler, Sr.’s project seems to have survived. If readers know anything about this, please let me know.

16 January 2007 at 1:02 am Leave a comment

Richard Florida’s Blog

| Peter Klein |

Richard Florida, author of The Rise of the Creative Class, has a new blog.

15 January 2007 at 4:49 pm Leave a comment

Best Blog Post Opening Lines I Read Today

| Peter Klein |

My associate Roderick Long gets the prize:

Wish you’d been a fly on the wall at last month’s Molinari Society symposium on “Anarchist Perspectives”?

Well, of course you don’t. A fly’s brain is too small to process the event properly. Plus you might have gotten squished against the wall by a stampeding bewilderment of philosophers.

15 January 2007 at 9:36 am Leave a comment

The Canon of Management Thought

| Peter Klein |

Gordon Smith points us to David Kennedy and William W. Fisher’s edited volume The Canon of American Legal Thought (Princeton, 2006). The volume features the “twenty most important works of American legal thought since 1890.” Click Gordon’s link for the list, which includes a few items familiar to O&M readers (Coase’s 1960 “The Problem of Social Cost”; Calabresi and Melamed’s 1972 “Property Rules, Liability Rules, and Inalienability”; and possibly Macaulay’s 1963 “Non-Contractual Relations in Business”). The more recent stuff is mostly “critical legal theory” (pomo alert!).

So, what are your selections for the canon of management thought? Both books and articles are fair game. (I imagine the after-1890 constraint won’t be binding.) You can include works in organizational economics if you like.

15 January 2007 at 8:52 am 1 comment

Grad Skool Rulz

| Peter Klein |

A new feature from Fabio Rojas at orgtheory.net. Highly recommended for (current or prospective) graduate-student readers.

I have some resources for graduate students listed on my site. A few are specific to my own department, but most are general (especially “Writing, speaking, and listening,” “Teaching,” and “Miscellaneous”).

13 January 2007 at 4:16 pm 2 comments

Psychology and Economic Development

| Peter Klein |

A Vietnam story for Nicolai to enjoy during his holiday. Writes a World Bank staffer:

At the end of the day, it is the mentality of our government clients that matter. It is their willingness to reform and their interest in facilitating private sector development that make the difference. We just give them the tools. We have to put more emphasis on why they should change their mentality and adopt the “Vietnam approach.” But we are not psychologists — we are economists, lawyers, bankers, investors, bureaucrats, you name it, but not psychologists.

13 January 2007 at 12:07 am Leave a comment

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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).
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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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