Archive for April, 2007

What’s In a (University) Name?

| Peter Klein |

An organization’s name is an important part of its identity. Names can also be valuable signals to market participants about mission, values, and strategy. Certainly, names seem to matter: a 2001 paper by Michael J. Cooper, Orlin Dimitrov, and Raghavendra Rau, “A by Any Other Name,” documented a positive and significant stock-price reaction to announcements of adding “dot-com” to company names. (No word on the reaction to the reverse, as when changed its name to Monster in 2003.)

Two universities in my state have gotten into the act. In 2005 Southwest Missouri State University changed its name to Missouri State University to reflect a more national orientation. (In most US states the “University of XYZ” is the original state university and “XYZ State University” is the newer, land-grant institution; in Missouri, however, the land-grant designation was given in 1870 to the already-existing University of Missouri, officials of which strongly opposed giving the name Missouri State to a rival institution.) Now the University of Missouri system has announced that the University of Missouri-Rolla, one of four campuses in the state system (and home of guest blogger Chihmao Hsieh), will change its name to Missouri University of Science and Technology. The name change is “is part of chancellor John S. Carney III’s goal of making UMR one of the nations top 5 technological research universities by 2010,” according to a news release. But will it smell as sweet?

Update: My old college classmate Jim  Surowiecki, author of The Wisdom of Crowds, wrote about corporate name changes for Slate back in 1997.

30 April 2007 at 10:35 pm 10 comments

Tips for Academic Presentations

| Peter Klein |

Good tips from Jonathan Shewchuk (via Craig Newmark). Written for computer scientists but mostly applies across the board. Highlights:

A talk of 30 minutes or less should be an advertisement for the paper, not a replacement.

It is disturbing that so many presentations have large wasted bands of space on the border of every slide, as if to taunt the audience — “I could have used a readable font, but it’s just you.”

You communicate most powerfully when your every movement, facial expression, and utterance is in the service of the words you are saying right now, and no unproductive movement takes place.

Good speaking is about rhythm. The most common type of bad speaker delivers one talk-length paragraph at a uniform speed, never slowing for emphasis.

Most everything else, especially aesthetics, is learned through practice and feedback.

Includes great cartoons, like the one above.

See also this and this on PowerPoint.

30 April 2007 at 12:00 am Leave a comment

The Dark Side of Capital Pooling

| Peter Klein |

The great advantage of joint-stock companies, whether public or private, is the ability to create value by pooling capital. Unfortunately, capital pools can also be channeled to activities that destroy value. (HT: Against Monopoly.)

28 April 2007 at 10:51 am 1 comment

Teaching Management through Demotivators

| Peter Klein |

Like many of you, I’ve considered using teaching my managerial economics course using a Dilbert collection as a secondary, or even primary, text. There are so many good ones! One could also use the wickedly funny Demotivators to illustrate key managerial and organizational theories and concepts. For example:

28 April 2007 at 8:14 am Leave a comment

How Well Do You Know Your Advisor?

| Chihmao Hsieh |

Unless you’ve already seen it, here’s a quite popular comic strip glorifying and lampooning school, and particularly graduate studies. Below was the comic for 04/23 (infinitely clearer version here). Another recent good one is the sheet used for Seminar Bingo. (Caution: The comic’s archive is a happily illuminating time sink.)

27 April 2007 at 2:53 pm 1 comment

The Language of Economists (and Sociologists)

| Peter Klein |

From the “news that will shock no one” department come the results of this linguistic analysis of four economics journals, the American Economic Review, Economic Journal, Journal of Economic Perspectives, and American Journal of Economics and Sociology, along with a control group containing the American Journal of Sociology, Journal of Microscopy, and Journal of the American Mathematical Society:

The present study aims to add to our knowledge about economic rhetoric by conducting a data-driven analysis of economic academic discourse, both synchronically in its contemporary form, and diachronically over the past four decades. We find (1) that linguistically, economics is clearly an academic genre of its own, (2) that there are at the same time clear differences in vocabulary and style usage across economic journals, and (3) that there have been major developments in economic prose during the past four decades. We argue that there is some, albeit tentative, evidence that the discipline may face an increasing methodological gap.

Here is the paper, “What Do Economists Talk About? A Linguistic Analysis of Published Writing in Economic Journals” by Nils Goldschmidt and Benedikt Szmrecsanyi (American Journal of Economics and Sociology 66, no. 2, April 2007). The “gap” is between journals like the AER and EJ that use increasingly formal, empirical (scientistic?) terminology and journals like JEP and AJES that favor broader, social-science terms and concepts (“justice,” “society,” “culture,” “institutions”). Interestingly, use of social-science terminology in the AER, relative to the other journals, dropped between 1965 and 1980 but rose again between 1980 and 1990. Too early to reflect the Freakonomics phenomenon, to be sure, but perhaps a marker for economic imperialism more generally?

27 April 2007 at 2:10 pm 1 comment

Political Instability and Financial Development

| Peter Klein |

The latest salvo in the debate over the role of legal origin in financial-market performance comes from Mark Roe. In “Political Instability and Financial Development” (with Jordan Siegel) he argues that political instability is a more important determinant of financial development than trade openness, latitude, and, particularly, legal origin as modeled by LLSV. “Surprisingly, despite the widespread view in the law and finance literature of legal origin’s importance, not only is political stability highly robust to legal origin, but, for many years, our results for key indicators and specifications neither show Common Law to be consistently superior nor French Civil Law to be consistently inferior to other legal families in generating strong financial development outcomes.”

See also my “Politics and Productivity” on the interaction between political institutions, economic freedom, and national economic performance.

27 April 2007 at 10:07 am 1 comment

The Market for Organization Equals USD 7.6B

| Chihmao Hsieh |

Home organization (in 2009), that is.

A CNN article posted online last month has re-appeared in the headlines today, probably in response to the woman who is virtually selling virtually (sic) all her belongings in one single auction on EBay (see the actual listing here). To spare you the reading, the article essentially describes our “hyper-consumptive society deluged by its own belongings,” mentions the TV shows and firms that create products and promote services to help us organize our belongings, and highlights associations like the new-but-fast-growing National Association of Professional Organizers.

Personally, in the last few years I’ve become much more mindful of the number of discrete items I keep at home, that mindfulness mainly a side effect of thinking in terms of this kind of complexity theory and this subfield of cognitive science.

26 April 2007 at 5:00 pm 3 comments

Five Blogs That Make Me Think

| Peter Klein |

When Nicolai and I started this blog a year ago we were hoping for a plural readership. Now that we’ve hit that target we can move on to the next: making our readers think. Fortunately, we’ve already succeeded with at least one reader: Nijma of Camel’s Nose, who named O&M one of five blogs that make her think. This is one of those “memes” in which each blogger named is supposed to name five bloggers who make him think, who in turn name five bloggers that make them think, and so on, until everyone is nested under someone else, sort of like Amway but without money changing hands.

The Thinking Blog’s Ilker Yoldas is responsible for all this (and for supplying the nice graphic above). Yoldas describes the exercise as a humanistic alternative to blog ranking systems like Technorati based on quantitative analysis of linking patterns, just as “human-powered” search engines like ChaCha are alternatives to Google.

Anyway, I’ll play along. Here are five blogs that make me think. (To make things interesting I’ve excluded the sites listed already on the blogroll below.)

26 April 2007 at 2:35 pm 2 comments

Reminder: Abstract Submission Deadline

| Peter Klein |

Next Tuesday, May 1, is the deadline for submitting an abstract to the University of Missouri’s Frameworks for Entrepreneurship Research conference. Keynote speakers include O&M favorites Pierre Desrochers and Randy Westgren (who comments as REW) so you don’t want to miss it.

26 April 2007 at 9:15 am 2 comments

Puzzles and Problems Redux

| Peter Klein |

In an earlier post, “Economics: Puzzles or Problems?”, I noted the tendency of talented young economists to focus on clever, yet ultimately unimportant, puzzles rather than the traditional “big problems” of economics (inflation, unemployment, poverty, economic growth, regulation, political economy, etc.). Steve Levitt, and the brand of “Freakonomics” he inspired, is usually singled out as the main culprit here. A recent piece in The New Republic, “Freaks and Geeks,” takes Levitt and company to task not only for wasting their time and talent, but also for being dilettantes who get key facts wrong (a point raised by Steve Sailer). Here are responses from Levitt (very unhappy), Joshua Angrist (also unhappy, though not for personal reasons), Josh Wright (mildly unhappy), and Greg Mankiw (neutral). Sadly, no one has picked up my (very clever) reference to the relationship between Wittgenstein and Popper.

26 April 2007 at 7:49 am Leave a comment

Fabio Chaddad to Join Missouri Faculty

| Peter Klein |

I’m pleased to announce that Fabio Chaddad of IBMEC is joining the Division of Applied Social Sciences at the University of Missouri. Fabio’s research deals with networks, supply-chain management, cooperatives, corporate finance, and other aspects of strategy and organization. He may even be worthy of a guest-blogger spot at O&M!

25 April 2007 at 11:15 pm Leave a comment

Happy Birthday to Us

| Peter Klein |

April 25, 2007 marks the one-year anniversary of Organizations and Markets. Thanks to our readers and to guest bloggers Joe Mahoney, Dick Langlois, Lasse Lien, David Gordon, Cliff Grammich, Steve Postrel, and Chihmao Hsieh for making the past year so much fun and challenging. We look forward — if Nicolai will forgive the pomo phrase — to “continuing the conversation.”

25 April 2007 at 7:44 am 2 comments

Does Hayek Still Matter?

| Nicolai Foss |

I may be wrong, but I have the feeling that the thought of Friedrich von Hayek is receiving less and less attention. This worries me for personal reasons — I wrote my Master’s Thesis in economics in 1989 on Hayek’s business cycle theory, and his work has continuously served as an important source of inspiration to me (e.g., this paper) as well as to countless others — and for the reason that Hayek’s thought is too important to vanish in influence. (more…)

25 April 2007 at 3:17 am 7 comments

Frank Knight and the Chicago School

| Peter Klein |

Frank Knight is generally regarded, along with Jacob Viner, as the founder of the Chicago school of economics. But Knight’s relationship to the later Chicago school of Friedman, Stigler, and Director is ambiguous. Knight’s theories of capital and competition were incorporated into the mainstream Chicago (and contemporary neoclassical) tradition but his account of profit and entrepreneurship, his quasi-Austrian methodology (inherited from his teacher Herbert J. Davenport), and his eclectic social and political theories were largely ignored or forgotten.

Ross Emmett has a new paper, “Did the Chicago School Reject Frank Knight? Assessing Frank Knight’s Place in the Chicago Economics Tradition,” exploring this in detail. The conclusion: “Without [Knight’s] initiation of eaching price theory and persistence in defending it, there ould be no Chicago tradition. Yet the methodological approach and research infrastructure which propelled the Chicago School to a central position in the economics profession owe little or nothing to him.”

(Incidentally, critics of economics often target a stylized version of Chicago economics circa 1970 (see here), but these critics often seem unaware that the Chicago school of economics no longer exists. While there is still a (top-notch) economics department at the University of Chicago, there is no longer a distinct Chicago approach. The economics taught at Chicago is the same as the economics taught at MIT, Harvard, Stanford, or any other top mainstream department.)

24 April 2007 at 11:31 pm 3 comments

How is What is an Opportunity a Valuable Research Question?

| Chihmao Hsieh |

In introducing the April 2007 Special Issue of Small Business Economics, guest editors Jeffery McMullen and Lawrence Plummer, and Zoltan Acs ask “What is an Entrepreneurial Opportunity?” First, the abstract:

The nature and source of entrepreneurial opportunity are important issues for understanding how markets function and come into being. In addition to describing the forum held on the topic and summarizing the contributions of the articles that appear in the special issue, this article shares a number of lessons learned during the workshop and the editorial process. We explore three of the most important reasons for confusion about the opportunity construct: (1) the “objectivity” of opportunity, (2) the perceived importance of one particular individual in determining the direction of the social world and (3) what distinguishes the sub-class of “entrepreneurial” opportunity from the broader category of opportunity in general. Finally, we offer some directions for future research by illuminating important issues that emerged from the workshop but that remain largely unanswered by the papers of this special issue.

Needless to say, the authors courageously untangle some fundamental concepts (i.e. different types of ‘objectivity’ as it might relate to the notion of opportunity). Yet a sentence in the article’s second paragraph gave me pause: “…without a clear understanding of the nature of opportunity, formulating logically consistent prescriptions for both policy and practice is problematic because any theoretical basis of empirical results would be incomplete” (p. 273). (more…)

24 April 2007 at 2:06 pm 2 comments

The Growth of Cities: A Formal Model

| Peter Klein |

Luís Bettencourt, José Lobo, Dirk Helbing, Christian Kühnert, and Geoffrey West’s paper “Growth, Innovation, Scaling, and the Pace of Life in Cities” (Proceedings of the National Academy of Sciences 104, no. 17, April 24, 2007) is getting a lot of attention, garnering plugs in Scientific American and Nature. They use data on innovation, employment, wages, GDP, consumption, crime, disease, housing, and infrastructure from US, European, and Chinese cities to estimate a “power law scaling function” linking demographic, socioeconomic, and behavioral indicators to city size. Such indicators, Y(t), are related to population N(t) according to



Many diverse properties of cities from patent production and personal income to electrical cable length are shown to be power law functions of population size with scaling exponents, \beta, that fall into distinct universality classes. Quantities reflecting wealth creation and innovation have \beta \approx 1.2 >1 (increasing returns), whereas those accounting for infrastructure display \beta \approx 0.8<1 (economies of scale). We predict that the pace of social life in the city increases with population size, in quantitative agreement with data, and we discuss how cities are similar to, and differ from, biological organisms, for which \beta<1. Finally, we explore possible consequences of these scaling relations by deriving growth equations, which quantify the dramatic difference between growth fueled by innovation versus that driven by economies of scale. This difference suggests that, as population grows, major innovation cycles must be generated at a continually accelerating rate to sustain growth and avoid stagnation or collapse.

For more on cities see these posts on Jane Jacobs and this one on clusters. Here is Ed Glaeser’s influential 1992 paper (with Hedi Kallal, Jose Scheinkman, and Andrei Shleifer) on growth in cities. Other important Glaeser papers on cities include this one with Jesse Shapiro, this one with Albert Saiz, and this one with Christopher Berry. Here is Glaeser’s review of Richard Florida’s Creative Class and here is Florida’s blog. And here is an interesting special issue of the Review of Austrian Economics on the new urbanism.

Update: Here is Florida’s take on the paper.

23 April 2007 at 9:10 pm 1 comment


| Peter Klein |

Re Chihmao’s post: English also has quite a few contronyms, words that are their own antonyms. Here is a list, including these that appear often in business administration and social-science research:

  • consult — ask for advice, give advice
  • custom — usual, special
  • discursive — proceeding coherently from topic to topic, moving aimlessly from topic to topic
  • enjoin — prescribe, prohibit
  • first degree — most severe (e.g., murder), least severe (e.g., burn)
  • handicap — advantage, disadvantage
  • mean — average, excellent (e.g., “plays a mean game”)
  • oversight — error, care
  • rent — buy use of, sell use of
  • transparent — invisible, obvious


23 April 2007 at 10:53 am 22 comments

Theoretical vs. Teórico vs. 理论: How the Precision of Foreign Language Relates to the Cost of Innovation

| Chihmao Hsieh |

Recently, bloggers Nicolai and Peter have highlighted the unfortunate confusions corresponding to the usage of the terms conceptual vs. theoretical, as well as usage of “method” vs. “methodology.”

A few inquiries could deserve some attention. First, is this confusion specific to those terms as they appear in the English language? For instance, perhaps other languages have their own labels indicating the concepts of “conceptual” and “theoretical” but the root words (e.g. concept, theory) involved are less substitutable. I’m also guessing that other languages have distinct labels for “method” and “methodology,” whereby less confusion emerges. (more…)

22 April 2007 at 6:14 pm 1 comment

Media, Dummy Variables, Fame, Fathers of Sociology, and School Shootings

| Chihmao Hsieh |

By now, all readers of this blog are probably well-aware of the massacre at Virginia Tech that took 33 lives. (My own prayers go out to all those affected by the tragedy.)

Some controversies are bound to be re-visited during and after the investigation (e.g. gun control) but others are starting to reveal themselves as mainstream for the first time. Namely, the media itself may be promoting these types of shootings. (more…)

21 April 2007 at 4:54 pm Leave a comment

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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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