Archive for June, 2007

Did Nobody Consider the Incentive Effects?

| Peter Klein |

Heard on NPR this morning:

SEOUL (AP) — A South Korean bank is offering to help heartbroken soldiers dumped by girlfriends while away on mandatory military service by providing special interest rates for stilted troops.

Soldiers who can show letters or e-mail proving their break-up to a bank clerk can receive a new deposit plan with better rates and waived service fees.

Look for a new Korean country-and-western song, “My Baby Dumped Me for a Basis Point.”

5 June 2007 at 11:42 am Leave a comment

Pomo Periscope XII: Was Hayek a Pomo?

| Nicolai Foss |

It is well known that some Austro-libertarians have had a love-hate relation with the Left. The late Murray Rothbard quite actively flirted with the rather extreme Left for a substantial period in the 1960s (for an amusing historical account, see this). From the 1980s one manifestation of this perhaps latent Austrian tendency has been a flirtation with post-modernist currents that usually have a strong leaning to the left (for Rothbard’s hilarious take on this, see here). (more…)

5 June 2007 at 9:14 am 2 comments

Concise Summary of Chandler’s Achievements

| Peter Klein |

Louis Galambos, writing at EH.News:

When Alfred D. Chandler, Jr., entered the subdiscipline of business history, the field was producing very little scholarship of great interest, even to other historians. When Chandler, the world’s leading historian of business, died recently (May 9, 2007) at the age of 88, his legacy included a vibrant, influential body of scholarship and active scholars producing studies that intersected creatively with important developments in economics, sociology, and political science — as well as modern history. Chandler remade business history by publishing a long series of works characterized by meticulous, penetrating research; careful analysis of the data; and, above all, original, imaginative synthesis. Drawing upon the sociology of organizations and Schumpeterian economic analysis of innovation, Chandler reconstructed our understanding of the rise of large enterprise in America and Europe. The business bureaucracies he described were innovative and efficient. Economies of scale and scope, as well as aggressive, successful research and development, enabled them to hold their positions in a capitalist system that was changing rapidly in the second and third industrial revolutions. Their leaders were investors, not Robber Barons; they guided the evolution of the giant, multinational, multidivisional enterprises that have played a central role in capitalist progress since the late nineteenth century. Chandler left the politics of political economy, the labor relations of the firm, and the gender and racial themes of interest to many American scholars of late to other historians of business. His focus throughout his long, amazingly productive career was on the large, successful corporations that have played the central role in global economic development in the modern era.

4 June 2007 at 11:42 pm Leave a comment

Goals or Preferences?

| Nicolai Foss |

My two favorite sociologists are Peter Abell and Sigwart Lindenberg. Both stress rationality (and rationalism), micro-foundations for social science research, and are (not surprisingly) sympathetic to, even admiring of, economics. However, neither is an uncritical admirer of economics.

In “Why the Microfoundations of the Social Sciences Should be Based on Goals Rather than Preferences” (you can find it on this page), Lindenberg argues that economists tend to conflate preferences and goals, or at least leaves open or trivializes the relationship between the two.  (more…)

4 June 2007 at 6:18 am 3 comments

Klein-Mahoney Smackdown

| Peter Klein |

Those of you in the Pacific Northwest may wish to drop by the annual meeting of the American Agricultural Economics Association, 29 July to August 1 in Portland, Oregon, for this session organized by Randy Westgren:

Economic Theories of Entrepreneurship
Monday, July 30, 10:30am – 12:00pm

This session will offer the chance to explore the economic foundations for the study of entrepreneurship. Joseph Mahoney and Peter Klein will engage in a “Point-Counterpoint” discussion on the theory of entrepreneurial behavior using the lenses of classical, neoclassical, Austrian, institutional, and Carnegie School economics. The discussion will explicitly evoke audience participation in an open and informal design. The various lenses will be used to highlight where the (usually) amorphous study of entrepreneurship can benefit from theoretical foundations.

Last man standing wins.

3 June 2007 at 10:40 pm 4 comments

More Robbins

| Peter Klein |

Further commemorations of the 75th anniversary of Lionel Robbins’s Nature and Significance of Economic Science. Next week’s History of Economics Society annual meeting in Fairfax, Virginia includes a Robbins session with papers by Steve Medema and Roger Backhouse, Dave Colander, and Alain Marciano.

3 June 2007 at 10:39 pm Leave a comment

Rival Hypotheses in the Same Paper?

| Nicolai Foss |

Apparently, having rival hypotheses in the same paper is becoming a don’t do! — at least in management! My colleagues who are more empirically minded than I am tell me of rejections that are motivated solely by having rival hypotheses in the same paper. Big guys in the relevant field (e.g., strategic management, organization, international business) also argue against rival hypotheses-in-the-same-paper in doctoral consortia, professional development workshops, etc. 

Instead, what is recommended is this: 

1) concentrate on developing one set of non-rival hypotheses and deliberately neglect contraditory hypotheses


2) allow for hypotheses that may seem rival, but really aren’t, because they are special cases of a more over-arching framework. In the latter case, the theory development exercises become a matter of identifying the conditions under which H1 is true (and H2 is false) and the conditions under which H1 is false (but H2 is true) etc. (more…)

3 June 2007 at 6:20 am 13 comments

Color Me Beautiful

| Peter Klein |

The most popular colors on national flags are white and red, followed by blue, green, and black. Click here to see how the analysis was done, and to play a fun game of “identify the flag” (click on the pie charts to reveal the flags). (HT: SMCISS blog.)

I wonder how much of this clustering is explained by path dependence? The flags of many former European colonies are, of course, based on the mother country’s flag.

Here’s another interesting example of chromatic clustering: corporate logos. The graphic below (click to enlarge) ran in the June 2003 issue of Wired, in a feature called “The Battle for Blue.” This blurb accompanied the graphic:

Companies spend millions trying to differentiate from others. Yet a quick look at the logos of major corporations reveals that in color as in real estate, it’s all about location, location, location. The result is an ever more frantic competition for the best neighborhood.

I use this example in class to illustrate Hotelling’s law.

1 June 2007 at 9:25 pm 1 comment

Today in Business History

| Peter Klein |

The Friends of Business History newsletter includes a fun feature, This Day in Business History. June 1 was a busy day.

  • 1495: Friar John Cor records the first known batch of Scotch whiskey in the Exchequer Rolls of Scotland.
  • 1774: The British government orders Port of Boston closed.
  • 1812: President James Madison calls on Congress to declare war on Great Britain, after fiscally minded measures fail to dissuade the British from harassing American ports and ships.
  • 1869: Thomas Edison receives a patent for a voting machine. It was his first patent for a device.
  • 1905: The first world’s fair to be held in the Pacific Northwest, the Lewis & Clark Centennial and American Pacific Exposition and Oriental Fair ­opens in Portland, Oregon.
  • 1911: The Equitable Life Assurance Society of New York issues the first U.S. group insurance policy to the Pantasote Leather Company and its 121 employees.
  • 1917: Henry Leland, founder of the Cadillac Motor Car Company, resigns as company president.
  • 1947: Corning Glass Works publicly announces its development of photosensitive glass.
  • 1961: Regular FM multiplex stereo broadcasting debuts in Schenectady, New York and Chicago, Illinois.

Celebrate with me by pouring a glass of scotch, buying an insurance policy, selling your Cadillac, turning up the radio, and punching an Englishman.

1 June 2007 at 10:42 am 3 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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