Archive for July, 2007

Garrett on Ford

| Peter Klein |

Garet Garrett’s 1953 book on Ford Motor Co., The Wild Wheel, is now available as a free e-book at Garrett, the iconoclastic American journalist who wrote for the New York Times, Wall Street Journal, and Saturday Evening Post and is best known as a critic of Franklin Roosevelt, was trained as a financial reporter and covered Ford for many years. Worth a read.

30 July 2007 at 7:22 pm 1 comment

Another Great Higher Education Quote

| Peter Klein |

From Jacques Pépin’s delightful memoir The Apprentice: My Life in the Kitchen (Houghton Mifflin, 2003):

By the time I had completed all but one of the required courses for my Ph.D. [in literature at Columbia, around 1972], I was thinking about quitting the kitchen and becoming a university professor. . . . [I] proposed a doctoral thesis dealing with the history of French food presented in the context of French literature. There were plenty of literary references for me to explore, from Ronsard’s “Apology to a Field Salad,” to the wedding feast in Flaubert’s Madame Bovary, to Proust’s well-known madeleine.

But when I proposed the idea, my adviser, a Frenchman, shook his head. “The reason not much has been written on the topic, Mr. Pépin,” he intoned, “is that cuisine is not a serious art form. It’s far too trivial for academic study. Not intellectual enough to form the basis of a Ph.D. thesis.” My proposal was turned down.

Perhaps I could have argued my point, but my adviser’s curt dismissal of a field so important to me, to which I had dedicated my life, helped crystallize some doubts I was having about a career in academia. Though I enjoyed research, the last time I had participated in anything resembling a stimulating intellectual discussion with fellow students was back at [Columbia’s] School of General Studies, when we met after class for drinks and conversation — people of many nationalities and all ages, a mini-United Nation. Now my associates were suddenly twenty-one- or twenty-two-year-olds whose only interest seemed to be grades. Far from being noble and high-minded, many of my professors were petty, focused on trivial departmental squabbles. When two or more of them gathere socially, the conversation was limited to university politics and junior-high-school-level gossip about other professors.

As much as anything, getting an education cured me of my complex about not having an education.

30 July 2007 at 1:48 am Leave a comment

The “Age of Cobden”

| Peter Klein |

Leonard Liggio reviews a new collection of essays on Richard Cobden, the great English liberal and free trader who led the movement to eliminate the protectionist Corn Laws. Notes Liggio:

The contemporary world is focused on the issues Cobden raised. According to co-editor, Anthony Howe’s “Introduction”: “For the modern preoccupations with globalization, free markets, the retreat of the state, the importance of civil society are all ideas which took political shape in the ‘age of Cobden.’ While post-modernists may find in Cobden’s liberalism too many of the emblems of the ‘modernity’ project from which they are keen to distance themselves, historians and the public may still have much to learn from one of the first practical attempts to implant the ‘Enlightenment project’ within the fabric of the world order.” Cobden’s affinity with European Liberals reflected their shared heritage of the Enlightenment in the works of Vattel, Grotius, Voltaire, Rousseau, Franklin, Jefferson, Bentham and James Mill.

For more on Cobden and his contemporaries John Bright and Charles Dunoyer see these papers by Liggio and Ralph Raico and listen to Raico’s 2005 lecture “Classical Liberalism in War and Peace: The Case of Richard Cobden” (scroll down).

27 July 2007 at 8:03 am Leave a comment

Economic Inquiry Tries “As-Is” Reviews

| Peter Klein |

Economic Inquiry, generally regarded as the best of the second-tier general-interest economics journals, is adding an “as-is” submission option, like the one we discussed here.

26 July 2007 at 9:14 am Leave a comment

Brilliant But Neglected II

| Peter Klein |

Some suggestions for Nicolai’s list:

John G .Matsusaka, “Corporate Diversification, Value Maximization, and Organizational Capabilities,” Journal of Business 74 (July 2001): 409-31. Offers a novel and provocative “match-seeking” theory of diversification in which firms do not know their own capabilities but must discover them by experimenting with various combinations of business units. A diversified firm may be valued at a discount relative to more specialized firms because its current lines of business include some not consistent with its capabilities, but such conglomeration is necessary, and value-creating in the long run, if the firm is to discover where it should eventually refocus. 85 hits on Google Scholar. Possibly neglected because it appeared in the Journal of Business near the end of its run.

Robert C. Ellickson, “A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry,” Journal of Law, Economics, and Organization 5, no. 1 (Spring 1989): 83-97. A nice example of the emergence of private law, focusing on the rules governing property rights in whales prior to the twentieth century. Without a central authority the whaling community — a small, close-knit group with shared characteristics and frequent interaction — developed a complex set of norms enforced by community sanction and the threat of ostracism. Just 25 Google Scholar hits. (more…)

25 July 2007 at 11:01 pm Leave a comment

Management R&D Blog

| Peter Klein |

Luke Froeb and Brian McCann, whose book we discussed earlier, have a new blog, Management R&D. It looks good, so check it out.

24 July 2007 at 10:17 pm Leave a comment

Strategic Entrepreneurship Review

| Peter Klein |

In case you missed it, Steve Phelan mentioned in one of the comment threads that he has started a new e-journal, the Strategic Management Review. Writes Steve:

Philosophically, the journal is focused on publishing articles that “contribute to the ongoing conversation in strategic management” and intends to be theoretically, methodologically, and geographically neutral. We also aim to have quick reviewer turnaround times and ongoing (instant) publication of accepted articles. There is no reason an article could not be reviewed and published in 30-60 days (if it is deemed to make a contribution). Initially, we anticipate a 35% acceptance rate but the traditional “space considerations” of a paper journal will not be a reason for rejecting articles or lowering the acceptance rate.

The journal is also intended to be a resource for the strategic management community. For example, there is an area for doctoral students to post their dissertation abstracts and there is a “Comments” area for all published articles. Google Scholar will also start indexing the journal and improving the chances that an article will be read. With 269 BPS accepted papers (from 653 submissions) at the upcoming AOM meeting, I think that many articles could benefit from the timely exposure that SMR offers.

To date, the journal has published one issue but has averaged about 250 article downloads per month for the last three months. This is a very positive sign that people want to read online academic content in strategic management.

Consider sending your stuff his way. The journal website contains all the necessary info.

23 July 2007 at 10:01 pm Leave a comment

Most Overrated Econ or Management Papers

| Nicolai Foss |

Here is a controversial, but perhaps fun, exercise for the O&M readership: nominate a paper that you think is grossly overrated. In operational terms you may think of “overrated” in terms of the ratio of Google Scholar hits to actual content/substance. Remember that you, in contrast to the resident O&M bloggers, have the option and benefit of remaining anonymous. Uninspired? You may draw inspiration from our Pomo Periscope series. (And you are welcome to nominate Ferraro, Pfeffer, and Sutton, Academy of Management Review, 2005. ;-))

22 July 2007 at 11:04 pm 6 comments

Will the Real Peter Klein/Kline Please Stand Up?

| Peter Klein |

Twice in recent months I’ve been contacted by someone who thought I was the Peter Klein — actually Peter Kline — who wrote Ten Steps to a Learning Organization (with Bernard Sanders, 1997). I was even invited to give a keynote speech! I suppose this happens because if you Google “Peter Klein organizations” or “Peter Klein learning organizations” you get me at or near the top of the list. (Who says academic blogging isn’t worthwhile?)

So, who is this Peter Kline? He has several interesting-sounding books: The Everyday Genius, The Genesis Principle: A Journey into the Source of Creativity and Leadership, and Why America’s Children Cannot Think. But I can’t find any biographical information on the author, nor contact information to hand out to his admirers. Any suggestions?

NB: See also this on more Kleins.

21 July 2007 at 10:49 pm 6 comments

Visual Presentation Tips

| Peter Klein |

Funny examples from an anonymous comedian (via Cliff). (Warning: some coarse language.) Not as clever as the Gettysburg Address in PowerPoint but amusing nonetheless. Cliff and I both liked the pie chart on procrastination. I also liked the chart on states with squiggly borders, which relates to a serious point discussed here.

20 July 2007 at 9:55 pm 2 comments

Call for Papers: Generation and Use of Academic Knowledge about Organizations

| Peter Klein |

Organization Studies, one of our favorite journals, is soliciting papers for a special issue edited by Paula Jarzabkowski, Susan Mohrman, and Andreas Georg Scherer, “Organization Studies as Applied Science: The Generation and Use of Academic Knowledge about Organizations.” Submission deadline is 30 November 2007. Here is the call for papers: (more…)

20 July 2007 at 7:39 am Leave a comment

More on Social Capital, Historically Considered

| Peter Klein |

For more on social capital in history see Rowena Olegario’s history of credit reporting firms, A Culture of Credit: Embedding Trust and Transparency in American Business (Harvard University Press, 2006). Here is an EH.Net review. Here is Dan Klein’s earlier work on credit bureaus.

20 July 2007 at 7:23 am Leave a comment

Fighting Illini

| Peter Klein |

Big things are happening at the University of Illinois. Former O&M guest blogger and longtime Illinois professor Joe Mahoney has been named Investors in Business Education Professor of Strategy in the College of Business. And O&M friend and regular commenter Randy Westgren has been appointed Head of the Department of Business Administration. Congratulations to Joe and Randy!

19 July 2007 at 11:08 am Leave a comment

Berle and Means Were Partly Right

| Peter Klein |

Check out Kenneth Lipartito and Yumiko Morii’s revisionist account of The Modern Corporation and Private Property (1932) — what they call the “ur-text of managerial capitalism” — and its influence on the academic and policy literatures. Well known interpretations of the Berle-Means thesis from Robert Gordon, James Burnham, John Kenneth Galbraith, and others were far different from the original. Berle and Means cared little about efficiency, argue Lipartito and Mori, but were more interested in problems of power and social responsibility. They were wrong about dispersed ownership — stockholdings were actually more concentrated in the US than in other Western economies — but right that particular agents could exercise disproportionate control over corporate assets through family control and pyramid structures. Berle and Means’s main concern, in other words, was entrenchment more generally, not simply entrenched managers taking advantage of passive shareholders.

The paper is provocative but doesn’t cite the best modern work on corporate structure prior to the 1930s such as Holderness, Kroszner, and Sheehan (1999), which worries me. Worth a look in any case.

19 July 2007 at 10:24 am 2 comments

How Austrian Can Mark Blaug Get?

| Nicolai Foss |

In Austrian circles, Mark Blaug isn’t a popular figure. Many Austrians remember his characterization in his 1980 book, The Methodology of Economics, of Mises’s methodological writings as “so cranky and idiosyncratic that they have to be read to be believed.” In Economic Theory in Retrospect Blaug has tough things to say of Böhm-Bawerk’s capital theory.

And yet, Professor Blaug seems to become very Austrian in his later writings. Here is a smashing from 2003 of the “formalist revolution” in economics that Pete Boettke would find little to disagree with. Here is a thoroughly Austrian defence of “dynamic competition” from 2001. He also has a series of conference papers on “ugly” or “disturbing” currents in modern economics which are all attacks on modern formalist economics, often with substantial Austrian content.

19 July 2007 at 12:26 am 1 comment

The Nature of the (Nonprofit) Firm

| Peter Klein |

Organizational economists are learning more about family firms and cooperatives but still know relatively little about nonprofits. What is their objective function? How are they organized, managed, and governed? Jill Horwitz and Austin Nichols’s NBER paper, “What Do Nonprofits Maximize? Nonprofit Hospital Service Provision and Market Ownership Mix,” looks at the behavior of nonprofit, government, and for-profit hospitals to address these questions. Key finding is that nonprofit and government-owned hospitals respond to competiton; the more local-market competition they face from for-profit hospitals, the more likely they will offer profitable services and the less likely they will offer unprofitable services. For-profit hospitals, however, tend to offer the same mix of services regardless of what competing for-profit hospitals are offering. Overall, Horwitz and Nichols find the Newhouse (1970) model, in which nonprofits maximize their own output, more plausible than the Hirth (1999) model in which nonprofits are “for-profits in disguise.” (HT: De Gustibus)

18 July 2007 at 2:53 pm 3 comments


| Peter Klein |

Like most academics I list unpublished papers and projects on my CV. I distinguish between “Completed Working Papers” that can be downloaded and circulated and earlier-stage “Research in Progress.” I try to maintain a narrow definition of the latter, including only papers that are at least partially written or analysis that is at least partially complete. Some colleagues list even earlier-stage projects better described as “wishes and dreams.”

Someone recently asked why I list research in progress. Are these papers the academic equivalent of vaporware — attempts to discourage others from working on these topics by signalling that I have the market cornered?

I don’t think so. Most academics list these papers and projects not to deter entry, but to signal to colleagues — potential collaborators, not potential competitors — what they are working on and interested in. Naming the coauthors can also have a certification effect (like the role played by VCs and banks for startup firms). It is also important to communicate, credibly, to current (and potential) employers that one has a good set of projects in the pipeline. In short, the motives are probably benign

18 July 2007 at 9:26 am 7 comments

Is Social Capital Path Dependent?

| Peter Klein |

Recent work by Robert Putnam, Douglass North, Ed Glaeser, and others has highlighted the role of social capital — membership in organizations, participation in civic activities, social trust — plays in economic development. Empirically, social capital has typically been measured with survey data, making historical comparisons difficult. It is important to know, however, how social capital changes over time. If social capital is largely path dependent, then there is little that can be done to improve the stock or productivity of social capital at a particular time.

A new paper by Marta Felis Rota, “Is Social Capital Persistent? Comparative Measurement in the Nineteenth and Twentieth Centuries,” exploits Adelman and Morris’s (1965) database of socio-economic indicators for 23 countries from 1850 to 1914 to construct social capital indicators for the late nineteenth century, which can be compared to similar indicators for the twentieth century. Evidence for path dependence is weak; all countries enjoy long-run increases in social capital but rates of change vary widely. Check it out.

17 July 2007 at 10:14 pm 1 comment

John Hagel’s Blog

| Nicolai Foss |

John Hagel III is one of the most thoughtful consultant-thinkers out there.  His work (with John Seely Brown) on productive friction and dynamic specialization is very inspiring, and I have benefited from it when recently starting up an empirical project on how major Danish firms are changing corporate strategies towards dynamic specialization.  Hagel runs a nice blog, EdgePerspectives that is worth taking a look at.  I particularly liked his discussion of Bill McKelvey’s work on the differences between Gaussian and Paretian worlds.

17 July 2007 at 3:57 am Leave a comment

Geoff Hodgson on Methodological Individualism

| Nicolai Foss |

Geoff Hodgson is no doubt a very thoughtful economist. I admire much of his work. But I have always been disturbed by a sustained theme in his writings: His relentless criticism of methodological individualism. To me, MI is “trivially correct,” to paraphrase Jon Elster, and I have viewed Hodgson’s critiques as bizarre and idiosyncratic, particularly because I have not thought that he provided any good reasons to reject MI.

However, the Journal of Economic Methodology has just published a very interesting piece by Hodgson, “Meanings of Methodological Individualism,” in which he offers some serious reasons why MI is problematic (and perhaps more than that). Hodgson argues that MI are surrounded by a number of ambiguities: 1) It is unclear whether it is intended to be something that is specific to “pure economics” or to the social sciences in general; 2) it is unclear whether MI is about social ontology or about social explanation, and 3) it is unclear whether it refers to “explanation in terms of individuals, or indivuals alone.

Now, 1) doesn’t really seem to me to be an ambiguity. While indeed Schumpeter, the inventor of the term, thought of MI as something that applied to pure economics alone, it is quite clear that modern proponents of MI think of it as applying generally to the social sciences. 2) is a red herring, for while MI is about explanation it is rooted in the ontological argument that only individuals act.  (more…)

16 July 2007 at 9:51 am 10 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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