Thoughts on Capabilities From the Interesting Sutton

30 August 2007 at 2:29 am 3 comments

| Nicolai Foss |

We have spent too much time on this blog discussing Bob Sutton. A much more interesting Sutton is John Sutton, the Sir John Hicks Professor of Economics as the London School of Economics.  Sutton is the author of numerous papers and books (e.g., the highly influential Sunk Costs and Market Structure). He has had some influence on strategic management thinking, mainly (obviously) among those who base strategic management on industrial economics.

In a recent paper, “Competing in Capabilities: An Informal Overview,” the influence goes the other way, as Sutton takes seriously the notion of capabilities, a central, if not unproblematic (cf. thisthis, and this) construct in strategic management research (but actually originating in economics in this paper). 

Sutton’s approach is to take relatively traditional ideas from standard production theory (akin to the approach in this paper) and add his ideas on sunk cost to make sense of differential capabilities in the context of competition, trade and development, globalization, and technology transfer (in contrast, he is not interested in explaining capabilities themselves). The paper does reach some interesting conclusions, e.g., relating to the dependence of market structure on capability investments, but doesn’t seem terribly innovative compared to what has been going in formal evolutionary economics and some parts of the international business literature (I may be wrong, of course; make your own judgment), but it is certainly interesting to note this case of spillover from strategic management to industrial organization. 

Entry filed under: - Foss -, Recommended Reading, Strategic Management.

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3 Comments Add your own

  • 1. Bob Sutton  |  4 September 2007 at 5:15 pm

    I am sorry I am boring. I find that the kind of off-hand nastiness in your comment illustrates why, on the whole, too many academics have the reputation as being nasty, arrogant, and put down artists. I guess you are just following occupational norms, but I wonder the value. I think John Sutton’s work is interesting and valuable — why can’t you just say that without talking a personal stab at me in the process? You don’t know me, we’ve never met, and I doubt you have read much of my work. I tire of the put downs and status games in academia, which often seem to be more about getting ahead than an authentic desire to learn anything or help anyone. It is really a shame.

  • 2. David Hoopes  |  4 September 2007 at 8:53 pm

    Dear Bob, we have not met. I think you are over-reacting a little bit. However, I am sympathetic to your point about put downs and status games in academia. Still, I am as guilty as anyone (see my comment: On the other hand, I think some of the thinly vieled resentment comes from the feeling that your work does not honestly and thoroghly credit economists (or others with an economics-based approach. I found your AMR paper (award winning!) to be quite depressing. I don’t know how much economics you’ve read. However, the AMR paper makes it seem as if what you know about economics is what others have told you. And it seems unlikely they have read much either. Soooo,, I am very sorry that our posts about you have been hurtful. However, I think you have made your own bed my making what most people reading this blog would consider to be overly general and mostly inaccurate statements about “economics.” That the powers that be at AMR consider it to be a noteworthy contribution is all the more depressing. For what it’s worth, I very much enjoy your empirical work and have had the pleasure of seeing you present it (at UCLA long ago). Best of luck.

  • 3. JC  |  4 September 2007 at 9:33 pm

    Of course, as an immigrant, I see the American Dream (alas perhaps) is that reasonable people can always sit down and talk it through to a mutually acceptable conclusion. In the spirit of Rodney King we ask ‘Can’t we all get along?’.

    The Europeans, especially, and maybe more of the World believes that answer may be ‘No!’.

    As a young PhD student I was stunned by the violence of the discussion among the geographers and urban planners of the 1920’s and 1930’s – those who were proposing urban planning versus those who though it the end of Civilization as they knew it.

    It’s intriguing that we see those above in this discussion at the same time as the release of Hulsmann’s biography of von Mises who, among other things, played a major role in the Methodenstreit. By any measure of academic politics and politesse, this was a brutal affair – and it resonates down to our own ‘campus wars’ today.

    To those at some remove there can be no question that the bloody warfare did a great deal to advance the various disciplines involved – suggesting that conflict and disagreement, though often painful to those immediately involved in the action – is part of the tooth and claw Darwinian process of progress – and academic progress too.

    Indeed, I think there may be an argument that the typical attempt to maintain ‘academic decorum’ is inhibiting and counter-productive. As I can attest from a recent presentation experience at the AoM where someone (I know who) told me I was ‘boring and should sit down’ (which I did), there is much good to be done creating more space for those with interesting things to say.

    For those interested in the philosophical arguments about whether we should expect to arrive at some common conclusions, scientific or not, I would warmly recommend something I read last week:

    Gray, J. (2003). Al Qaeda and What it Means to Be Modern. London: New Press.

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