Archive for 2007
Author Order
| Peter Klein |
Nicolai’s post on paper order got me thinking about author order, and how authorship ordering practices vary systematically across academic disciplines. In some scientific fields the lead author (or principal investigator) is listed first, while in others the lead author’s name comes last. In economics and business administration there isn’t a strong notion of “lead authorship,” and author names are usually listed alphabetically. There are, of course, prominent exceptions, such as Klein, Crawford, and Alchian (1978), Masten and Crocker (1985), and Hoskisson and Hitt (1994), to name just a few in organizational economics and strategy.
I’m curious to know how these practices evolved, and why they evolved differently in different disciplines. Surely some sociologists have written on this. (Academics tend to be narcissists, after all, and have shined the research spotlight on virtually every other aspect of their own profession!)
The social-science convention of usually-but-not-always-alphabetical ordering poses particular problems. How, for instance, do you communicate priority if the main author is first in the alphabet? Suppose my friends Mike Aarstol and Todd Zywicki get together. They can signal equal effort with “Aarstol and Zywicki” or give Todd the lead with “Zywicki and Aarstol.” But how do they give priority to Mike? “By Michael Aarstol, with special assistance from Todd Zywicki”?
Open-Source Cola
| Peter Klein |
This is what the Linux-heads are drinking these days instead of Coke or Pepsi. No joke. People can download the “source code,” modify it to their liking, and produce their own stuff, under the terms of the GNU General Public License. (Will somebody put the cocaine back in?)
I’ll bet this is Don Tapscott and Anthony Williams’s drink of choice!
CBS Workshop on Knowledge Sharing
| Nicolai Foss |
The Center for Strategic Management and Globalization hosts a workshop on “The Barriers to Intra- and Inter-firm Knowledge Transfer” at the Copenhagen Business School June 15. Keynote Speeches will be given by Linda Argote and Gabriel Szulanski. Paper proposals must be submitted prior to April 10 to the arranger, Dr. Koen Heimeriks at kh.smg@cbs.dk Here is the Call for Papers.
Demanding the Right to Be Offensive
| Nicolai Foss |
Here is an online campaign to defend unrestricted freedom of inquiry in universities, recently started by Academics for Academic Freedom. Its Statement of Academic Freedom reads:
‘We, the undersigned, believe the following two principles to be the foundation of academic freedom:
(1) that academics, both inside and outside the classroom, have unrestricted liberty to question and test received wisdom and to put forward controversial and unpopular opinions, whether or not these are deemed offensive, and
(2) that academic institutions have no right to curb the exercise of this freedom by members of their staff, or to use it as grounds for disciplinary action or dismissal.’
Leo Strauss, the Randian
| Nicolai Foss |
Yes, that’s right . . . well, almost: If you put together the key political ideas of neo-con idol Strauss, “we will arrive at Objectivist Libertarianism.” So says philospher Tibor Machan in the most recent issue of Philosophy Now (an excellent, bi-monthly journal written for, as they used to say, the “intelligent layman”). (more…)
Selling My Wife
| Peter Klein |
Alchian and Demsetz tell me I can fire my grocer. But can I sell my wife?
Here’s the context: Nicolai and I were discussing (via IM — we’re high-tech) my plans to attend an overseas conference. When he asked if I had checked with my wife before committing, I admitted that I hadn’t.
This led (naturally) to a discussion of original and derived judgment. I argued that while my wife has veto power over my travel plans (not to mention most other things), I am really in charge because I have given her this authority. In Foss-Foss-Klein terminology, her decision rights are delegated, or “derived,” while mine are primary, or “original.” (If you just fell off your chair, get back up and play along, just for the sake of argument.)
Nicolai reminded me that some of our colleagues think the original/derived distinction is a distinction without a difference. A de facto right is a right, whether we label it “original” or “derived.” I responded that there is a difference, namely that asset owners possess decision rights that non-owners do not. For example, the owner can sell the asset, while the hired worker, even if possessing a wide range of use rights, cannot. Moreover, the owner can choose — indeed must choose — which decision rights to delegate to subordinates. In general, no matter how “passive” the owner chooses to be, regarding day-to-day activities, the owner possess a kind of “ultimate” authority that cannot be delegated. (In the words of the great Canadian philosopher Geddy Lee, “If you choose not to decide, you still have made a choice.”) As evidence, note that the owner can take away all the subordinate’s decision rights by terminating the employment relationship — “selling” the subordinate, as it were.
We concluded that the original/derived judgment distinction can be applied to the family, but only if I have the right to sell my wife.
“Lead Papers”?
| Nicolai Foss |
Increasingly often you see the following in the publications section of academic CVs: “paper title, journal, volume, pages (lead paper).” I take it that the “lead paper” is the first paper in an issue. Obviously, the impression that the writer of the CV wants to convey is that somehow this paper is the best in that specific issue (or at least written by the biggest guy). Do any of our readers know whether this is something journal editors (consciously) do? Is having your paper printed as the first paper in an issue a reliable signal of quality? Or is the structuring of papers in an issue a more random thing?
The A..hole Factor in Economics
| Nicolai Foss |
I may be entirely mistaken, but my personal and admittedly casual observations after working in academia since 1989 seem to point toward something like the following approximate generalizations: “Orthodox” (or “mainstream”) economists and finance scholars are — I stress: as a crude approximation — reserved, not very wordy, introverted, but still direct (bordering on brutal, particularly in seminars). They are spiteful of “softies.” On the other hand, “heterodox” (“non-mainstream”) economists (including many management scholars) are generally more extroverted, easier to get along with, and less direct/brutal. However, they are as spiteful of mainstream economics as mainstream economists are of the soft stuff (Marxist economists are, however, a lot like mainstream economists). Again, this is just a tendency; there are many, many counter-examples. Am I right? Or just biased (e.g., by hanging out with too many heterodox types)? (more…)
Reputations Die Hard
| Peter Klein |
This debunking of Pythagoras (via Lew Rockwell) reminded me of our recent attempt at Galileo revisionism. Apparently Pythagoras was a cult leader and political activist but not a serious mathematician or philosopher. He didn’t even discover the Pythagorean Theorem!
As debunker M. F. Burnyeat observes, “beloved historical traditions die hard.”
Other debunkings that might interest our readers: Murray Rothbard on Adam Smith, Richard Rumelt on the “Honda Effect,” Ronald Coase on Fisher Body, and Phil Rosenzweig on Peters and Waterman.
A Classroom Experiment in Organizational Economics
| Peter Klein |
I don’t do classroom experiments, but some of my colleagues find them effective. Here’s an experiment that might appeal to the O&M readership:
We present a simple classroom principal-agent experiment that can effectively be used as a teaching device to introduce important concepts of organizational economics and contracting. In a first part, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. In the second part, students take the role of agents and decide on an effort level. The experiment can be used to introduce students to the concepts of efficiency, incentive compatibility, outside options and participation constraints, the Coase theorem, and fairness and reciprocity in contracting.
See Simon Gaechter and Manfred Königstein’s paper “Design a Contract! A Simple Principal-Agent Problem as a Classroom Experiment,” available on SSRN.
Microfinance and Growth
| Peter Klein |
As excitement over the Yunnus Nobel fades, microfinance skeptics continue to emerge. The latest is Thomas Dichter, who writes in a new Cato paper:
Most people, poor or otherwise, are not entrepreneurs, so there is little reason to think that mass credit would in general lead to viable business start-ups. Today as in the past, business start-ups in the advanced countries depend predominantly on savings and informal sources of credit; past forms of microcredit never played a role in small business development, and much microcredit is actually used for consumption rather than investment. In the history of today’s rich countries, moreover, economic growth occurred first, then came credit for the masses. That credit was and is predominantly for consumption rather than investment.
The paper is “A Second Look at Microfinance: The Sequence of Growth and Credit in Economic History. And here is a rare specimin, an empirical paper on microcredit that uses actual microdata.
Milton Friedman: Patron Saint of Blogging?
| Peter Klein |
Left to the free market of ideas and instant reader feedback, good writing, quality and reliability in blogging secures a readership and reputation solely on merit. The analogy to “democracy” may be clichéd but the blogosphere is a prime example of Milton Friedman’s credo (“Capitalism and Freedom”) that minimal (or no) regulation and state licensing are best; they are too often a pretext to shut down competition not protect the populace. — Jens F. Laurson and George A. Pieler
I appreciate the sentiment, but am not sure why Friedman deserves the honor. I suspect most bloggers would take Hayek instead (1, 2). (This cynic offers a slightly different take.)
Spooky CEO Research
| Nicolai Foss |
Research on corporate governance and the importance to value creation of CEOs is becoming increasingly morbid. Check out the abstract of a recent paper by CBS colleague Morten Bennedsen (as the paper doesn’t seem to be online, you will have to write Morten for a copy; mb.eco@cbs.dk):
Estimating the value of top managerial talent is a central topic of research that has attracted widespread attention from academics and practitioners. Yet, studying the impact of managers on firm performance is difficult because of endogeneity and omitted variables concerns. In this paper, we test for the impact of managers on firm performance in two ways. First, we examine whether top executive deaths have an impact on firm performance, focusing on the manager and firm characteristics that are associated to large manager-death effects. Second, we test for the interaction between the personal and professional activities of managers by examining the effect of deaths of immediate family members (spouses, parents, children, etc) on firm performance. Our main findings are three. First, CEO deaths are strongly correlated with declines in firms operating profitability, asset growth and sales growth. Second, the death of board members does not seem to affect firm prospects, indicating that not all senior managers are equally important for firms’ outcomes. Third, CEOs’ immediate family deaths are significantly negatively correlated to firm performance. This last result suggests a strong link between the personal and business roles that top management plays, a connection that is present even in large firms. Overall, our findings demonstrate CEOs are extremely important for firms’ prospects.
Call for Papers: Technological Change in Low- and Medium-Technology Industries
| Peter Klein |
Paul Robertson, author of many fine works with former O&M guest blogger Dick Langlois, is co-organizing a special issue of Research Policy on “Technological Change in Low- and Medium-Technology Industries.” Details below the fold (courtesy of EH.Net). (more…)
Risk, Uncertainty, and Baseball
| Peter Klein |
Frank Knight meets Abner Doubleday in this this item from the Hardball Times.
When we try to predict the outcome of a baseball season, whether as fans or pretend-general managers, there’s a whole lot of stuff we just don’t know. In fact, if you want certainty, we don’t know anything: any player in major league baseball could blow out his arm, crash into a teammate, or just plain lose the skills necessary to hit a slider.
Of course, most of those things won’t happen. When guessing the outcome of a team’s season, it’s a safe bet that somebody will get hurt, some players will underperform expectations, and others will overperform. One mark of a good general manager is identifying the situations in which those are most likely to happen, and then providing the best insurance he can.
Invoking the Knightian distinction between risk and uncertainty, baseball analyst Jeff Sackmann continues:
In a game of Strat-O-Matic, baseball is risky — you could calculate the likelihood of every event before you roll the dice. In real life, baseball is uncertain — no number of dice (or spreadsheet) is going to tell you Chris Snelling’s 2007 OPS. However, when it comes to the game on the field, there’s a continuum between risk and uncertainty, and that’s what I’m interested in. [Links added by PK for the benefit of our non-baseballophilic readers.]
Returning to Steve Postrel’s thoughts on the value added of management, one can perhaps conceive the problem in Knightian terms. In a world of probabilistic risk, “management” is, in principle, a simple problem of contract design. Nor would there be a reason for entrepreneurs to own assets. In a world of Knightian uncertainty, however, there is a role for managerial skill and for entrepreneurial judgment. Indeed, as Sackman notes, baseball “statheads don’t always agree with general managers” on personnel matters.
NB: If you think this is a rather silly example, you haven’t been keeping up with the literature. The academic analysis of sports is a rapidly growing field. Check out the Journal of Sports Economics, for example. Here is a short sportometric piece by yours truly.
Toyota at the Crossroads
| Steven Postrel |
The recent NYT article (not the Sunday Magazine story but an earlier business sectiion piece by Martin Fackler) describing Toyota’s struggle to transmit its methods and culture to large numbers of foreign workers, in the face of unprecedented recalls and quality problems, provokes a number of thoughts about the company’s past successes and its current problems. (more…)
Chip and Dan Heath on NPR
| Peter Klein |
The Made to Stick guys were interviewed on today’s NPR’s Morning Edition.
In other book news, check out this USA Today review of Phil Rosenzweig’s excellent The Halo Effect, which we blogged about earlier.
Why the Strong May Be Late
| Nicolai Foss |
One of the favorite cases of technology strategy classes is the innovation of the CAT scanner. The first such commercially viable scanner was introduced in 1972 by EMI, by no means a major player in the diagnostic-imaging market. The EMI scanner was leapfrogged by General Electric in 1977. GE dominates the market today along with Siemens. EMI exited already in 1979.
Why was EMI the first to commercialize CAT scanners and not the more established players with the relevant core competencies? Typical explanations of this kind of pattern where strong players avoid pioneering a market involve “stupidity” (because of various biases the strong do not see it coming) or “lock-in” (for various reasons, the strong cannot respond effectively). (more…)
What Did the Legal Realists Believe, Really?
| Peter Klein |
I posted a while back on Karl Llewellyn and legal realism, its recent revival, and what this all means for the O&M crowd. Brian Tamanaha says that the legal realists were not, contrary to popular belief, “proto- or early-day Crits (members of Critical Legal Studies) who exposed the rampant indeterminacy of law and insisted that judging is inevitably infused with and shaped by the subjective views of judges.” Rather, Tamanaha maintains, the Realists favored a common-sense, empirically grounded approach over the overly formal and deductive method preferred by their contemporaries.
Llewellyn’s point was that the Realists were indeed critical of mechanistic accounts of judicial decision-making — as deductive and exclusively rule-focused — but they did not commit the opposite error of suggesting that judging is purely subjective and not legally constrained. Rather, the Realists brought attention to other stabilizing aspects of the craft of law and judicial decision-making besides just the legal rules. While they denied that law was certain to the extent that formalism portrayed, they agreed that there was a great deal of certainty and predictability in law (though not attributable to the legal rules alone). They also argued that in some cases policy decisions were called for and should be done openly by judges, although they recognized that many cases were routine and determined by the legal rules.
Thanks to Orin Kerr for the pointer.
European Entrepreneurship
| Peter Klein |
Europe’s economic problem, writes Nobel Laureate Ned Phelps in last week’s Wall Street Journal, is its lack of dynamism — “how fertile the country is in coming up with innovative ideas having prospects of profitability, how adept it is at identifying and nourishing the ideas with the best prospects, and how prepared it is in evaluating and trying out the new products and methods that are launched onto the market.”
Europe, Phelps argues, lacks the economic culture and economic institutions to encourage dynamism. Europe’s economic institutions “typically exhibit a Balkanized/segmented financial sector favoring insiders, myriad impediments and penalties placed before outsider entrepreneurs, a consumer sector not venturesome about new products or short of the needed education, union voting (not just advice) in management decisions, and state interventionism.”
Man, how simplistic and comical can you get?
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