Archive for 2007
Organizational Learning: Observations from the Shadow of the Fires
| David Hoopes |
A few Mondays [more than a few now] ago the T.V. got turned on pretty early and we found a host of officials discussing a couple of very large fast-moving fires. Someone in charge of emergencies spoke. The sheriff spoke, the fire chief, and more. Winds were blowing above 40 miles per hour and fires were spreading . . . like wildfire! My wife and I started gathering important papers (my ES-137) and other things in case we needed to make a run for it.
We did have to evacuate. However, our house was fine except for some minor wind damage.
What amazed many in the San Diego area was how well local media, emergency institutions, the private sector, and the public coordinated. The news media were very helpful (wow!), fire fighters, sheriff’s office, and other such crews were clear about how people could help them (get out of the way), and local grocery stores delivered lots of food and other supplies to shelters.
It seems there was quite a bit of learning from the many problems that occurred in a previous fire (2003).
Things That Make You Go Hmmm . . . .
| Steve Phelan |
I had an interesting encounter with two economists in my college last week. The first was during a presentation I was giving to the MBA Association on buying opportunities in Las Vegas following the subprime debacle. I assured the audience that buying opportunities existed but you needed to to be very knowledgeable about the area of town in which you intended to buy. The professor of economics who preceded me in the presentation immediately retorted, “if so many opportunities exist then why isn’t everybody buying?” (more…)
Metanomics
| Steve Phelan |
I have used a lot of simulation studies in past papers and I currently sit on the editorial board of the Journal of Computational and Mathematical Organization Theory (CMOT). However, I was surprised to stumble upon an emerging field in economics called “metanomics.” (more…)
Mizzou-KU in the WSJ
| Peter Klein |
We don’t normally discuss trivia such as college football here at O&M (we prefer other trivia). But when your team’s big game makes the front page of the WSJ, you have to say something.
A story in today’s paper, “New Powers in College Football Carry Old Baggage,” focuses on this weekend’s showdown between the undefeated 2nd-ranked Kansas Jayhawks and the 4th-ranked Missouri Tigers, two normally-mediocre teams that have exploded onto the national stage this season. The subject is not the game itself, but the historical hatred between Missourians and Kansans that goes back to the Civil War (or, as we call it around here, the War or Northern Aggression).
This hatred dates back to the 1850s, when the Great Plains state of Kansas became a beachhead for men around the country committed to ending slavery. Many, however, hid behind that noble cause, all the while killing, pillaging and raping their way across the culturally Southern state to the east, Missouri. These Kansas guerrillas called themselves Jayhawkers — supposedly a combination of two birds, the jay and the hawk. (more…)
Agency Theory and Intrinsic Motivation
| Nicolai Foss |
Agency theory represents one of the most influential and controversial bodies of microeconomics. To some, it is an extraordinarily powerful theory that can be applied in all sorts of ways and provides the theoretical foundation for the understanding of reward systems, many contractual provisions, the use of accounting methods, corporate governance, etc. To others (e.g., Bob, Jeff, and Alfie), it is the brainchild of overly cynical economists, responsible for most evil in the World, including bad managerial practices and Enron. (more…)
Want a Euro Career?
| Nicolai Foss |
The center for which I serve as director, the Center of Strategic Management and Globalization at the Copenhagen Business School, has two vacancies in strategic management and/or international business on the assistant professor level. Check the job ad and mail me (njf.smg@cbs.dk) if you want to hear more. CBS, the second largest BSchool in Europe, is very much a “rising school” with an increasingly strong research culture, good career opportunities, and improving FT rankings every year. And Copenhagen is a funky boom-city. Not bad, eh?
Poor INSEAD
| Peter Klein |
Business school Insead, founded in 1957 in Fontainebleau, France, opened a campus in Singapore in 2000 and markets itself as “Business School for the World.” “People assume the majority of faculty and students are French,” complains Insead Dean Frank Brown. “That’s not true.”
We’re not French — not that there’s anything wrong with that. This comes from an interesting item about firms with multiple corporate headquarters in yesterday’s WSJ. Lenovo has corporate offices in Beijing, Singapore and Raleigh, N.C. Thomson SA CEO Frank Dangeard says he doesn’t “want people to think we’re based anyplace.” Lenovo’s William Amelio claims the concept of a home country is “outdated.” (Pankaj Ghemawat, call your office!)
There’s a bit of work in multinational strategy about the distribution of subsidiaries across countries and the relationships between subsidiaries and the corporate office. I’m not aware of any studies on multiple corporate offices, however. Any suggestions?
Relevance and Practice
| Steve Phelan |
Peter, thank you for the warm introduction. In addition to 15 years in academia, I also had another life working in strategic planning in major corporations in Australia and undertaking the odd strategy consulting gig. I’ve also had the pleasure of teaching executive courses on four continents.
In all this time, the most common critique I encounter is the lack of relevance of academic courses to the “real world”. I am sure that many readers will agree that the 1980s and 1990s were an exciting time to be a strategy practitioner or researcher. The work of Porter and Barney (among many others) brought a level of rigor to the discipline that promised to revolutionize the practice of strategy.
(more…)
Ghemawat: Borders Matter
| Peter Klein |
The world is still round, says Pankaj Ghemawat in his new book Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter (HBS Press, 2007). Here’s an interview that lays out the main argument. FDI, for example, is growing, but remains only about 10% of total global investment. If the world is flat, asks Ghemawat, why isn’t it much more? The answer is institutions, though the exact mechanisms by which the institutional environment contributes to home-country bias are unclear. (Thanks to Marshall Jevons for the video pointer.)
See also Ghemawat’s blog posts on global strategy from the HBS Discussion Leaders site.
Introducing Guest Blogger Steven Phelan
| Peter Klein |
We’re very pleased to welcome Steve Phelan as our newest guest blogger. Steve is associate professor of management at the University of Nevada, Las Vegas, founding editor of the Strategic Management Review, and author of many interesting papers on entrepreneurship, cognition, networks, and the resource-based theory of the firm. Steve’s been a regular commentator for some time and we’re happy to have him join us on the “main page.” Welcome, Steve!
Jacques Barzun Turns 100
| Peter Klein |
Jacques Barzun, the eminent historian and cultural critic, turns 100 in a couple of weeks. Barzun has written more books than I’ve read so it’s hard to give an overall summary of his contributions. This New Yorker profile tells us that “[m]ore than any other historian of the past four generations, Barzun has stood for the seemingly contradictory ideas of scholarly rigor and unaffected enthusiasm.” Now that’s a nice tribute.
Many of my friends like Barzun’s 2000 book From Dawn to Decadence: 1500 to the Present: 500 Years of Western Cultural Life, a sweeping history that compares favorably to Martin van Creveld’s Rise and Decline of the State. Perhaps more relevant for the O&M crowd is Barzun’s 1974 Clio and the Witch Doctors: Psycho-History, Quanto-History, and History, a defense of traditional, qualitative, narrative history against the newer disciplines of cliometrics and what Barzun calls “psycho-history.” Cliometrics, which substitutes simplistic, mono-causal explanations for the complex interplay of people and institutions through time, is attempting “to rescue Clio from pitiable maidenhood by artificial insemination.” Agree or disagree, you have to respect the way the man writes.
More on Plagiarism
| Nicolai Foss |
We have treated plagiarism in two earlier posts. Here is Enders and Hoover on Plagiarism in Economics. Also try out the Plagiarism Risk Quiz.
More on Recommendation Letters
| Nicolai Foss |
An earlier blog post addressed the ever fascinating topic of recommendation letters. Last week I had the opportunity to discuss this with a prominent MIT Professor who provided some inside information. According to her, if the expression “solid worker” or “hard-working” or the like appears in a recommendation letter, this is likely to be a signal that the recommended person isn’t too bright. That sounds reasonable enough. But I was somewhat disturbed to learn that what I took to be uncontroversial boilerplate — namely, the standard ending “Don’t hesitate to contact if you need further information about NN” (or some such formulation) — is a signal that something is likely to be wrong with the applicant and that the recipient of the letter better drop the writer a phone call. I have ended all my recommendation letters with that formulation! Here is a question for the O&M readership: Is it a problem to have a Euro professor recommending you?
Individuals and Organizations at DRUID Redux
| Nicolai Foss |
There are few things more time-consuming than hustling for slush funds in the university system (as George Stigler once quipped, academic infights are particularly violent because the stakes are so low!) — which explains my very low blogging frequency over the last 4-5 weeks. However, I should have more time on my hands now, so here goes:
As I related earlier, this year’s D(anish) R(esearch) U(nit) (for) I(ndustrial) D(ynamics) conference highlighted methodological individualism in a panel debate between Peter Abell, Thorbjørn Knudsen, Sid Winter, and yours truly (here is the stream). Although the DRUID crowd didn’t wholeheartedly embrace methodological individualism, the broader theme of micro-foundations — explicitly promoted in a management context for some time now by Teppo Felin and I (eg., here, here, and here) — seems to have caught on.
Thus, Thorbjørn Knudsen organizes a one day event, a “DRUID Fundamental” back-to-back to next years DRUID conference on the subject of micro-foundations in strategy and organization. It takes place on June 17. Among the speakers are Rich Burton, Linda Argote, Ranjay Gulati, Sid Winter, and the present blogger. Check Thorbjørn’s call here.
Langlois on McCraw on Schumpeter
| Peter Klein |
Former O&M guest blogger Dick Langlois reviews Thomas McCraw’s Schumpeter biography, Prophet of Innovation, for EH.Net.
McCraw is at his best in conveying Schumpeter the man, providing an engaging and beautifully written portrait of this larger-than-life and often tragic figure. McCraw also works hard at weaving Schumpeter’s economics into the life story and at making the ideas supply their share of the drama. The result deepens our understanding of a fascinating and complex man and of the difficult times in which he lived, even if it does not necessarily sharpen our understanding of his economics or add much that is new to his biography.
See also our previous comments on McCraw and Schumpeter more generally.
AEI Conference on Private Equity
| Peter Klein |
Those of you in the Washington, DC area may wish to drop by “The History, Impact, and Future of Private Equity: Ownership, Governance, and Firm Performance,” November 27-28 at AEI. The lineup features heavyweights like Michael Jensen, Glenn Hubbard, Josh Lerner, Steve Kaplan, Ken Lehn, Karen Wruck, Annette Poulsen, Mike Wright, and David Ravenscraft, along with a few not-so-heavyweights like me. From the conference announcement:
From humble beginnings twenty-five years ago on Wall Street, the leveraged buyout boom has developed into a veritable industry; today, 30 percent of all corporate merger and acquisition activity in the United States is driven by buyout firms, and the sector commands over $2 trillion in leveraged assets. Along with hedge funds and real assets, private equity is now seen as an important alternative investment class, and fundamental changes in corporate control, governance, modern capital markets, institutional investing, and the funding of entrepreneurial pursuits have all been driven by the growth and evolution of the private equity sector.
My view is that the growth of the PE sector represents an increasingly important manifestation of entrepreneurship — not only because private equity helps fund new ventures, but because the creation of new financial instruments such as high-yield (“junk”) bonds, the establishment and management of diversified buyout funds, the use of private equity to restructure public enterprises, and the like are themselves entrepreneurial acts, given an appropriately broad understanding of entrepreneurship.
NYU Students Are Rational
| Peter Klein |
Twenty percent of NYU students would trade their right to vote in the next Presidential election for an iPod. Two-thirds would do it for free tuition. And half would give up their right to vote forever for $1 million. Where do we rational non-voters sign up? (Via Drudge.)
Econometrics Haiku
| Peter Klein |
From Keisuke Hirano (via Marginal Revolution). Samples:
Supply and demand:
without a good instrument,
not identified.T-stat looks too good.
Use robust standard errors —
significance gone.From negation comes
growth, progress; not unlike a
referee report.
A Plea for Economic Education
| Peter Klein |
As economists have long emphasized, individuals need not understand the full benefits of participation in the division of labor to benefit from it. But when the market is continually under attack from special interests and from ideologues both left and right, a little knowledge goes a long way. Jeff Tucker puts it nicely:
The old-style classical liberals [Adam Smith, Hayek] reveled in the fact that [the market’s] “impersonal forces” worked without anyone really being aware of them, or having to understand them. The checkout lady at the store just shows up, pushes buttons, gets paid, and stays or leaves based on her assessment of her own well-being. Everyone else does the same. The pursuit of self-interest generates this amazing global matrix that benefits everyone.
The old liberals reveled in the fact that no one had to understand it, but then the system itself came under attack, and needed defense. It had to be understood to be explained, and explained in order to be preserved.
This is why Ludwig von Mises set out to revise liberal doctrine. It is not enough that people participate unknowingly in the market economy. They must understand it, and see how, and precisely how, their smallest and selfish contribution leads to the general good, and, moreover, they must desire that general good.
All of which is to say that in an enlightened world, it would be a good thing for that cashier to understand economics from the point of view of those who pay her. It would be good for striking workers to understand how they are harming not only their bosses but also themselves. It would be good for voters to see how supporting government benefits for themselves harms society at large.
An economically literate public is the foundation for keeping that amazing and wild machine called the market working and functioning for the benefit of the whole of humanity.
Hoselitz Bleg
| Peter Klein |
Can anyone point me to biographical or bibliographical resources on Bert F. Hoselitz? He is known to Austrian economists as the translator (with James Dingwall) of Menger’s Principles of Economics, but he was also an accomplished Chicago development economist who founded the journal Economic Development and Cultural Change. He was trained in Vienna (according to this brief note) but did not apparently have much contact with the Austrian school. I’m particularly interested in Hoselitz’s contributions to entrepreneurship theory.
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