Archive for January, 2008

Erin Anderson (1955-2007)

| Peter Klein |

Erin Anderson, John H. Loudon Chaired Professor of International Management at INSEAD and one of the pioneers of empirical research in transaction cost economics, died of an inoperable brain tumor this past November. Her papers “Integration of the Sales Force: An Empirical Examination” (Rand Journal of Economics, 1984, with David Schmittlein), “The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis” (Marketing Science, 1985), and “The Multinational Corporation’s Degree of Control Over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation” (JLEO, 1988, with Hubert Gatignon) were extremely influential in the transaction-cost literature. They also showed, importantly, how TCE can be applied not only to backwards integration into component procurement, but also to forwards integration into marketing and distribution. She became one of the leading specialists in management and marketing on vertical integration and entry into foreign markets. Her chapter (with Gatignon) in the Handbook of New Institutional Economics, “Firms and the Creation of New Markets” (draft version here) provides an excellent overview of this work.

Erin was a warm, friendly, and helpful colleague and mentor as well as a fine scholar. Read the tributes at this INSEAD memorial page. I saw her last in April 2006 when she presented her paper “How Internal Transaction Costs Drive Compensation of Managers and Salespeople in Business-to-Business Field Sales” here at CORI. I never imagined it would be our last visit.

29 January 2008 at 10:47 pm 2 comments

Best Book Catalog Cover I Saw Today

| Peter Klein |

law_image11.jpgElgar’s 2008 Law catalog has a terrific image on the cover. What better way to capture the essence of lawyering, at least transactional lawyering?

Here’s a fun game: If you were to design covers for the Economics, Management, Sociology, or Political Science catalogs, what would they look like?

29 January 2008 at 12:51 pm 6 comments

This Week’s Sign of the Apocalypse: Naming-Rights Edition

| Peter Klein |

You want your name associated with a university but can’t afford to fund a building, classroom, or endowed professorship. Not to worry, there are other options:

It’s an offer the University of Colorado couldn’t flush away: A Boulder venture capitalist paid $25,000 for the naming rights to a bathroom in the Boulder campus’ ATLAS building.

And so it is that the second-floor men’s bathroom in the high-tech hub now has Brad Feld’s name on it and a plaque with some words of wisdom from the donor: “The best ideas often come at inconvenient times. Don’t ever close your mind to them.” . . .

“I just wanted a plaque outside of the men’s room to inspire people as they walk in to do their business,” Feld said.

Perhaps this should be our next continuing series.

26 January 2008 at 4:35 pm 2 comments

DeLong on Introspection

| Peter Klein |

Brad DeLong sounds almost Misesian in this call for economics PhD students to study economic history:

[Mainstream] Economics is the hyper-positivist of social science disciplines: believing that everything of interest can be reduced to law-like theoretical and empirical propositions modeled after classical mechanics; that what cannot be reliably, repeatedly, quantitatively, and empirically demonstrated does not really exist as knowledge; that the only good social science is a deductive, analytical, model-based, general, experimental science.

But this misses a lot. Because we are people like those whom we study, we have psychological access to our subjects’ internal decision-making processes and motivations at a level that we cannot obtain from market price-quantity data. There is lots of interest that happens once and only once. Natural experiments are rare, and so if we restrict ourselves to positivist tools alone much is underidentified. The individuals’ preferences — the “tastes” part of “tastes and technologies” are not primitive but are themselves the result of long and complex historical, sociological, psychological, and — yes — economic processes. You need thickly-described case studies and anecdotes looking out from people’s insides before you can tell if your statistical results mean what you assert they mean.

Mises argues in Theory and History (1957) that the basic economic categories of means and ends, of preference, contraint, and choice, cannot be understood in purely positivist terms: “Being himself a valuing and acting ego, every man knows the meaning of valuing and acting. He is aware that he is not neutral with regard to the various states of his environment, that he prefers certain states to others, and that he consciously tries, provided the conditions for such interference on his part are given, to substitute a state that he likes better for one he likes less.” In other words, we understand economic activity in a causal, realistic sense, a sense denied to us in our study of the natural world. Moreover, like Brad, Mises argued that the historian must use not only the tools of deductive theory, but a deep understanding or Verstehen, to grasp the meaning of particular historical events. (more…)

25 January 2008 at 4:29 pm 11 comments

Law of Unintended Consequences

| Steve Phelan |

Nice post by Alex Tabarrok on the law of unintended consequences. He concludes by saying:

Does the law of unintended consequences mean that the government should never try to regulate complex systems? No, of course not, but it does mean that regulators should be humble (no trying to remake man and society) and the hurdle for regulation should be high.

24 January 2008 at 11:38 am Leave a comment

Shane Interview in Business Week

| Peter Klein |

Scott Shane is interviewed in today’s Business Week on his new book, The Illusions of Entrepreneurship. The book is a treasure-trove of empirical data on startups, much of which is familiar to specialists but completely unknown in the business press and in popular culture (e.g., that industry explains most of the variation in failure rates). See also this guest post by Scott on Guy Kawasaki’s blog for more on the basic thesis.

Of course, when Scott writes here about the value of entrepreneurship to society defines entrepreneurship narrowly as busines startups, not some broader notion of creativity, innovation, alertness, or (to ride one of this blog’s favorite hobby-horses) judgment.

24 January 2008 at 10:18 am 4 comments

Data Sharing, When It Might Really Matter

| Peter Klein |

Social scientists aren’t the only ones reluctant to share raw data. Medical researchers are equally touchy about it, even when granting other people access to the data could lead to real breakthroughs. Biostatistician Andrew Vickers writes in yesterday’s Times about his experiences trying to replicate or extend cancer studies:

Not long ago, I asked a respected cancer researcher if he could send me raw data from a trial he had recently published. He refused. Sharing data would make the study team members “uncomfortable,” he said, as I might use this to “cast doubt” on their results. . . .

[W]e wrote to [another research team] and asked whether they would share their data. They refused on the grounds that they might consider a similar analysis at some point in the future. But years have passed, no such analyses have been forthcoming and few patients are benefiting from what could be a very effective drug. . . .

When a colleague and I wanted to analyze the data from a completed breast cancer trial, merely getting permission to speak to the study’s organizing committee required a one-hour phone call with the scientist in charge of the agenda. Only after another one-hour call with the committee itself were we allowed to submit a formal proposal — to which we received no response. . . .

Researchers give all kinds of reasons for refusing to share — concerns about patient confidentiality, appropriate research methods, and so on — but, Vickers concludes, “the real issue here has more to do with status and career than with any loftier considerations. Scientists don’t want to be scooped by their own data, or have someone else challenge their conclusions with a new analysis.”

Thanks to Research on Innovation blog for the lead.

23 January 2008 at 5:41 pm 1 comment

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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).