BYU-Utah Winter Strategy Conference

1 March 2008 at 4:37 pm Nicolai Foss 7 comments

| Nicolai Foss |

The BYU-University of Utah Winter Strategy Conference 2008 ended a couple of hours ago here in Sundance. Before I embark upon my 23-hrs trip home, I offer some fresh impressions.

As usual I was struck by the difference in the overall quality level relative to comparable arrangements in Europe. I submit that it would not be possible to make a similar conference in Europe (with only Euro scholars participating). The research that was presented was top-notch, the presentation skills that were exercised were impressive (Brian Silverman should seek alternative employment as a stand-up comedian), and the organization was just perfect. Add to this the magnificent surroundings of Sundance and the result is essentially conference perfection. The only possible critique that might be raised is that there was a significant, and in IMHO excessive, diversity in terms of the subjects, research methods, etc.

In terms of the presentations some of the highlights were these:

Michael Tushman (HBS) did a nice and interesting piece of advertising for his notion of organizational “ambidexterity.”
Evan Rawley (Wharton) presented an excellent paper on ownership arrangements in the taxi industry, concentrating on deregulation (that allows taxi companies to offer limo services) has resulted in an increase of drivers’ ownership of taxis.
Lyda Bigelow (UUtah) presented some fascinating current work with Nick Argyres on how economic organization varies over the industry life cycle (extending their recent Management Science paper on the same subject by including considerations of competitive positioning).
Jay Barney, Jackson Nickerson and Joel Baum made three excellent presentations in a panel on “Research Methods Opportunities and Challenges in Strategy.” Jay pointed that the key idea of strategic management of successfully matching idiosyncratic capabilities to opportunities is at conflict with the dominant empirical approach of predicting means. Theorizing about individual firm-level effects while estimating an average can be highly misleading, a point he illustrated by discussing the diversification-discount literature. He argued that hierarchical Bayesian methods may help solve the conundrum. Jackson concentrated on the endogeneity problem, pointing out that only 10 years ago most empirical strategy researcher essentially didn’t know about endogeneity. However, strategy had clearly catched up since then, and in general empirical strategy scholars (meaning 98% of strategy scholars) were now approaching economists in econometric sophistication. Joel Baum linked up with Barney by arguing that because strategic management is taken up with extreme events, scholars should take much more of an interest in Extreme Statistics, looking at Paretian rather than Gaussian distributions).

Entry filed under: - Foss -, Strategic Management.

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7 Comments Add your own

1. Hakan Ener | 1 March 2008 at 10:16 pm

Great advice from the panel on research methods. However, there must be a good reason why methods such as hierarchical Bayesian analysis or Extreme Statistics are not used: it is simply easier to convince readers using a technique they are familiar with. Even “new methods” such as variance decomposition (used in explaining the drivers of firm performance) in the strategy literature since 20 years ago have not diffused because readers found it difficult to learn and be convinced through a new type of analysis. Until these methods are part of the standard PhD program, there will be a very limited niche for research that uses them.
2. Warren Miller | 2 March 2008 at 10:02 am

Thank you, Nicolai. Sounds like a great conference. I’m w/Joel Baum on “extreme events.” In a non-strategy context, an excellent book on the subject is “The Black Swan.” Highly recommended.
3. Bo | 2 March 2008 at 9:10 pm

I too applaud the increasing attention to multi-level methods in management research. Indeed, these methods are common in fields such as health and education etc., in which data are often collected in a nested or hierarchical fashion. Strategic management issues are no different, however, for simplicity people often try to model data as (conditionally) at a fairly high level of aggregation; for instance by pretending that all the subjects in a sampling are drawn homogeneously from a single population. In fact, heterogeneity is often the rule
rather than the exception, and frequently the available predictor variables do not explain this heterogeneity sufficiently. With recent computational advances in Markov chain Monte Carlo (MCMC) methods it’s becoming increasingly straightforward to at least describe such heterogeneity with mixture models that employ latent variables (unobserved predictors) in a hierarchical structure.

Some have argued that these methods are better suited to certain types of studies in certain disciplines (i.e. studying students within classes within schools), however, new softwares (such as Mplus) have the capability to test hierarchical models where the dependent variable is at a higher level, enabling us to investigate micro foundational (e.g. individual level) influences on macro level phenomena.

Now, the question is: are we as management scholars poorly educated methodologically or simply lazy people looking for the convenient easy solution? one could make the argument that both are true and perhaps correlated; Since social science rarely is a matter of life or death (although some people like Nicolai may disagree) or even has measureable (tangible) outcomes, such as increasing test scores on SATs, there seems to be a natual tendency to do “methodologically sloppy” work. At the end of the day, what drives our research (in many instances) is the ability to publish (i.e. convince our peers that our model is an adequate representation of reality) rather than the ability to influence/impact society (at least directly). Hence, why learn more advanced (costly) methods that may yield better (as in more accurate) results when rational economic behavior tells us to focus on doing just enough to get published regardless of accuracy?
4. the strategy in strategy « orgtheory.net | 3 March 2008 at 11:27 am

[…] that followed a presentation by Nicholai Foss (who posted his own thoughts on the conference here), an organizational economist from Copenhagen and blogger from our evil twin-site. Nicholai’s […]
5. Ty Mackey | 3 March 2008 at 5:08 pm

I’ll throw in my applause along with Bo for Bayesian hierarchical models, since Jay was discussing our diversification paper at the conference.

I wouldn’t say the field hasn’t adopted them because we’re methodologically sloppy or lazy, but instead because we take our methodological cues from economics. They don’t have the inherent interest in heterogeneity that strategy scholars do, and so their methodology doesn’t need to incorporate firm heterogeneity.

And while Bayesian methods aren’t as convenient as prepackaged programs like Stata or SAS, they really have become a lot easier to implement in recent years. Greg Allenby’s book, “Bayesian Statistics and Marketing” is a great place to start along with his bayesm package in R. Hansen, Perry, and Reese’s (2004) and Hahn and Doh’s (2006) recent papers (both in SMJ) have given the field of strategy a great introduction to the potential value of Bayesian hierarchical models for our field.
6. teppof | 3 March 2008 at 8:17 pm

Ty: Jay did give you lots of props as the bayesian brain in the project.
7. Andy | 5 March 2008 at 10:22 am

It is very difficult to study Markov chain topic. Not many good reference textbooks to study Markov chain.

I use Markov Chains and Stochastic Stability to study. This is good reference textbook.

Do you have any other good Markov Chains related textbooks recommend?

Regards,

Andy