Archive for April, 2008

O&M Two-Year Anniversary

| Peter Klein |

O&M went live 25 April 2006, exactly two years ago. Introducing ourselves to the world, we wrote:

We started this blog for two reasons. First, while there are many excellent blogs on economics, law, and public policy, there are relatively few on organization, strategy, and management, our main areas of research. Organizations and Markets hopes to help fill this gap. Second, we think we have a unique and interesting perspective on many of these issues, and we thought it would be fun to share this perspective with the world.

We may or may not be interesting (or fresh), but we think we’re still unique. While the econo-blogosphere has become thickly populated, only a few blogs focus on managerial and organizational issues. (Our blogroll includes most of our personal favorites.)

In the last two years we’ve written 1,275 posts in 32 categories (the most popular being InstitutionsManagement Theory, Methodology/Theory of Science, Strategic Management, Entrepreneurship, and, of course, Ephemera). We’ve hosted 283,822 unique visitors from dozens of countries (including, during just the last week, Slovenia, Iraq, Cameroon, Malaysia, and Guam). Thanks to our readers (students in particular), regular commentators, and former guest bloggers for their continued enthusiasm and support.

We’re planning significant changes to the site in the coming weeks. Watch this space for details!

25 April 2008 at 8:54 am 2 comments

Best Anti-IRB Article You’ll Read Today

| Peter Klein |

It’s Zachary Schrag’s “How Talking Became Human Subjects Research: The Federal Regulation of the Social Sciences, 1965-1991,” forthcoming in the Journal of Policy History.

In universities across the United States, institutional review boards, or IRBs, claim that they have the moral and legal authority to control the work of researchers in the humanities and social sciences. While IRBs may claim powers independent of federal regulations, they invariably point to these regulations as a key source of their authority. This article draws on previously untapped manuscript materials in the National Archives to trace the history of the federal regulation of social science research. Officials raised sincere concerns about dangers to participants in social science research, especially the unwarranted invasion of privacy as a result of poorly planned survey and observational research. On the other hand, the application of the regulations to the social sciences was far less careful than was the development of guidelines for biomedical research. Regulators failed to define the problem they were trying to solve, then insisted on a protective measure borrowed from biomedical research without investigating alternatives.

See also Schrag’s valuable Instituitional Reveiw Blog.

IRB oversight is particularly strong at the University of Missouri, across all departments, partly the result of a federal investigation in 1999 that came down hard on the medical school. One might wonder what this has to do with social-science research, but there you go.

24 April 2008 at 12:30 pm Leave a comment

The Nature of the (Law) Firm

| Peter Klein |

Gordon Smith shared an interesting report on a recent Georgetown conference, “The Future of the Global Law Firm.” Apparently there is a healthy literature in legal scholarship examining the boundaries and internal organization of law firms. Writes Gordon:

The participants seem to have reached a few points of consensus. First, the legal profession has changed dramatically in the past two decades and it remains under significant stress, meaning that more change is on the way. Second, the rules that constrain change (e.g., prohibition of non-lawyer ownership, rules relating to conflicts, non-competition rules) should be changed sooner rather than later. Third, the traditional legal form (partnership) is largely irrelevant to the current practice of law, even if law firms want to create an organizational structure that encourages the collegiality of a traditional partnership. Fourth, the law firms that will succeed in the future are those that get the organizational structure right.

In a follow-up email, Gordon explains that the organizational features being challenged include the partnership model, the up-or-out  “Cravath system,” and the outsourcing of routine services (e.g., electronic discovery) to places like India. Gordon recommends Laura Empson’s Managing the Modern Law Firm for an overview of the issues. I said I thought there was some work by economists and management scholars on the economic organization of the law firm (and professional services firms more generally), but couldn’t come up with much, aside from a series of interesting papers by Luis Garicano and Thomas Hubbard (here, here, and here). Any suggestions from our readers? Is the persistence of the partnership form, for example, mainly the result of arcane professional-ethics rules or is there an underlying efficiency rationale? If consulting firms can have IPOs, why not law firms?

23 April 2008 at 11:47 pm 7 comments

Ken Lay Chair Filled

| Peter Klein |

The University of Missouri’s Kenneth L. Lay Chair of Economics, which we’ve written about before, has been filled, by an internal candidate, Joe Haslag. Joe is a monetary economist who, unlike many macroeconomists, does policy work (some with the controversial Show-Me Institute) and, unlike many economists, is a warm and friendly person. (Did I just write that?)

For those who think that economists, like other social-science and business academics, tend to be overly narrow and specialized, note what Joe says about his patron:

Haslag acknowledged being relatively uninformed about the Enron affair. “Actually, it’s not an episode that’s part of the economics I teach,” he said. “There isn’t anything about the story that entices me to spend a lot of time on it. I couldn’t talk about it with any amount of detail or any analysis.”

23 April 2008 at 1:27 pm Leave a comment

MDE Special Issue: Frontiers of Strategic Management Research

| Nicolai Foss |

Managerial and Decision Economics has become a favorite journal of mine. It has a strong econ orientation, to be sure, but the journal stresses econ that is relevant, readable, and right. In other words, there is lots of applied microeconomics, transaction cost economics, etc. Moreover, over the last few years MDE — presumably as a result of Margie Peteraf’s tenure as co-editor — has become very much of an econ-based strategic management journal, not like the Journal of Economics and Management Strategy, to be sure, but more economics-oriented than the Strategic Management Journal.

The most recent issue(s — issue 2 and 3 are bundled into one special issue) features a string of excellent papers under the heading “Frontiers of Strategic Management Research,” edited by Peteraf and Catherine Maritan. Several of the papers should be of interest to the O&M readership. For example, Kyle Mayer (with Janet Bercovitz) continues to work with his information technology service contracts dataset, this time looking at the influence of inertia on what contract clauses that are included in these kind of contracts. Maritan and Robert Florence engage in a nice modelling exercise, modelling strategic factor markets in a way that seems quite different from earlier attempts (e.g., by Rich Makadok). Michael Jacobides builds an interesting argument, linking foreign direct investment to the investing firm’s embeddedness in value chains in the home country and value chain conditions in the host country. And, of course, there is the usual handful of alliance articles. A great special issue. Highly recommended.

22 April 2008 at 4:06 am 1 comment


| Peter Klein |

From Marshall Jevons I just learned about the Authors@Google lecture series. Lots of good stuff there. The O&M crowd may especially enjoy the talks by Ian Ayres, Larry Lessig, Bob Litan, Richard Florida, John Searle, Daniel Solove, Steven Pinker, Robert Frank, Don Tapscott, Bill Easterly, and Tom Perkins.

Update: If you like this sort of thing check out TED as well (thanks to Art Carden for the pointer). The first person I saw when I visted the site yesterday was Yochai Benkler, whose book The Wealth of Networks I happen to be reviewing for The Independent Review.

21 April 2008 at 4:36 pm Leave a comment

Bacon Weave

| Peter Klein |

Michael Ruhlman, one of my favorite food writers, maintains that cooking is a craft, not an art. For example, writing in The Soul of A Chef about the Certified Master Chef exam, he writes:

Poetry is an art form. Cooking is a craft. (Oh, I know how the foodie blowhards — and even a lot of chefs — love to talk about food as art! But I’m sorry, noodles spun into towers and designs on plates with different-colored sauces do not equal art, so don’t talk to me about food as art or chefs as artistes.) As with any craft, there were artful levels and shared standards of excellence. The test’s very existence implied that great cooking, cooking at so-called master chef level, was not art, was only craft, the result of physical skills that were consistently measurable and comparable from one chef to the next. The Certified Master Chef exam aimed to set an objective standard of great cooking that existed regardless of this or that person’s own taste and preferences, something you could not do with an art such as poetry.

I used to agree with Ruhlman, until I saw the bacon weave. Now that’s art! (Thanks to Gary.)

On a more serious note, there are of course different schools of thought on the possibility of objective standards in art (not just visual arts but also music, literature, drama, and film). I don’t think Ruhlman’s distinction between art and craft implies some kind of postmodernism. Certainly one neen’t embrace pomo to understand that essay exams are a lot harder to grade than multiple-choice tests! (But see this.)

20 April 2008 at 5:37 pm 1 comment

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Our Recent Books

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).