Archive for December, 2008

More New Blogs of Interest

| Peter Klein |

26 December 2008 at 2:47 pm 2 comments

Christmas Links

images1| Peter Klein |

Rotman’s Roger Martin explains the challenges faced by Santa in the Knowledge Economy:

While he may have an indisputable track record of effectiveness, Santa is clearly an industrial-age leader. He is going to need to change his leadership style dramatically to prosper in the knowledge economy. His focus on the physical characteristics of his workers — e.g. Rudolph’s red nose — is “old world.” He just has to learn how to value and reward the brains and accumulated knowledge of his elves and reindeers for his enterprise to prosper in the new economy.

The problem with satire, however, is that some people don’t quite get the joke. Consider, for example, this book on leadership, the contents of which can be summarized thusly:

1. Build a wonderful workshop!

  • Make the MISSION the MAIN THING
  • Focus on your PEOPLE as well as your purpose
  • Let VALUES be your guide

2. Choose your reindeer wisely!

  • Hire TOUGH so you can manage EASY
  • PROMOTE the right ones….for the right reasons
  • Go for the DIVERSITY advantage

3. Make a list and check it twice!

  • PLAN your work
  • WORK your plan
  • Make the MOST of what you have

4. Listen to the Elves!

  • OPEN your ears to participation
  • PAY ATTENTION to how you’re perceived
  • Walk awhile in THEIR shoes (more…)

24 December 2008 at 10:08 am 2 comments

Pomo Alert: New Management Journal Special Issues

| Peter Klein |

We haven’t raised the pomo periscope for a while, but two recent management journal special issues call for its return. The June 2008 issue of the Scandinavian Journal of Management contains a symposium on “Recreating/Recontextualising Entrepreneurship,” which includes such articles as “Accidental Ventures — A Materialist Reading of Opportunity and Entrepreneurial Potential” and “Transduction and Entrepreneurship: A Biophilosophical Image of the Entrepreneur.” Then there’s the new issue of ephemera, with the theme “University, Failed” and articles like “Institutionalizing Critique: A Problem of Critical Management Studies,” “Epistemic Convenience,” “I Wanted to Be an Academic, Not a ‘Creative’: Notes on Universities and the New Capitalism, and “We Are All Workers: A Class Analysis of University Labour Strikes.” Hoo-boy.

23 December 2008 at 9:30 am 1 comment

Guilds and Innovation

| Peter Klein |

Most economic and management historians see the guild system as partly responsible for the stagnation of the medieval European economy. A new book, Guilds, Innovation and the European Economy, 1400-1800 (S. R. Epstein and Maarten Prak, eds., Cambridge, 2008) offers a revisionist view, challenging the stereotype of guilds as “moribund rent-seekers whose habitual reaction to technical innovation was resistance and rejection.” The reality is more complex, says reviewer Christine MacLeod:

What emerges from this exceptionally coherent volume is not only the complexity of this institution, whose history spans more than half a millennium and a myriad of particular trades and local circumstances, but also the persistent tensions to which it was subjected, both internally from individualistic and capitalist challenges to its collective ethos and externally from the exigencies of nation states. Moreover, it adds another spur to the demanding search for innovation in the workshop and on the construction site, rather than in the too easily accessed and counted records of the patent office.

22 December 2008 at 12:47 pm Leave a comment

The Failure of the Journalists, Part II

| Peter Klein |

Another aspect of journalists’ remarkably credulous and fatuous attitude towards policymakers is their view that rhetoric, not substance, is what matters. Hence the constant references to the Bush Administration’s “dedication to free-market principles,” its “aversion to regulation,” its “belief in letting markets work by themselves.” This is of course sheer balderdash and piffle, virtually the reverse of the truth. Bush and Paulson and Greenspan and their clique are “free marketeers” in the same way (to borrow from A. J. Jacobs) that Olive Garden is an Italian restaurant. They adopt the language, and some of the form, of market advocacy without any of the content. The Bush Administration was already, before the “financial crisis,” the most economically interventionist since LBJ; it now ranks with Hoover and FDR as the most aggressively anti-market in US history. Greenspan and Bernanke expanded the money supply like none before; Bush and Cheney borrowed and spent trillions to finance overseas adventures; the Federal Register added pages at a record-setting pace; now the banking and automobile industries have become GSEs. Lassiez-faire, indeed! (BTW can anyone name a specific act of “deregulation” that contributed to the financial crisis? Gramm-Leach-Bliley? No way. And GLB was under Clinton, as was the infamous WGFM. What specific regulations, e.g. on hedge funds or mortgage-backed securities or executive compensation, did the Bush Administration oppose?)

And yet, there was Juan Williams on yesterday’s Diane Rehm show explaining, matter-of-factly, how Bush and Paulson had allowed their “free-market ideology” and “resistance to regulation” to “commitment to the idea that the market works itself” to lead the nation into ruin. Williams may be a good news reporter, but he  has the political-economy understanding of a fifth-grader. Does it ever occur to these “watchdogs” to investigate what government officials actually do, rather than simply repeat what they say?

20 December 2008 at 9:21 am 8 comments

Indigenous Entrepreneurship in Rural China

| Peter Klein |

A very interesting article in the McKinsey Quarterly by MIT’s Yasheng Huang: “Private Ownership: The Real Source of China’s Economic Miracle.” The key to China’s recent economic is not state-led capitalism (call it “Bush-Bernanke-Paulson capitalism”) but private property and financial-market liberalization, leading to a burst of indigenous rural entrepreneurship. Writes Huang:

Big cities like Beijing, Shanghai, and Shenzhen are routinely extolled in the Western press as vibrant growth centers. China’s rural areas, if mentioned at all, typically figure as impoverished backwaters. But a close analysis of the economic data reveals that these breathless descriptions of China’s modern city skylines have it exactly backward: in fact, the economy was most dynamic in rural China, while heavy-handed government intervention has stifled entrepreneurialism and ownership in the urban centers.

Particularly interesting is Huang’s account of why so many Western economists fail to understand this. (more…)

19 December 2008 at 3:27 pm Leave a comment

Good to Great: Neither Good nor Great

| Peter Klein |

I’m not a fan of “guru” books like In Search of Excellence, Built to Last, and Good to Great, for reasons well documented by Phil Rosenzweig in his excellent Halo Effect. These books suffer from ad hoc generalization, sampling on the dependent variable, and a host of related methodological and expository flaws. If Rosenszweig’s critique is startling, then two articles from the November 2008 Academy of Management Perspectives on Jim Collins’s Good to Great — perhaps the leading guru book of our time — are devastating. Here is Bruce Resnick and Timothy Smunt:

With sales of more than 4.5 million copies, Good to Great by Jim Collins provides an inspiring message about how a few major companies became great. His simple but powerful framework for creating a strategy any organization can use to go from goodness to greatness is certainly compelling. However, was Collins truly able to identify 11 great companies? Or was the list of great companies he generated merely the result of applying an arbitrary screening filter to the list of Fortune 500 companies? To test the durability of his greatness filter, we conducted a financial analysis on each of the 11 companies over subsequent periods. We found that only one of the 11 companies continues to exhibit superior stock market performance according to Collins’ measure, and that none do so when measured according to a metric based on modern portfolio theory. We conclude that Collins did not find 11 great companies as defined by the set of parameters he claimed are associated with greatness, or, at least, that greatness is not sustainable. (more…)

19 December 2008 at 1:01 am 18 comments

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
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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).
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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).
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