Archive for June, 2010

Accounting Conference on Creativity

| Peter Klein |

Hold your accountant jokes, everybody, because the journal Accounting, Organizations, and Society, along with IESE Business School and Sda Bocconi School of Management, is sponsoring a workshop on creativity and it looks really interesting. The workshop, “Debating the Link Between Creativity and Control,” takes place 4–5 April 2011 in Barcelona. Here’s the blurb:

Creativity is more important today than ever before. In fact, in current hypercompetitive environments, where the comparative advantage is easily eroded by technological evolution and by imitative or innovative action of competitors, firms can only react by means of creative processes aimed at renewing market strategies and product lines. Different streams of research on creativity have been developed over time, evolving from different sources, focusing on somewhat different aspects and suggesting a rich set of managerial results.

The aim of the workshop is to start an interdisciplinary debate on creativity, calling together contributors from psychology, sociology, management, and accounting domains. The discussion will explore the link between creativity and control, seen as a promising stream of research not only because of its infancy but most important because of its relevance to the world of management. The event will contribute to unveiling how the dialog between different disciplinary perspectives may lead to a deeper understanding on how to control creativity processes, thanks to the potential synergies deriving from the study of this phenomenon from different theoretical angles.

Further details and submission info below the fold. (more…)

30 June 2010 at 3:29 pm 10 comments

Amsterdam Workshop on Entrepreneurial Capabilities

| Peter Klein |

The Amsterdam Center for Entrepreneurship (ACE) is sponsoring a two-day workshop starting tomorrow, 28 June, on “The Development of Entrepreneurial Capabilities.” Participants include Benson Honig, Gary Dushnitsky, Zoltan Acs, David Audretsch, Thomas Astebro, ACE Director Mirjam van Praag, and former O&M guest blogger Chihmao Hsieh. For more information see the conference program. Good stuff!

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27 June 2010 at 3:14 pm 1 comment

Pomo Periscope XX: Thomas Basbøll vs. Karl Weick

| Nicolai Foss |

Karl Weick may not really qualify as a bona fide pomo. He writes well and clearly and much of his work is quite in the mainstream of management research. Still, he has written about the favorite pomo notion of reflexivity (e.g., here), his authority is often invoked in prominent pomo tracts in management (e.g., here), and his notion of sensemaking has a distinct pomo connotation.

Weick’s work has recently been subject to close examination by my CBS colleague, Thomas Basbøll. In a recently published paper, “Softly Constrained Imagination: Plagiarism and Misprision in the Theory of Organizational Sensemaking,” Basbøll argues that Weick’s work suffers from “significant instances of plagiarism and misreading” (p. 164). Wow! Here is the abstract:

While Karl Weick’s writings have been very influential in contemporary work on organizations, his scholarship is rarely subjected to critical scrutiny. Indeed, despite its open ‘breaching’ of the conventions of much academic writing, Weick’s work has been widely celebrated as ‘first-rate scholarship.’ As it turns out, however, his ‘softly constrained’ textual practices are rendered doubtful by both misreading and plagiarism, which makes his work resemble ‘poetry’ in a much stronger sense than perhaps originally intended. This paper draws inspiration from literary theory to analyze three cases of questionable scholarship in Weick’s 1995 book Sensemaking in organizations, framing them in the context of standard formulations of the methodology of sensemaking drawn from the literature. It concludes that we need to rethink our tolerance of the sensemaking style and re-affirm a commitment to more traditional academic constraints.

Here is Weick’s reply. And here is Thomas’s reply to the reply.

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24 June 2010 at 9:42 am 15 comments

Property Rights and Modularity

| Dick Langlois |

The Schumpeter Society conference in Aalborg has just ended, and I’m on the train to Copenhagen before heading home tomorrow. Like Peter, I was also at the ISNIE conference in Stirling. Of the three conferences I attended on this trip, ISNIE gets the award for best substance, something I judge by whether I learned something interesting that I hadn’t known. Great plenaries with Ostrom and Williamson, as well as Bruno Frey on the economics of happiness and Pablo Spiller on regulation. I hadn’t been familiar with Spiller’s concept of third-party opportunism in government contracting. Some of the parallel sessions were also good, including sessions involving always-reliable people like Lee Alston and Gary Libecap. But perhaps the most interesting papers I heard were by Henry Smith of Harvard Law School, whom I had never met before.

Smith has a modularity theory of property rights, one very much in line with my own thinking on the issue. As Smith writes in one of his papers given at the conference,

property sets up modular structures that manage the complexity of the interactions of actors with respect to resources. A starting point for property is to use an exclusion strategy to define the “thing” and then to delineate rights wholesale as a first cut through the interface between the bubble defined by the exclusion strategy and the rest of the world. Thus, . . . the interface between the basic package of rights to a car and the rest of the world is a simple one behind which much information is hidden. In this way, the structure of rights is modular. As a method of managing complexity modularity relies on a system’s being nearly decomposable, that is, one in which there are clusters of elements that interact relatively intensely with each other but which interact more sparsely with elements of other clusters.

This is a version of what lawyers call the in rem view. What I learned that I hadn’t known is that this is the polar opposite of Coase’s theory of property rights. It turns out that Coase is an extreme legal realist. That is, like legal realists, Coase thinks of property as a bundle of rights to do specific things — emit sparks, make noise, etc. The trouble with this view is that it is non-modular (more technically: non-decomposable) and creates a spaghetti-tangle of interactions among rights holders that raises transaction costs. The in rem view is perfectly consistent with Coasean bargaining, of course, since it is just a starting point from which people can slice off specific pieces if they choose. (Side note: I had been wanting to post something about a paper by Tom Hazlett and Vernon Smith that credits Coase with $17 billion in welfare losses foregone because of his influence on how spectrum now gets allocated.)

At the same session, Gillian Hadfield of USC had a paper arguing that the market for legal services has not kept pace with the needs of the new economy. I saw this a paradigmatic dynamic-transaction-costs story. Google is internalizing legal services for the same reason Chandlerian corporations in the nineteenth century internalized complementary production processes the market was not yet well enough developed to provide. As Hadfield pointed out, the inability of market institutions to supply these new kinds of legal services has a lot to do with the tight regulation the government exercises over the supply of such services.

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24 June 2010 at 8:20 am 7 comments

Bailouts in Historical Perspective

| Peter Klein |

O&M has been consistently anti-bailout, whether recipients are banks, manufacturing firms, or homeowners. Besides encouraging moral hazard, bailouts also stymie the fundamental market process of moving productive assets from lower- to higher-valued uses. A market economy, after all, is a profit-and-loss system. Without losses, what’s the point?

A new edited volume, Bailouts: Public Money, Private Profit (Columbia University Press, 2010), explores bailouts in historical perspective, going back as far as the US financial crisis of 1792. Editor Robert Wright and his contributors try to steer a middle course, with Wright endorsing Hamilton’s Rule (formerly Bagehot’s Rule) of providing public loans to failing firms only if they have good collateral, and at “penalty” interest rates. Still, as Wright notes in his introduction, “There is no statistical evidence, however, that bailouts [of any kind] can speed economic recovery. In fact, bailouts can slow recovery by creating policy uncertainty, distorting market incentives, and in extreme cases fomenting sociopolitical unrest.”

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23 June 2010 at 4:34 pm Leave a comment

Guru Drivel in Fiction

| Peter Klein |

A funny passage from Neal Stephenson’s The Confusion, the second volume of his Baroque Cycle trilogy. In this scene, set in 1690, a motley crew of galley slaves, victims of Barbary Corsair raiding parties, discuss their plan to escape and get rich. Each is giving his backstory:

“The winter before last, I made the acquaintance of Moseh, who was asking many questions about the market in tutsaklar ransom futures. We had several conversations and I began to perceive the general shape of his Plan.”

“He told you about Jeronimo, and the Viceroy?”

“No, I learned of that on the same night as you.”

“Then what do you mean when you say you understood his plan?”

“I understood his basic principle: that a group of slaves who, taken one by one, were assigned a very low value by the market, might yet be worth much when grouped together cleverly. . . .” Vrej rolled up to his feet and grimaced into the sun. “The wording does not come naturally in this bastard language of Sabir, but Moseh’s plan was to synergistically leverage the value-added of diverse core competencies into a virtual entity whose whole was more than the sum of its parts. . . .”

Jack stared at him blankly.

“It sounds brilliant in Armenian.” (more…)

21 June 2010 at 10:00 pm 2 comments

Management Journal Impact Factors 2009

| Nicolai Foss |

Eugene Garfield may not exactly be defunct, but it is entirely true that practical men, such as university presidents, deans, and department heads, are slaves of the Science Citation Index he created. In fact, so are the rest of us who have eagerly been waiting for the publication of the impact factors for 2009. They have just arrived and it is fascinating stuff. Here are a few immediate observations on the management IFs:

  • Abstracting from MIS Quarterly, the Strategic Management Journal is #3.
  • Journal of Management is, at #5 (and #4 if MIS Q is left out) cementing its position as a top journal.
  • Strategic Organization is up on #8!  Way to go, Joel and colleagues! But can you sustain that position?
  • Journal of International Business Studies has dropped a few positions but is still in the top-10.
  • Journal of Management Studies (#14) has emerged as a close competitior in terms of ranking to Organization Science (#12). It is the undisputed #1 Euro management journal (it has also just entered the Financial Times ranking).
  • Resarch Policy, which was among the top 10 only two years back, is now #22.
  • Management Science is now down to #24. There are management departmetns where this journal is considered A+.

Of course, we all know the many reasons why all this should be taken with more than the proverbial grain of salt.  For example, as Ram Mudambi points out (personal conversation), more and more journals play the impact factor game and force authors to cite recent papers in the journals, and reference lists grow longer and longer.  Perhaps Article Influence Scores represent the superior alternative.

20 June 2010 at 10:12 am 4 comments

ISNIE Conference Papers

| Peter Klein |

I’m in lovely Stirling, Scotland, for the ISNIE Annual Meeting. (And, driven in part by my Scottish ancestry, feeling the urge to slay an Englishman.) Nobel Laureates Williamson and Ostrom are giving the keynote speeches, and many additional members of the O&M extended family are here. You can access most of the accepted papers at this link, which is almost as good as being here. Enjoy!

Next year’s conference, organized by Barry Weingast, will take place mid-June at Stanford University, so start making plans now!

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18 June 2010 at 5:47 am 4 comments

Interview with Josh Lerner

| Peter Klein |

Paul Kedrosky interviews Josh Lerner for Kauffman’s “Infectious Talk” series. Josh is one of the top researchers and teachers working at the intersection of entrepreneurship and finance, and is always worth reading (or listening to, if you prefer the podcast version).

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15 June 2010 at 12:59 pm Leave a comment

In the Pink

| Dick Langlois |

A propos Peter’s recent post about behavioral economics, I discovered this interesting video illustrating Daniel Pink’s book Drive (thanks, Steve). I don’t think there is anything about it that is particularly inconsistent with what we know about the economics of organization, but others may disagree.

I once heard Pink speak, at the 2002 Business History Conference meeting, just after his book Free Agent Nation (about the rise of self-employment) appeared. He was one third of a panel on the New Economy, the rest of which consisted of two extremely far-left twits. It was amusing to hear Pink, a former speechwriter for Al Gore, gamely hold up a sensible position, though I remember thinking what greater fun it would have been if they had invited Virginia Postrel.

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13 June 2010 at 4:02 am Leave a comment

Taking AIM

| Dick Langlois |

Aha! So that’s why nobody met me at the airport: I was supposed to be in France. Actually, I’m in the UK, traveling around as a Visiting Fellow of the Academy of Advanced International Management (AIM). I will be giving a series of talks under their aegis in Lancaster, London, and Edinburgh. I am now in Lancaster, where my host is Martin Spring, an operations management guy who is interested in modularity and contracting in the delivery of complex services like engineering. My first stop in the UK was Nottingham, where I refrained from any tax protests let alone progressive redistribution of rents. (This despite the ads for the new Ridley Scott-Russell Crowe movie prominently displayed on all the busses.) But I did speak at the Nottingham University Business School, which is home to the likes of Paul Windrum and Peter Swann.

Today I hope to see some of Lancaster, possibly including Williamson Park. Among its highly specific assets is the pictured Ashton Memorial, built by James Williamson, Jr., Lord Ashton, who made his fortune in the linoleum trade. (According to the city council website, he was able to afford this grand edifice because he paid his workers so little.)

During the trip I also plan to stop in at several conferences, including DRUID (for one day), the ISNIE conference in Stirling (where I am likely to view a flesh-and-blood Williamson), and the Schumpeter Society in Aalborg. If I can, and if the material warrants, I may try a little live (or at least half-dead) blogging from the conferences.

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12 June 2010 at 5:47 am Leave a comment

Legal and Economic Perspectives on Contracts

| Peter Klein |

Law professor Lewis Kornhauser and economist Bentley MacLeod have teamed up to provide a multidisciplinary perspective on contracts:

Contracts between Legal Persons
Lewis A. Kornhauser, W. Bentley MacLeod
NBER Working Paper No. 16049
Issued in June 2010

Contract law and the economics of contract have, for the most part, developed independently of each other. In this essay, we briefly review the notion of a contract from the perspective of lawyer, and then use this framework to organize the economics literature on contract. The review thus provides an overview of the literature for economists who are interested in exploring the economic implications of contract law. The title, Contracts between Legal Persons, limits the review to that part of contract law that is generic to any legal person. A legal person is any individual, firm or government agency with the right to enter into binding agreements. Our goal is to discuss the role of the law in enforcing these agreements under the hypothesis that the legal persons have well defined goals and objectives.

The paper is unfortunately behind the NBER firewall. Note in the comments if you find an ungated version.

Gordon Smith’s chapter in the forthcoming Elgar TCE Handbook, “Legal Precursors of Transaction Cost Economics,” is also worth a look.

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10 June 2010 at 11:46 pm 3 comments

René Stulz on Asset Bubbles

| Peter Klein |

From the HBR series “Finance: The Way Forward”:

At the same time, however, it is also critical to create conditions that make it more difficult for bubbles to emerge. This means fundamental changes in public policy. The most important change is to do everything possible to make sure that no institution is “too-big-to-fail.” We also have to do away with the Bernanke put. It is not possible for the public sector to guarantee investors against losses without creating more and more instability.

I’d add that policymakers should avoid creating bubbles in the first place, but that’s a subject for another day.

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9 June 2010 at 7:34 am 1 comment

Jane Jacobs Festschrift

| Peter Klein |

It’s called What We See and has just been published by New Village Press. Here are the publisher and Amazon links. The website,, has a blog and lots of useful information about the book, the authors, and Jacobs.

Of particular interest to O&Mers include “Rethinking ‘Jacobs Spillovers,’ or How Diverse Cities Actually Make Individuals More Creative and Economically Successful” by Pierre Desrochers and Samuli Leppälä and “The Mirage of the Efficient City” by Sandy Ikeda.

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8 June 2010 at 7:21 am Leave a comment

O&M in Paris

| Peter Klein |

I shot the first of these yesterday at Paris Charles De Gaulle Airport, the second near the Panthéon in the 5th Arrondissement (click to enlarge). If the Muppets can take Manhattan, why can’t we take Paris?

More seriously, there are some interesting things happening here in France. Last week was the 9th session of the European School for New Institutional Economics (ESNIE) in Corsica, a week-long summer program for PhD students and junior faculty from around the world. Plenary speakers included Oliver Hart, Francine Lafontaine, John Drobak, Maristella Botticini, me, and several others, and there were research development workshops and student paper sessions as well, along with the all-important networking and socializing. I strongly urge O&M readers to apply or encourage their students to apply next year.

The week after next is a conference on “Contracts, Procurement, and Public-Private Agreements,” 14-15 June in Paris, organized by Stéphane Saussier, one of Europe’s leading specialists in public-private partnerships. It features many great speakers, including keynoter Pablo Spiller (one of my old tennis sparring partners). Anita McGahan, who is doing important work in this area, is presenting a seminar at Paris I this Thursday.

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6 June 2010 at 5:03 am 4 comments

Buridan’s Ass

| Peter Klein |

This week’s A.Word.A.Day features “Words not named after the person they should be,” including McKenzieorrery, philippic, and guillotine. Thursday’s entry, on Buridan’s ass, reminded me of Murray Rothbard’s insightful discussion of  Buridan. Rothbard treats Buridan as an important contributor to the theory of value, price, and exchange, particularly the theory of money. Buridan’s ass makes the daily word list because a) the famous example of an animal who, indifferent between two equidistant bales of hay, can choose neither and hence starves to death, did not originate with Buridan, who merely commented on a familiar story, and b) Buridan referred to a dog, not a donkey — it was Buridan’s critics who changed the animal in the story to an ass, as an insult.

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4 June 2010 at 2:18 am 3 comments

Duke LLM in Law and Entrepreneurship

| Peter Klein |

We mentioned before Vanderbilt’s PhD program in law and economics and Arizona’s program in law and entrepreneurship. Now Duke Law School is offering an LLM degree in law and entrepreneurship. “Open to an inaugural class of about 20 JD graduates, the curriculum will blend rigorous academic study relating to the legal, business, institutional, strategic, and public-policy frameworks and considerations that apply to entrepreneurs and innovation, with practice and research opportunities that allow each student to develop skills in representing clients.” Obviously, this is a program for lawyers, not for entrepreneurship scholars or management practitioners, but there may be lessons here for business schools and other academic units seeking to offer interdisciplinary programs in entrepreneurship studies. I particularly appreciate the Duke program’s broad, functional concept of the entrepreneur: “[T]he entrepreneurship LLM will not only be ideal for the entrepreneur, but also for those in large institutions and firms who operate with the spirit of an entrepreneur.”

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2 June 2010 at 5:22 pm Leave a comment

SMS Competitive Strategy Junior Faculty and Paper Development Workshop

| Peter Klein |

Forwarded for Don Hatfield:

Call for Participants

Competitive Strategy Junior Faculty and Paper Development Workshop
Saturday, September 11, 2010
1:00 p.m.-6:00 p.m.

Submission deadline: July 15, 2010

The Competitive Strategy Interest Group is offering a research focused junior faculty and paper development workshop at the 2010 Strategic Management Society meetings in Rome, Italy. Although all members of the Competitive Strategy IG are invited to participate, preference will be given to junior faculty who defended their dissertations after September 2005.

This workshop will include panel discussions and breakout sessions. Senior faculty panels will discuss critical aspects of the research and publication process, ways to craft a successful research program and future directions in competitive strategy research. A breakout session will provide opportunities for participants to discuss and receive feedback on their work in an informal setting. (more…)

1 June 2010 at 10:11 am Leave a 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).

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