Archive for February, 2011

The Vanishing Hand: 19th-Century French Edition

| Dick Langlois |

Haven’t read this yet, but it looks interesting. Note also the futuristic publication date.

On the Origins of Vertical Unbundling: The Case of the French Transportation Industry in the 19th Century
Guy Numa
European Journal of the History of Economic Thought, Vol. 20, No. 2, 2013

The paper retraces the origins of the unbundling of infrastructure, which is a monopoly, from services, which are subject to competition. Using the case of the railroad industry in France, I examine how both natural monopoly theorists and legislation dealt with this subject in the 19th century. I argue that the origins of vertical unbundling date to this period with legislation pertaining to inland waterways and railroads. This was particularly the case for the railroad industry due to pricing and competition rationales. I analyze the writings of Dupuit and Walras and show that they both agreed that infrastructure and services had to be unbundled for the inland waterways. In contrast, they expressed different justifications to defend the monopoly for the railroad industry. Following a chronological progression, the first section explores the origins of unbundling in legislation. The second section analyzes how theorists approached the way railroads had to be managed. Throughout, I highlight the interplay between their work and legislation.

16 February 2011 at 2:46 pm 2 comments

Not Entirely Sure I Got This…

| Lasse Lien |

From the British Journal of Management I got this abstract.

The Sublime Object of Desire (for Knowledge): Sexuality at Work in Business and Management Schools in England

This paper explores why and how sexuality intertwines with gender in the organizational context of academic institutions. Drawing on insights from the work of psychoanalyst post-structuralist feminists Luce Irigaray, Hélène Cixous and Julia Kristeva, we explore the institutionalized abjection of the real and imagined (woman’s) body as the root cause of her relative exclusion from knowledge (creation) and her subordinate position in it. The project is analytical as well as political: it both unravels and opposes the ways gender is superimposed on sexuality and how we as academics might collude, legitimize and perpetuate and gendered sexualized (and therefore exclusionary) ways of organizing in/of society. The findings of an empirical study of a sample of women academics in management and business schools in England are discussed in the light of the proposed theory.

I  am not sure I fully get this, but my hunch is that I am guilty and should try to improve — but what, specifically, should I do?

16 February 2011 at 1:07 pm 17 comments

New Insight from Old Data

| Peter Klein |

A few years ago Mike Sykuta and I met with Ronald Coase to discuss ways to add contract documents to the CORI library. Limited contract data from secondary sources, like large-company public filings, are readily available, but how to get a larger variety of contract types, such as the long-term supply agreements of particular interest to Coase? Firms are naturally reluctant to make these available to researchers. Coase’s suggestion was to pursue obsolete contracts from company archives. Old contracts, after all, should be as good as current ones for examining hypotheses about contract design and performance, and firms presumably don’t care if they’re made public.

A recent HBR article implores companies to make use of archived datasets, and the advice applies to academic researchers as well. “For example, a retailer that has kept and labeled its old POS data could now subject it to today’s sophisticated analytical techniques, gaining a valuable understanding of long-term consumer trends.” Likewise, revisiting old data with new and better econometrics, more careful attention to research design (e.g., identification), and sharper hypotheses could generate some interesting findings.

In strategy and entrepreneurship research, everybody wants to study the same stuff: pharma and biotech patenting, R&D alliances, technology IPOs, etc. On the margin, a clever study of an old industry, old data, an old problem, could create a lot of value.

15 February 2011 at 1:10 am 2 comments

Counterintuitive Research Result of the Day

| Peter Klein |

According to the current issue of Managerial and Decision Economics, women free ride more than men:

An Experimental Test of Behavior under Team Production
Donald Vandegrift and Abdullah Yavas

This study reports experiments that examine behavior under team production and a piece rate. In the experiments, participants complete a forecasting task and are rewarded based on the accuracy of their forecasts. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. Overall, there is no statistically significant difference in performance between the conditions. However, this result masks important differences in the behavior of men and women across the conditions. Men in the team-production condition increase their performance relative to men in the piece-rate condition. However, this gap in male performances across conditions diminishes over the course of the experiment. In contrast, women in the team-production condition show significantly lower performance than the women in the piece rate. As a consequence of these differences, men in the team-production condition show significantly better performance than women in the team-production condition. We also find evidence that men show stronger performance when they are in teams with a larger variation in skill level.

I’m trying to derive implications for firm performance in light of Alchian and Demsetz (1972). But come on, give me the Go-Gos or Bangles over Backstreet Boys or Jonas Brothers any day.

12 February 2011 at 11:10 am 11 comments

Anita McGahan at TEDx

| Peter Klein |

Here is my good friend and colleague Anita McGahan, Professor and Rotman Chair in Management and Associate Dean for Research at the University of Toronto’s Rotman School, speaking at a recent TEDx event on the role business schools can play in making the world a better place. Anita is not only a gifted speaker and teacher, and a highly accomplished researcher, but also one of the most thoughtful people in the profession, emphasizing Big Problems as well as the more narrow, technical issues favored by the strategic management literature. Check her out!

10 February 2011 at 9:09 pm 5 comments

Famous Quotations Taken Out of Context

| Peter Klein |

Kenneth Olsen, former head of computer-industry pioneer Digital Equipment Corporation, died over the weekend. DEC was probably the most important “minicomputer” firm of the 1970s and 1980s, one that failed to make the transition to the PC era and dropped out of sight. (DEC plays a major role in Tracy Kidder’s 1981 Pulitzer-winning book Soul of a New Machine — a book I read just this last year and which, despite the now-obsolete subject matter, feels surprisingly fresh. DEC was the dominant incumbent and foil to Kidder’s protagonist firm, Data General.)

Despite his many accomplishments — a 1986 Fortune article called him “America’s most successful entrepreneur” — Olsen is remembered today mostly for saying, in 1977, “There is no reason for any individual to have a computer in his home.” This is usually taken to show how the leading mainframe and minicomputer firms failed to see the gale of creative destruction on the horizon, or just to illustrate businessperson cluelessness more generally. (Bill Gates’s 1981 remark that “640K ought to be enough for anybody” falls in the same category.)

Olsen consistently maintained that he was quoted out of context, that he wasn’t talking about the ordinary desktop PC, but a sort of master house computer that would run the home, much like HAL in 2001. According to the useful entry on Olsen, “What Olsen was addressing in 1977 was the concept of powerful central computers that controlled every aspect of home life: turning lights on and off, regulating temperature, choosing entertainments, monitoring food supplies and preparing meals, etc.  The subject of his remark was not the personal use computer that is now so much a part of the American home, but the environment-regulating behemoth of science fiction.” As Olsen himself put it: “A long time ago when the common knowledge was that PCs would run our lives in every detail, I said that if you stole something from the refrigerator at night you didn’t want to enter this into the computer so that it would mess up the computer plans for coming meals.” I wouldn’t make that sandwich if I were you, Dave.

What are some other examples of famous quotations taken out of context?

10 February 2011 at 11:00 am 3 comments

The AER Canon

| Lasse Lien |

The American Economic Review is celebrating its 100th anniversary and, to commemorate, Volume 101, Issue 1 names the top 20 papers during its first 100 years as judged by the following committee: Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel L. McFadden, James M. Poterba, and Robert M. Solow. The list and the committee’s justification for including each paper can be found here. The committee admits using a combination of quantitative as well as qualitative criteria, but I cannot see that the list is idiosyncratic in any particular way. A balanced and reasonable canon IMHO:

Alchian, Armen A., and Harold Demsetz. 1972. “Production, Information Costs, and Economic Organization.”American Economic Review, 62(5): 777–95.

Arrow, Kenneth J. 1963. “Uncertainty and the Welfare Economics of Medical Care.” American Economic Review, 53(5): 941–73.

Cobb, Charles W., and Paul H. Douglas. 1928. “A Theory of Production.” American Economic Review,18(1): 139–65.

Deaton, Angus S., and John Muellbauer. 1980. “An Almost Ideal Demand System.” American Economic Review, 70(3): 312–26.

Diamond, Peter A. 1965. “National Debt in a Neoclassical Growth Model.” American Economic Review, 55(5): 1126–50.

Diamond, Peter A., and James A. Mirrlees. 1971. “Optimal Taxation and Public Production I: Production Efficiency.” American Economic Review, 61(1): 8–27.

Diamond, Peter A., and James A. Mirrlees. 1971. “Optimal Taxation and Public Production II: TaxRules.” American Economic Review, 61(3): 261–78.

Dixit, Avinash K., and Joseph E. Stiglitz. 1977. “Monopolistic Competition and Optimum Product Diversity.” American Economic Review, 67(3): 297–308.

Friedman, Milton. 1968. “The Role of Monetary Policy.” American Economic Review, 58(1): 1–17.

Grossman, Sanford J., and Joseph E. Stiglitz. 1980. “On the Impossibility of Informationally Efficient Markets.” American Economic Review, 70(3): 393–408.

Harris, John R., and Michael P. Todaro. 1970. “Migration, Unemployment and Development: A Two-Sector Analysis.” American Economic Review, 60(1): 126–42.

Hayek, F. A. 1945. “The Use of Knowledge in Society.” American Economic Review, 35(4): 519–30.

Jorgenson, Dale W. 1963. “Capital Theory and Investment Behavior.” American Economic Review, 53(2): 247–59.

Krueger, Anne O. 1974. “The Political Economy of the Rent-Seeking Society.” American Economic Review, 64(3): 291–303.

Krugman, Paul. 1980. “Scale Economies, Product Differentiation, and the Pattern of Trade.” American Economic Review, 70(5): 950–59.

Kuznets, Simon. 1955. “Economic Growth and Income Inequality.” American Economic Review, 45(1): 1–28.

Lucas, Robert E., Jr. 1973. “Some International Evidence on Output-Inflation Tradeoffs.” American Economic Review, 63(3): 326–34.

Modigliani, Franco, and Merton H. Miller. 1958. “The Cost of Capital, Corporation Finance and the Theory of Investment.” American Economic Review, 48(3): 261–97.

Mundell, Robert A. 1961. “A Theory of Optimum Currency Areas.” American Economic Review,51(4): 657–65.

Ross, Stephen A. 1973. “The Economic Theory of Agency: The Principal’s Problem.” American Economic Review, 63(2): 134–39.

Shiller, Robert J. 1981. “Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends?” American Economic Review, 71(3): 421–36.

9 February 2011 at 3:15 pm 11 comments

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