Archive for September, 2013

Happy Mises Day

| Peter Klein |

ludwig-von-misesI never miss Hayek’s birthday but sometimes forget to celebrate September 29 as the birthday of Ludwig von Mises (1881-1973), Hayek’s senior colleague and mentor, whose writings are very influential here at O&M. To learn about Mises you should read Guido Hülsmann’s biography but, if you prefer shorter treatments, you can find biographical essays by Mises’s students Murray Rothbard and Israel Kirzner. Organization theorists should pay particular attention to Mises’s 1922 book Socialism as well as his (unfortunately neglected) 1944 book on Bureaucracy.

29 September 2013 at 2:58 pm Leave a comment

The Return of Max Planck

| Dick Langlois |

How failure to proofread can improve the quality of your coauthors. Note the use of “we” in the abstract. I suppose that Penrose’s idea that resources come in discrete bundles is a kind of quantum mechanics of the firm.

26 September 2013 at 10:50 am 2 comments

How Much Has Changed, Really?

| Peter Klein |

Henry of Germany lecturing at the University of Bologna, 14th century.

University of Bologna, 14th century

Come to the CSIG Teaching Workshop this Saturday in Atlanta and find out!

25 September 2013 at 1:46 pm 6 comments

NBER Papers of Interest

| Peter Klein |

Three recent NBER papers on compensation, performance, and productivity:

Ann Bartel, Brianna Cardiff-Hicks, Kathryn Shaw
NBER Working Paper No. 19412, September 2013

Due to the limited availability of firm-level compensation data, there is little empirical evidence on the impact of compensation plans on personal productivity. We study an international law firm that moves from high-powered individual incentives towards incentives for “leadership” activities that contribute to the firm’s long run profitability. The effect of this change on the task allocation of the firm’s team leaders is large and robust; team leaders increase their non-billable hours and shift billable hours to team members. Although the motivation for the change in the compensation plan was the multitasking problem, this change also impacted the way tasks were allocated within each team, resulting in greater teamwork.

William Mullins, Antoinette Schoar
NBER Working Paper No. 19395, September 2013

Using a survey of 800 CEOs in 22 emerging economies we show that CEOs’ management styles and philosophy vary with the control rights and involvement of the owning family and founder: CEOs of firms with greater family involvement have more hierarchical management, and feel more accountable to stakeholders such as employees and banks than they do to shareholders. They also see their role as maintaining the status quo rather than bringing about change. In contrast, professional CEOs of non-family firms display a more textbook approach of shareholder-value-maximization. Finally, we find a continuum of leadership arrangements in how intensively family members are involved in management.

George J. Borjas, Kirk B. Doran
NBER Working Paper No. 19445, September 2013

Knowledge generation is key to economic growth, and scientific prizes are designed to encourage it. But how does winning a prestigious prize affect future output? We compare the productivity of Fields medalists (winners of the top mathematics prize) to that of similarly brilliant contenders. The two groups have similar publication rates until the award year, after which the winners’ productivity declines. The medalists begin to “play the field,” studying unfamiliar topics at the expense of writing papers. It appears that tournaments can have large post-prize effects on the effort allocation of knowledge producers.

Thank goodness I haven’t won the Clark Medal, Nobel Prize, or a MacArthur Award. I want to keep my productivity high!

23 September 2013 at 9:34 am Leave a comment

New Member of the Academy of … Family

| Nicolai Foss |

So, we have the Academy of Management Review and the Academy of Management Journal, commonly acknowledged as the top theory and empirical management journal, respectively. We are also blessed with the Academy of Management Perspective (formerly, the Academy of Management Executive), which seeks (successfully) to style itself as the management research equivalent to the Journal of Economic Perspectives. Then there is also the Academy of Management Learning and Education and there is the rather recently established Academy of Management Annals.

The sixth member of the family is now being launched, and has assumed the name of the Academy of Management Discoveries.  The founding editor is Andrew H. Van de Ven  who is the Vernon H. Heath Professor of Organizational Innovation and Change in the Carlson School of Management of the University of Minnesota, a major figure in organization theory over the last 4 decades, and a former President of the Academy of Management. According to the journal’s website, AMD will”promote the creation and dissemination of new empirical evidence that strengthens our understanding of substantively important yet poorly understood phenomena concerning management and organizations.” The journal is “phenomenon-driven” rather than aimed at theory testing per se.

In the end, I am not entirely convinced that this is that different from the mission and practice of the Academy of Management Journal, and I can see a scenario where we get an AMJ #2.  However, the journal is open to replication research and “evidence-based assessments”, and certainly the first characteristic would seem to set it apart from the AMJ (even if replication research and evidence-based assessments would seem to pull away from phenomenon-driven discovery and towards theory testing).

Here is a brief YouTube clip with Van de Ven talking about the kind of research that the AMD will publish.

Manuscripts can be submitted here.

21 September 2013 at 11:46 am 3 comments

Reflections on the Explanation of Heterogeneous Firm Capability

| Nicolai Foss |

Fritz Machlup famously argued that economists should not care about the specificities (e.g., internal organization) of individual firms, as this was unlikely to bring substantial additional insight in the market outcomes that were the real objects of interests for economists (here). Thus, for the purposes of price theory, firms within an industry could essentially be taken to be homogenous. Machlup’s view has been reflected in much of the micro-economics of the firm, not just in the standard Marshallian approach, but also in later contract theoretic and transaction cost approaches. While contract theory and transaction cost insights are surely capable of contributing to the understanding of firm heterogeneity, explaining such heterogeneity per se has never been a central explanatory task of these approaches. However, while the Machlup view was still holding sway among economists (well into the 1990s), dissenting economists and management scholars highlighted that heterogeneity among firms could be understood in terms of differential capability—an idea that helped them to explain firm boundaries (see much of the work of O&M blogger Richard Langlois), competitive heterogeneity in a population of firms (evolutionary economics), and competitive advantage (the resource-based view in strategy.

However, while management research has done much to advance the notion of intra-industry heterogeneity, it may have been less forthcoming with respect to theorizing the antecedents of such heterogeneity. Most work on such antecedents has highlighted cognitive a variables, such as managerial cognition and absorptive capacity, and variables related to skill levels and the efficiency of routines. Surprisingly, virtually no work in management research has linked differential capability to organizational design (e.g., the structures of communication, delegation, and incentives) or even to the human capital characteristics of firms’ workforces. (more…)

17 September 2013 at 9:17 am 1 comment

Varia on Impact Factors, Journals, Publishing …

| Nicolai Foss |

  • Here is an interesting popular piece from The Atlantic about, among other things, a Brazilian citation cartel.
  • Yes, replication papers are publishable in social science journals; check out this post.
  • We have Management Science, Marketing Science, Organization Science … Now we will also have Sociological Science.
  • Very interesting piece on harmful, unintended consequences of journal rankings, such as more misconduct, more retractions, less reliable research, and so on.

17 September 2013 at 8:46 am 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).