Author Archive
Geoff Hodgson on Methodological Individualism
| Nicolai Foss |
Geoff Hodgson is no doubt a very thoughtful economist. I admire much of his work. But I have always been disturbed by a sustained theme in his writings: His relentless criticism of methodological individualism. To me, MI is “trivially correct,” to paraphrase Jon Elster, and I have viewed Hodgson’s critiques as bizarre and idiosyncratic, particularly because I have not thought that he provided any good reasons to reject MI.
However, the Journal of Economic Methodology has just published a very interesting piece by Hodgson, “Meanings of Methodological Individualism,” in which he offers some serious reasons why MI is problematic (and perhaps more than that). Hodgson argues that MI are surrounded by a number of ambiguities: 1) It is unclear whether it is intended to be something that is specific to “pure economics” or to the social sciences in general; 2) it is unclear whether MI is about social ontology or about social explanation, and 3) it is unclear whether it refers to “explanation in terms of individuals, or indivuals alone.”
Now, 1) doesn’t really seem to me to be an ambiguity. While indeed Schumpeter, the inventor of the term, thought of MI as something that applied to pure economics alone, it is quite clear that modern proponents of MI think of it as applying generally to the social sciences. 2) is a red herring, for while MI is about explanation it is rooted in the ontological argument that only individuals act. (more…)
Brilliant But Neglected Articles
| Nicolai Foss |
Because markets for science hardly work perfectly, a certain number of papers that are truly excellent will tend to be overlooked. The scientific community may collectively commit Type 1 errors, or may simply overlook certain papers because they were published at a time when the interests of the community were elsewhere, or were published in obscure journals, or in non-English languages, etc. etc. (more…)
Beards
| Nicolai Foss |
Here are some Great Beards in Philosophy. Robert Aumann could join that club. So could my M.Sc. thesis committee member, the late Karl Vind. Both arguably contributed (almost) as much to analytical philosophy as to economics. The only management scholar with a comparable beard I know of (or at least remember) is R. Edward Freeman. Sid Winter and Michael Cohen come close, however. Are beards over-represented among philosophers and under-represented among economists and management scholars? Why?
Michael Cohen on Routines
| Nicolai Foss |
In the field of organization studies, Michael Cohen is a towering figure. What he says is listened to. In a recent Essai in Organization Studies (yes, in case you didn’t know, Org Studies belongs to the same continent as Michel de Montaigne; pretentious, nous?), Cohen talks about the inspiration he has gained from American pragmatist philosopher John Dewey. He mentions that, somewhat to his surprise, he has found out that he is far from unique in his Dewey interest. Another Dewey-reader with interests similar to Cohen’s is Sid Winter; in his recent bashing of methodological individualism at the DRUID conference, Winter enlisted Dewey among the enemies of MI. (more…)
Management Journal Impact Factors 2006
| Nicolai Foss |
The new journal impact factors for 2006 are now available from the ISI Web of Knowledge (here). Consider the journal list within “management” or “business” (the former includes information system journals, the latter includes marketing journals). (more…)
That Yearly Narcissist Exercise
| Nicolai Foss |
OK, let’s pretend that you are in fact interested in what I plan to read this summer. All the other bloggers pretend, so why not? In other words, it is time for the yearly book-reading showoff/narcissist exercise (the social purpose of which may mainly be to let you inform the rest of the readership of the great books you will read — so please comment). So, here is what I plan to peruse in my two weeks of summer vacation starting on Friday: (more…)
Routines or Practices?
| Nicolai Foss |
I am growing increasingly skeptical of the extremely popular and influential notion of routines, a central construct in large parts of management, notably organization and strategic management, and in evolutionary economics. My problems with the construct are these (among others):
1) There are still no clean definitions around of “routine.” Proponents of the routine notion sometimes delight in pointing out that it took transaction cost economics almost 4 decades to arrive at its unit of analysis, dimensionalize it, etc. However, with respect to TCE it was only when the unit was finally decided on, defined and dimensionalized that real progress beyond Coase (1937) began to take place. Those who work with routines have not been so patient, and have not hesitated to introduce all sorts of derived concepts. Thus, capabilities are often defined in terms of routines, so that something undefined is defined in terms of something badly defined.
2) Although no clean definitions seem to exist, different views of routines are proffered in the literature. Indeed, there has a notable drift in the dominant conception of routines, from the standard operating procedures of Cyert and March to the emergent/undesigned, collectively held, largely tacit routines of Nelson and Winter.
3) Routines are (partly because of 1)) too often used as a catch-all category that aims at capturing everything (at any level of analysis) about an organization that has some degree of stability/permanence. For example, the much cited “organizational learning” paper by Levitt and March (it has a whopping 1,655 hits on Google scholar) includes everything from individual-level heuristics (“rules of thumb”) to corporate strategy under the routine heading. (more…)
Signal Extraction Problems: Recommendation Letters
| Nicolai Foss |
Some kinds of recommendation letters need careful interpretation. A letter written for a student to help him or her study abroad usually doesn’t need much interpretation. But a letter written by a colleague for a colleague to a colleague is a different matter. One reason is that writers of recommendation letters differ. Some express themselves very directly, others more indirectly. The same words mean different things to different people. “Solid research” may mean “boring and unimaginative” to one person, but may mean, well, “solid” to another person. (more…)
Efficient Organizational Design by Marco Weiss
| Nicolai Foss |
Good textbooks in organizational economics are badly missing from the market. In particular, good textbooks that are more advanced than Brickley, Smith, and Zimmerman’s Managerial Economics and Organizational Architecture (great book, BTW), but still more accessible than the average organizational economics research papers, basically do not exist. Milgrom and Roberts’s Economics, Organization, and Management has much interesting material in it, but there is simply too much material (students drown) and the book is extremely uneven in terms of readability (some chapters, e.g., chpt. 4 are hard to read even for advanced readers and even more for students). George Hendrikse’s Economics and Management of Organizations is organized much like the Milgrom and Roberts book but is more readable. However, parts of it are too difficult for the average 3rd or 4th year business student. (more…)
Against Holism: The Boudon-Montaigne Farting Example
| Nicolai Foss |
Sophisticated attacks by methodological holists on methodological individualism often take the form of admitting that while, strictly speaking, only individuals act, individuals are so strongly influenced and constrained by institutions (in a broad sense) that we might as well disregard those individuals and instead reason directly from institutions to social outcomes. Individuals are effectively malleable by social forces. “There is no such thing as a human nature independent of culture,” Clifford Geertz famously argued, tying the holist argument to cultural relativism. (more…)
Philosophy of Social Science 101
| Nicolai Foss |
As I recently informed the O&M readership (here), I was in a debate last week at the DRUID conference in Copenhagen on the issue of methodological individualism. The debate took place in the afternoon, and at lunch I overheard one professor asking another (both were tenured full professors at highly prestigious US universities), “Do you have any idea about the stuff that Sid and Nicolai will be debating later today?” The other person shook his head and said he had “no idea.” I tried to talk to as many people before and after the debate as I could. I was surprised at how many basically did not have a clue concerning the meaning of methodological individualism (including a fair amount of those who had been listening to the debate!). Some of the questions that were raised during the debate also revealed considerable ignorance. For example, a young lady in the audience took Peter Abell and I to task for defending a notion (i.e., MI) that is not falsifiable! (more…)
Methodological Individualism at the DRUID Conference
| Nicolai Foss |
Today is the second day of the annual conference of the Danish Research Unit for Industrial Economics. In order to stimulate controversy, and entertain conference delegates between less interesting paper sessions, DRUID organizes debates on motions.
I participated along with Sid Winter of the Wharton School, Peter Abell of the London School of Economics, and Thorbjørn Knudsen of Southern Denmark University in today’s “DRUID Debate on Methodological Individualism versus Scientific Progress” (sic!!!!!) which involved the following motion:
Let it be resolved that this conference believes that the lack of methodological individualism applied in strategy research seriously limits scientific progress in the field.
Speaking for the motion were Peter and I, speaking against were Sid and Thorbjorn. A vote was taken before the debate. There were about as many pro as contra votes. After the debate, which had its rather heated moments, another vote was taken. And again there about as many pro as contra votes. Apparently, the debate had — perhaps not surprisingly — not managed to change any beliefs. The debate was streamed, and should be available on the DRUID site within a couple of weeks.
Pomo Periscope XII: Was Hayek a Pomo?
| Nicolai Foss |
It is well known that some Austro-libertarians have had a love-hate relation with the Left. The late Murray Rothbard quite actively flirted with the rather extreme Left for a substantial period in the 1960s (for an amusing historical account, see this). From the 1980s one manifestation of this perhaps latent Austrian tendency has been a flirtation with post-modernist currents that usually have a strong leaning to the left (for Rothbard’s hilarious take on this, see here). (more…)
Goals or Preferences?
| Nicolai Foss |
My two favorite sociologists are Peter Abell and Sigwart Lindenberg. Both stress rationality (and rationalism), micro-foundations for social science research, and are (not surprisingly) sympathetic to, even admiring of, economics. However, neither is an uncritical admirer of economics.
In “Why the Microfoundations of the Social Sciences Should be Based on Goals Rather than Preferences” (you can find it on this page), Lindenberg argues that economists tend to conflate preferences and goals, or at least leaves open or trivializes the relationship between the two. (more…)
Rival Hypotheses in the Same Paper?
| Nicolai Foss |
Apparently, having rival hypotheses in the same paper is becoming a don’t do! — at least in management! My colleagues who are more empirically minded than I am tell me of rejections that are motivated solely by having rival hypotheses in the same paper. Big guys in the relevant field (e.g., strategic management, organization, international business) also argue against rival hypotheses-in-the-same-paper in doctoral consortia, professional development workshops, etc.
Instead, what is recommended is this:
1) concentrate on developing one set of non-rival hypotheses and deliberately neglect contraditory hypotheses
or
2) allow for hypotheses that may seem rival, but really aren’t, because they are special cases of a more over-arching framework. In the latter case, the theory development exercises become a matter of identifying the conditions under which H1 is true (and H2 is false) and the conditions under which H1 is false (but H2 is true) etc. (more…)
Gintis Smashing Heterodox Economics
| Nicolai Foss |
Remember the “post-autistic” movement in economics that began in France in 2000? Have you, too, been irritated by the sometimes, ehmm, bizarre claims that are put forward by members of the “post-autistic economics network“? Do you think utterances such as the following one are, to put it nicely, not accurate representations of modern economic theory:
Game theory cannot be “applied”: it only tells little “stories” about the possible consequences of rational individuals’ choices made once and for all and simultaneously by all of them. . . . Akerlof, Spence and Stiglitz have no new “findings”, they just present, in a mathematical form, some very old ideas — long known by insurance companies and by those who organize auctions and second hand markets. . . . Amartya Sen, as an economist, is a standard microeconomist (that is what he was awarded the Nobel Prize for): only the vocabulary is different (“capabilities”, “functionings”, etc.).
Scientific Progress in Strategic Management?
| Nicolai Foss |
OK, I persist in using O&M for the purpose of shameless self-promotion: I have written “Theory of Science Perspectives on Strategic Management Research: Debates and a Novel View” (I know — not an elegant title) for The Elgar Handbook of Research on Competitive Strategy, edited by Giovanni Battista Dagnino. I will be happy to send you a copy if you drop me a mail at njf.smg@cbs.dk. (more…)
What Does “Zero Transaction Costs” Mean, Epistemically?
| Nicolai Foss |
What does the Coase Theorem require epistemically? To put it less mysteriously, what are the assumptions concerning agents’ knowledge that must be made for the Coase theorem to hold? Or, to rephrase it somewhat, what does zero transaction costs mean in terms of agents’ knowledge (an inquiry started by Carl Dahlman in this paper)?
In his retrospective (1988) discussion and assessment of the debate on the theorem, “Notes on the Problem of Social Cost,” Coase seems to imply that the Theorem requires omniscience. I think that Barzel makes the same inference in his Economic Analysis of Property Rights. In other words, the Coase Theorem holds iff all resource uses, current as well as future ones, are known by everyone.
Not all writers seem to agree with this interpretation, however. (more…)
Great Economists’ Autographs
| Nicolai Foss |
If you are into collecting autographs and admire Nobel Prize winning economists, ebay is (of course) the place for you. Here is Ronald Coase’s autograph — with a buy-it-now price of 10 USD; here is Nash’s — a bit more fancy (First Day Cover), and (therefore?) with a buy-it-now price of 85 USD; here is Uncle Milton at 34 USD, and one more Nash at 24 USD. The latter Nash autograph, the Friedman and the Coase ones are all on 3×5 unlined index cards. Still, there is a heavy disparity in terms of the asked price. The market values Friedman more than Nash who is valued more than Coase.
Foss & Foss Paper on Opportunity Discovery and the RBV
| Nicolai Foss |
With my frequent co-author, Kirsten Foss, I have written “New Value Creation in the Resource-based View: How Knowledge and Transaction Costs Shape Opportunity Discovery.” (more…)
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