Author Archive
Pioneers of Industrial Organization
| Nicolai Foss |
Pioneers of Industrial Organization: How the Economics of Competition and Monopoly Took Shape is the title of a new volume edited by Henk de Jong to be published next month by Edward Elgar. My CBS colleague Peter Møllgaard and I have contributed a chapter on early (meaning pre-1980) IO research in the Scandinavian countries. (more…)
Barzel on Property Rights
| Nicolai Foss |
This is how Yoram Barzel — arguably the most creative current exponent of property rights economics — defines (economic) property rights (in this paper, p. 394):
… an individual’s net valuation, in expected terms, of the ability to directly consume the services of the asset, or to consume it indirectly through exchange. A key word is ability: The definition is concerned not with what people are legally entitled to do but with what they believe they can do.
Notice how different this is from other (older) economic conceptions (e.g., Furubotn & Pejovich, Alchian, Demsetz et al.) which have typically categorized property rights into usus, usus fructus and abusus rights (and the right to sell these rights), often keeping a legalistic connotation. (more…)
Economizing and Strategizing
| Nicolai Foss |
In a much-cited 1991 paper in the Strategic Management Journal, “Strategizing, Economizing, and Economic Organization,” Oliver Williamson introduced the distinction alluded to in the title of the paper between “economizing,” that is, economizing with transaction costs, and “strategizing,” that is, the exercise of market power (in the standard sense of setting p above mc and imposing a deadweight welfare loss on society). Whereas strategizing is only available to relatively few, large players, Williamson argued, any firm can engage in economizing. Thus, “… economy is the best strategy. That is not to say that strategizing efforts to deter or defeat rivals with clever ploys and positioning are unimportant. In the long run, however, the best strategy is to organize and operate efficiently.”
However, in a certain sense, economizing and strategizing are made of the same stuff, and the distinction may, for this reason, be somewhat overdrawn. (more…)
Colin Camerer on Strategic Management
| Nicolai Foss |
Strategic management researchers are, as a rule, practically oriented folks who typically do not have much patience with lofty debates in the theory of science. Say the word “ontology” and you will have eyes rolling in the audience (yes, I have tried it!).
I am currently working on a chapter on methodological/philosophy-of-science discussions in strategic management for Giovanni Battista Dagnino’s forthcoming Handbook of Research on Competitive Strategy and, given the above characterization, I have actually been surprised by the number of published papers on meta-theoretical issues in strategic management. (more…)
Is there a Reputational Hierarchy in Management?
| Nicolai Foss |
We don’t often praise sociologists on O&M, but one of the more illuminating and interesting sociologists is Brit Richard Whitley, Professor at the University of Manchester Business School. Reference is here not so much to his recent, mainly descriptive, work on “business systems” (e.g., this one; for an early critique, see this) as to his more-than-two-decades-old work on the sociology of the sciences. (more…)
Wittgenstein and the PoP System
| Nicolai Foss |
At the end of my stay in Columbia, MO where I was working with co-blogger Peter on our forthcoming book, “Organizing for Entrepreneurship: Opportunity Discovery and the Theory of the Firm” (Cambridge University Press), I borrowed Edmonds and Eidonow’s Wittgenstein’s Poker from him so as to have something to entertain me on the long flight back to Denmark. The book is a fun and light read, in fact, so light that I also had time to peruse another book borrowed from Peter (this one).
The book is an attempt to reconstruct the famous poker episode in 1946 where Wittgenstein allegedly threathened Popper with a poker during an Oxford University philosophy seminar, and a discussion of the inevitability of a clash between these two philosophers, given their extremely different philosophy, background, etc. At one point the authors observe that Wittgenstein would never have made it under the current tenure system; apart from the Tractatus, he apparently only published one minor paper. Still, he was promoted to Full Professor of Philosophy almost twenty years after the publication of this slim volume, and remained a Full Professor for almost a decade more. However, the philosopher who according to this (somewhat bizarre) poll was the third greatest philosopher ever wouldn’t have academically survived the present publish or perish system. (more…)
Opportunity Discovery Conference in St. Louis
| Nicolai Foss |
The past two days, three of the four O&M bloggers (Steve, Peter, and I) participated in a Washington University conference on opportunity discovery. Opportunity discovery is (in my interpretation) the outcome of actions initiated by individuals or teams directed at identifying hitherto neglected market needs and wants. Needless to say, OD is fundamentally what entrepreneurship is about. (Here are earlier O&M posts on eship).
The conference was a small gathering with the participation of about twenty-five people from entrepreneurship, strategic management, sociology, organizational behavior, psychology, and marketing (it included Jay Barney, Rich Makadok, Todd Zenger, Anne Marie Knott, David Meyer, and others). One possible interpretation is that scholars from diverse fields consider the entry barriers to the eship field to be low. Perhaps they are. . . . (more…)
Does Hayek Still Matter?
| Nicolai Foss |
I may be wrong, but I have the feeling that the thought of Friedrich von Hayek is receiving less and less attention. This worries me for personal reasons — I wrote my Master’s Thesis in economics in 1989 on Hayek’s business cycle theory, and his work has continuously served as an important source of inspiration to me (e.g., this paper) as well as to countless others — and for the reason that Hayek’s thought is too important to vanish in influence. (more…)
Unintended Consequences and the Social Sciences
| Nicolai Foss |
According to a prominent tradition in economics and classical liberal thought, the social sciences (particularly economics) are primarily concerned with explaining unintended phenomena, whether more temporary outcomes, such as market phenomena, or more permanent ones, such as institutions, in terms of the intentional actions of multiple interacting agents. In contrast, the social sciences are not really taken up with explaining individual action per se.
This is an understanding, or perhaps even doctrine, that is perhaps most famously associated with Hayek, but it has also been echoed by Ludwig Lachmann (among Hayek’s contemporaries) and by many modern Austrians, as well as by philosophers, notably Karl Popper, Michael Polanyi, and Edna Ullman-Margalitt, and (non-Austrian) economists such as Andrew Schotter (in his 1981 book on institutions). (Of course, the notion of unintended consequences itself is by no means unique to classical liberal economists but can be found in the thought of most major thinkers on social science and political philosophy).
However, there are several problems with the doctrine that the social sciences are mainly about unintended consequences. Here are two that seem to have not been previously noticed: (more…)
Conceptual and Theoretical
| Nicolai Foss |
A few days ago Peter drew attention to the misuse in many academic papers of the word “methodology” (which is too often used when authors really mean “method”).
My personal pet peeve is the misuse of the word “conceptual,” particularly by management scholars. What is usually meant is “theoretical” (in fact, the word is often used in a derogatory manner — “Ah, Prof. NN, well, he mainly [meaning ‘merely’] does conceptual work” — something I once overheard being said of myself (in spite of several recent empirical papers — grrrr …. )).
Of course, management scholars are sometimes taken up with analyzing concepts per se — such as discussing alternative notions of competitive advantage — but usually conceptul analysis is the business of philosophers, and few management scholars publish in Metaphysica and similar places. (However, those management scholars who in fact do wish to undertake “conceptual work” may be interested in this newly started journal).
Organizational Innovation
| Nicolai Foss |
Organizational economists, new institutional economics, contract theorists, etc. are taken up with assessing alternative feasible allocations of decision and income rights, contracts, governance structures and institutions in terms of their impact on value creation for a relevant social system, whether a dyad, a multi-person firm, an industry, or a whole economy.
However, they usually assume that the set of alternatives is given to the choosing agent or set of agents. For example, in the Grossman/Hart/Moore property rights view, agents may not entirely understand the sources of payoffs, but they know exactly how alternative allocations of property rights impact payoffs. Of course, this is entirely in line with what we — given Peter’s post on Lionel Robbins below — may call “Robbinsian maximizing” in which the discovery and/or creation of new alternatives is deliberately disregarded. (more…)
Citation Metrics Using Google Scholar
| Nicolai Foss |
Are you in the process of preparing for tenure, promotion or for applying for a new job? Do you, as is increasingly the norm, wish to include your citatation data? Are you concerned that some or perhaps many of the journals in which your work is cited are not ISI listed?
Then you may benefit from checking out Anne-Wil Harzing’s new software for analyzing Google Scholar citation data, Publish or Perish.
It produces a number of useful statistics, such as, obviously, total number of papers and citations, average citations, etc., but also, and less trivially, the important metrics for measuring an academic’s impact, such as Hirsch’s h-index (and its updated version that gives more weight to more recent papers).
My Redesigned Site
| Nicolai Foss |
Check it out. I have dropped the quasi-blog feature of the old version (I hadn’t maintained it for almost a year anyway), so now I can concentrate on O&M and this one. I will soon upload talks and work in progress.
More on Socialist Calculation
| Nicolai Foss |
In an excellent book review of GC Archibald’s Information, Incentives and the Economics of Control, Tyler Cowen raised a number of neglected points concerning the socialist calculation debate. (The review is published in the apparently now closed Journal of International and Comparative Economics 5: 243-249 (1995) and unfortunately isn’t online).
Cowen argued out that the victors in the socialist calculation debate “… have shied away from the hard questions,” and that it is necessary to “push the boundaries of the calculation argument.” For example, what if a dictator who has read Mises instructed his managers to compete as in a regular market economy (i.e., not as in an Oskar Lange-economy), with the dictator being the residual claimant monitor? Would that work? It might not — but that would primarily be because of excessive monitoring costs.
Cowen also indirectly questions the Misesian emphasis on calculating prices. Experience shows that socialist managers systematically set prices too low (because they can gain from creating excess demand, while they cannot gain from setting the right prices). But this would seem to presuppose that socialist “managers are in fact very good at calculating the proper price.” In other words, there is really no “calculational chaos,” as predicted by Mises.
Has Strategy Forgotten About Rivalry?
| Nicolai Foss |
Austrian economists and other “process economists” have often argued that what is (or at least was) called “competition” in mainstream/neoclassical/orthodox/etc. economics has rather little to do with the real phenomenon. Hayek made the point famously and forcefully in his 1946 essay, “The Meaning of Competition,” and several Austrians have echoed him since then. (The best study of the transformation of “competition” (particularly, “perfect competition”) into the opposite of competition is Frank Machovec’s 1995 book, Perfect Competition and the Transformation of Economics).
It seems that strategy scholars may also have forgotten about rivalry. (more…)
March & Simon: Early Socialist Calculation Revisionists
| Nicolai Foss |
It is now commonly recognized that the majority of the economics profession for about four decades held an erroneous view of the nature of the “socialist calculation debate.” In particular, the nature of the arguments put forward by Mises and Hayek were misconstrued.
Revisionism took off in the mid 1980s with the work of Peter Murrell (e.g., here) and Don Lavoie (e.g., here). From a mainstream perspective, Murrell argued that the Austrians had developed sophisticated insights in property rights economics and the agency problem and had applied these insights to the problem of socialist calculation. Lavoie highlighted the distintive Austrian knowledge argument in the calculation debate, in particular emphasizing Hayek’s contribution. A bit later, Salerno and others emphasized the distinctiveness of Mises’ contribution. Thus, whereas Mises stressed the need for a distributed process of entrepreneurial judgment in the context of a private ownership economy characterized by uncertainty, Hayek put more of an emphasis on the impossibility under socialism of harnessing and processing massive amounts of knowledge, particularly under dynamic conditions. (more…)
Process Explanation: What Is It, Really?
| Nicolai Foss |
As I have recounted on an earlier occasion (here), my interest in economics was, after about 1.5 years of a somewhat unsuccessful economics study, finally stimulated by discovering what may broadly be called “process approaches” to economics, particularly the work of Axel Leijonhufvud, and Austrian and evolutionary approaches. I was captivated by the claims inherent in these approaches of studying “real” market “processes” in “time,” taking account of “genuine uncertainty,” “surprises,” “ignorance,” etc. — all in contrast to the (I then thought) mindless neoclassical obsession with equilibrium states.
Clearly, the Austrian marketing effort seemed much superior to the mainstream one, much less dull and much more concerned with reality. (more…)
Pomo Periscope IX: Pomo in the US Campaign Season
| Nicolai Foss |
The first major viral video of the campaign season appears to be this one. Perhaps the most disturbing fact about Hillary is her continued use of the pomo lingo of “getting the conversation started.”
Economies of Scope?
| Nicolai Foss |
Yesterday’s WSJ features an article on economists’ consulting jobs with (UC Berkeley Professor — and CBS Honorary Doctor) David Teece playing the main role. The article notes that Teece “… doesn’t dispute estimates that his career earnings from expert consulting amount to at least USD 50 million.” Teece has done important work on the role that economies of scope play in explaining diversification (here and here). Is he living his own theory?
HT to Marginal Revolution.
Discover Who Is Citing You in Books
| Nicolai Foss |
We academics are a narcissisic bunch. I know colleagues who check their citations on Google Scholar or the SSCI on a weekly basis. Of course, I myself would never, ever indulge in such egocentric excesses!!! That being said, however, I am still mildly interested in who may think that my modest contributions are good enough to cite.
A constant source of irritation is that while it is rather easy to find out who is citing you in the journals, it is more difficult to find out who is citing you in books (this may not matter to deans and research bureaucrats, but it is still nice to know). Until, that is, I discovered books.google.com — which allows you to do exactly this! Enjoy!
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