Ephemera | Organizations and Markets

WINIR Conference 2016 in Boston

| Dick Langlois |

Proposal submission will close soon for the third annual WINIR conference, which will take place this September 2-5 at the Seaport Boston Hotel. The first two conferences — in London and then in Rio — were great events, and this year should prove equally exciting. Plenary speakers are Daron Acemoglu (MIT, economics), John L. Campbell (Dartmouth, sociology), Margaret Gilbert (UC Irvine, philosophy), Henry Hansmann (Yale, law), and Wendy Wood (USC, psychology). Submit your abstract now.

26 February 2016 at 8:52 am Dick Langlois Leave a comment

Cecil

| Peter Klein |

rs_300x300-150728134433-600.Cecil-The-Lion.jl.072815 No doubt you’ve heard about Walter Palmer, the American dentist who shot the lion, “Cecil,” in Zimbabwe, pushing aside Sir Tim Hunt as the Internet’s Most Hated Person. (Aside from calling Palmer cruel and depraved — even wishing his death by bow and arrow — some are labeling him a sociopath, which makes me wonder, are lions now considered members of society? Orgheads?)

I don’t hunt and have no particular emotional attachment to lions, so I find the outrage level bewildering. However, I think this can be a teachable moment. Specifically, there are lessons here about trophy hunting and endangered species. Not surprisingly to anyone who has studied property-rights economics, there is evidence that allowing trophy hunting is a good means of protecting endangered species. This is a version of the general argument that defining and enforcing property rights in scarce resources, including wildlife, provides incentives for individuals to protect and maintain those resources. (You’ve probably heard the quip that the world isn’t running out of chickens and dairy cattle.) Groups like PERC have produce dozens of studies on endangered species and private conservation more generally and there are plenty of nerdier papers too. If Cecil’s unfortunate end helps stimulate thoughtful discussion on how to avoid the tragedy of the commons, then he will not have died in vain.

29 July 2015 at 6:01 pm Peter G. Klein 9 comments

Cocktail Construction Chart

| Peter Klein |

This may be the most useful document ever produced by a government agency:

It’s real, it was created at the US National Forest Service in 1972 or 1974, and a copy exists in the National Archives. See here and here for the backstory. (HT: Randy Westgren.)

21 April 2015 at 11:01 pm Peter G. Klein 4 comments

The Paper the World Needs Right Now

| Lasse Lien |

I strongly think this paper is both timely and useful.

21 December 2014 at 1:22 pm Lasse 10 comments

We Won a Book Award

| Nicolai Foss |

It doesn’t seem to have made its way to the Austrian blogs, but Peter and I just won the Society for the Development of Austrian Economics/Foundation of Economic Education Award for Best Book in Austrian Economics. Specifically, we received the Award for Organizing Entrepreneurial Judgment: A New Approach to the Firm. (Here is Peter and me presenting the book back in 2012). In addition, the book has picked up some cites and has sold quite well. Thus, we can hardly claim that it “fell still-born from the press.” Yet, it could be more influential and could sell better. You know what to do.

26 November 2014 at 6:50 am Nicolai Foss 4 comments

Entrepreneurship and the Established Firm: A Call to Arms

| Nicolai Foss |

Frequent readers of this blog will know that we (well, some more than others [ahem]) tend to obsess about the proper conceptualization of entrepreneurship, such as whether “opportunity” is a useful construct in the context of entrepreneurship research, and whether this, heavily expanding, research field is best off by thinking of entrepreneurship in terms of “opportunity discovery.” In this brief essay, just published in Strategic Organization, Dr. Jacob Lyngsie (Dept of Strategic Management and Globalization, Copenahgen Business School) and I discuss how the emphasis on opportunity discovery in the literature is accompanied by a neglect of entrepreneurship in the established firm and a tendency to think of entrepreneurs as individuals (rather than teams) (similar themes are discussed in the recent Foss and Klein volume, Organizing Entrepreneurial Judgment). We call for a research effort that systematically deal with how entrepreneurial established firms organize a division of entrepreneurial labor, and on how administrative machinery can be deployed inside firms to foster the motivation, opportunity and ability that drive entrepreneurial behaviors.

26 August 2014 at 11:39 am Nicolai Foss 5 comments

The Piketty Code

| Dick Langlois |

I was trying to avoid jumping into the fray about Capital in the Twenty-First Century so as not to participate in the mania, as if throwing one more tiny ember into a wildfire would cause measurable additional damage. But I couldn’t resist after seeing an article entitled “How Thomas Piketty Explains American Sports.” Written by someone called Kevin Lincoln in a left-wing mag called Pacific Standard, the article discusses the NBA’s proposal to raise the minimum roster age from 19 to 20, thus reducing the number of one-and-done college players and depriving John Calipari of his livelihood. (Did I forget to mention that UConn won both men’s and women’s national championships this year?) Lincoln correctly points out that such a change is in the interest not only of the D-1 colleges, who get to keep their stars longer, but also of the NBA, since it offloads more player development to the colleges. Sounds perfectly reasonable – exactly the kind of analysis you would expect from, say, a free-market public-choice economist. What on earth does this have to do with Piketty?

The concept of “over-accumulation” was coined by economist David Hershey, and with the ascent of Thomas Piketty’s Capital in the Twenty-First Century into bestsellerdom, it’s something that anyone with even a passing interest in economics is probably familiar with. In our current economy, actors who have gathered large amounts of capital tend to invest it in the creation of further capital for themselves rather than funneling it back into production. In turn, the economy stagnates, with the world’s financial resources concentrating in the hands of the rich with no money left over to raise wages for the working class.

Yes, this scheme will probably raise the wealth (a little) of NBA owners. But it doesn’t have anything to do with the accumulation of capital. For both owners and players, the NBA is all about people getting wealthy from entrepreneurial insight and scarce valuable skills — exactly contrary to Piketty’s predictions.

The author is obviously economically illiterate — how exactly can people “create further capital for themselves” without somehow “funneling it back into production”? Yet the fact that someone smart enough to write a free-lance article would connect the NBA to Piketty speaks, it seems to me, to what the Piketty phenomenon is all about. In my view, we should not be comparing Piketty with Marx or Keynes. We should be comparing him with Dan Brown. Like the Da Vinci Code, Capital is an otherwise unremarkable book that managed to put together a volatile mix of elements. Both books captured some kind of zeitgeist, of course, but they did so in a remarkably precise way. They rely on similar elements: a theory of how the world works that doesn’t stand up to minimal scrutiny but is easy to understand, seems to explain the mysterious and ineffable, and, most importantly, confirms the gut prejudices of its readers. Capital is not as much a conspiracy theory as the Da Vinci Code; it’s a nineteenth-century story about aggregate income shares. But it is also an empty-enough vessel into which readers (especially those who haven’t actually read it) can pour their own conspiracy theories. The NBA is the Opus Dei of capitalist sports.

While we’re on the subject, I also want to mention that, to my mild surprise, the best review of Piketty I have run across is by Larry Summers. He gathers together all the technical criticisms in many other reviews and then adds a few of his own. While he pats Piketty on the back for his wonderful interest in inequality, he leaves the theoretical claims in a tattered pile on the floor.

17 May 2014 at 1:10 pm Dick Langlois 4 comments

Friday Fun: The Market Value of Research Topics

[A guest post from Peter St. Onge, Assistant Professor of Marketing at Feng Chia University in Taiwan.]

Is academia the epitome of mankind’s quest for knowledge? Is it an adjunct to the productive forces that drive us ever-closer to a utopia of plenty? Or is it a self-licking ice cream cone? Here are a few data points.

For each keyword or phrase-in-quotes, the first column measures google searches (average ttm, in thousands, reported 5/15/14 on Google Adwords Keyword Planner). The second column measures academic papers on Google scholar between 2012-2013 (as of 5/15/14). The third column measures the ratio of academic papers divided by monthly searches. And the fourth column gives Google Adwords’ “suggested bid” — this suggests what an advertiser might offer for a “click” when somebody enters the search term or phrase, so is roughly the market value of a visitor searching for that term.

These measures are roughly intended to capture popular interest (the quest for knowledge) and market value (adjunct to production) compared to academic interest.

First, some general business terms, with “gender identity” thrown in for fun, ranked by papers-to-search ratios:

Google Scholar	Google monthly searches (k)	Papers 12-13 (k)	Papers/ searches	Suggested Bid
management	40.5	785	19.4	$5.25
“gender identity”	8.1	146	18.0	$1.99
“Corporate Strategy”	1.9	20.9	11.0	$10.83
accounting	40.5	343	8.5	$7.66
marketing	60.5	342	5.7	$6.45
entrepreneurship	33.1	80.1	2.4	$4.58
finance	823.0	301	0.4	$8.22

The highest ratio of academic vs popular interest? Management. Beating even “gender identity.” And the lowest? Finance, followed by entrepreneurship. The people demand more finance and entrepreneurship papers. Perhaps because they want to learn how to invest and start businesses, but this is conjecture.

What else jumps out here is the overwhelming interest among the public in finance. Indeed, there are more than 4 times more searches for the word finance than all the other terms together. “Finance” is 20 times more popular than accounting or management, and 15 times more than marketing. Perhaps business schools are misallocating their resources unless their departments aren’t at least 80% finance? (more…)

16 May 2014 at 2:16 pm Peter G. Klein Leave a comment

Top Ranked Thinkers 2013

| Nicolai Foss |

In management, that is. Here. Hardly surprising that Clay Christensen is #1. But … where is Klein?

12 November 2013 at 12:08 pm Nicolai Foss 3 comments

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 Dick Langlois 2 comments

The Coase Theorem in under 140 Characters

| Dick Langlois |

From the Stanford alumni newsletter:

Goodbye @SUAthletics, Hello @gostanford

Stanford athletics knows how to drive a hard bargain. The department recently traded its longtime Twitter handle, @SUAthletics, to Syracuse University in exchange for a yet-to-be determined order of local goods, including one case of oranges. The fruit will be used to refill Stanford’s 2011 Orange Bowl trophy. Athletics will now tweet as @GoStanford, which had emerged as a more popular choice.

18 July 2013 at 8:41 am Dick Langlois Leave a comment

The Pace of Modern Life

| Peter Klein |

Technological advance and economic growth are ruining modern life — people don’t write long letters anymore, they don’t spend time together at meals, they speak quickly, and nobody stops to smell the roses. So said critics starting in 1871. A new entry for our “Nothing New under the Sun” series (via Josh Gans). NB: Some of you will tag 1871 as the start of modernity, for a different reason!

19 June 2013 at 9:49 am Peter G. Klein 6 comments

Rise of the Three-Essays Dissertation

| Peter Klein |

Almost all dissertations in economics and business are of the “three-essays” variety, rather than conventional book-length treatises. The main reason is pragmatic: economics, management, finance, accounting, etc. are mainly discussed in journal articles, not books. Students writing treatises must spend the first year post PhD converting the dissertation into articles for publication; why not write them that way from the start? (An extreme example — perhaps apocryphal — concerns Larry Summers, who began teaching at MIT several years before receiving his PhD from Harvard. Rumor has it he forgot to submit the PhD thesis, and simply bundled three of his published articles and turned it in.)

Some counter that the traditional model, or some variant of it, has value — for instance, the treatise conventionally includes a lengthy literature review, more than would be acceptable for a published journal article, which demonstrates the student’s mastery of the relevant literature. My view is that the standalone literature review is redundant at best; the student’s mastery of the material should be manifest in the research findings, without extra recitation of who said what. I tell students: don’t waste time putting anything in the dissertation that is not intended for publication!

The May 2013 AER has a piece by Wendy Stock and John Siegfried, “One Essay on Dissertation Formats in Economics,” on the essays-versus-treatise question. The evidence seems to weigh pretty heavily against the treatise:

Dissertations in economics have changed dramatically over the past forty years, from primarily treatise-length books to sets of essays on related topics. We document trends in essay-style dissertations across several metrics, using data on dissertation format, PhD program characteristics, demographics, job market outcomes, and early career research productivity for two large samples of US PhDs graduating in 1996-1997 or 2001-2002. Students at higher ranked PhD programs, citizens outside the United States, and microeconomics students have been at the forefront of this trend. Economics PhD graduates who take jobs as academics are more likely to have written essay-style dissertations, while those who take government jobs are more likely to have written a treatise. Finally, most of the evidence suggests that essay-style dissertations enhance economists’ early career research productivity.

The paywalled article is here; a pre-publication version is here. (Thanks to Laura McCann for the pointer.)

21 May 2013 at 3:33 pm Peter G. Klein 14 comments

Google-Linked Scholarship

| Peter Klein |

Have you noticed that when you search for a person on Google, the sidebar shows you other linked people searches (“People also search for”)? E.g., if you search for yours truly, it pulls up Nicolai Foss, Joe Salerno, Bob Murphy, and Israel Kirzner. I’m not sure how the algorithm works; is it the likelihood these searches are combined, or searched in sequence, or does it have to do with cross-links in search results? Anyway, it’s interesting to see who Google things is related to whom. For instance

Peter G. Klein ==> Nicolai Foss, Joseph Salerno, Robert P. Murphy, Israel Kirzner

Nicolai Foss ==> Peter G. Klein, Edith Penrose, Israel Kirzner, Oliver E. Williamson

Oliver E. Williamson ==> Ronald Coase, Elinor Ostrom, Douglass North, Armen Alchian

Murray N. Rothbard ==> Ludwig von Mises, Friedrich Hayek, Frédéric Bastiat, Henry Hazlitt

Paul Krugman ==> John Law, P. T. Barnum, Charles Ponzi, Beelzebub

3 May 2013 at 9:54 pm Peter G. Klein 3 comments

The Klein Revolution

| Peter Klein |

Going through some old files, I came across a 1995 Wall Street Journal piece I had saved, with the following passages highlighted:

Mr. Klein caught the fanaticism of the converted and convened a special commission to audit the books. It summed up its findings in six words: the need for change is urgent. Polls showed the public agreed. . . .

Mr. Klein doggedly pursued a program of breathtaking change. Government will fall from 24,000 to 18,000 in two and a half years. Sixty school boards were eliminated, the health budget was cut by 17%, and the number of hospital beds cut in half. Seniors earning over $21,000 (U.S.) a year were asked to pay their own Medicare premiums. . . .

The Klein Revolution did meet with opposition. . . . “My day wasn’t complete without a protest,” Mr. Klein recalls with a smile. But each success spurred him on: “You’re nervous the first time you try something new, but once you do it, you sort of get used to it.” . . .

Last year, he spoke to a group in Toronto and was asked if books by F.A. Hayek and Ludwig von Mises had inspired his policies. Mr. Klein smiled and said, . . . “Do I look like the kind of guy who would read those books?” The crowd laughed, because while Mr. Klein may not have read Hayek’s “The Road to Serfdom,” he has proved he knows how to build a policy exit ramp away from it.

The full article is below the fold. (more…)

1 May 2013 at 5:48 pm Peter G. Klein 2 comments

Bob Wouldn’t Like It, but ….

| Nicolai Foss |

So, my school is now deep into discussing the results of the recent “employee satisfaction survey.” Thus, each department is expected to spend minimum 2,5 hours discussing the results, and to come up with an action plan to handle those problems that — per definition — exist. And in my capacity as department head I have just ended this round of annual reviews which focus on the “competence development” of faculty. The practice of management has changed, to be sure. An approach that is decidedly not acceptable anymore, at least in my part of the world, is exemplified by this great drummer chewing out the band he led (more here; here is the mandatory Hitler version; and, in case you really want to practice, here are the transcriptions). Bob Sutton wouldn’t like it.And yet, badass approaches to management may work — perhaps not for those autonomously motivated, self-directed types (i.e., us), but certainly for those with motivational issues (see Emily Bazelon’s Slate piece on Rutgers coach Mike Rice). Toughness has costs and benefits. It seems that much current management thinking focuses on the costs of tough management approaches and neglects the potential benefits. No?

8 April 2013 at 1:37 pm Nicolai Foss 2 comments

More on Blogs and Social Media

| Peter Klein |

Nicolai was kind enough to mention my Facebook page but neglected to add that he has one too, and that O&M itself is on Facebook and Twitter. You can read, like, share, and comment on O&M posts at those sites as well as the main site. Which raises the interesting issue, is the blog format obsolete? We started O&M in 2006, an eon ago in Internet time. Since then, Twitter, Facebook, Google Plus, LinkedIn, and other social media platforms have appeared, and they duplicate most functions of the old-fashioned blog. They usually allow cross-posting and let you compose on one and push to the others. So, are blogging platforms like WordPress (which we use) on the way out? Google’s unfortunate decision to kill Google Reader has some people suggesting that RSS itself is dead. What should we do, to stay on the cutting edge? What’s the future of structured online group discussion? Should we create the first MOOOB (Massively Open Online Organizations Blog)?

31 March 2013 at 7:05 am Peter G. Klein 4 comments

Klein Fan Page on Facebook

| Nicolai Foss |

Our Moral Leader at O&M has his own fan page on Facebook. He mixes entertaining libertarian outbursts with info on new conferences and links to cool new papers, articles, and so on–in other words, O&M en miniature. Pay a visit and like Peter’s page.