Posts filed under ‘Ephemera’

Italian Social Science: Generalized Low Quality?

| Nicolai Foss |

In conversations with Italian colleagues I have often been struck by the sad cynicism, sometimes even spite, with which they talk about Italian academic institutions. There is mention of “barons,” backstabbing, secret deals and networks, “the Roman approach,” the Illuminati and whatnot (OK, perhaps not that specific secret society) that hinder fully realizing the potential of Italian social science. To be sure, the situation cannot be entirely debilitating as there is quite serious research being conducted across a number of Italian universities (and as a frequent visitor to both Bocconi and Luiss Guido Carli I can testify to this). But, there is clearly a perception of rot among Italian academics themselves .

Here is a quite controversial 2009 paper, “L Words: The Curious Preference for Low Quality and Its Norms,” by famed rational choice sociologist, Diego Gambetta and philosopher Gloria Origgi. The paper begins thusly: “We have spent our academic careers abroad, Gloria in France and Diego in Britain. Over this long period of time each of us has had over a hundred professional dealings with our compatriots in Italy – academics, publishers, journals, newspapers, public and private institutions. It is not an exaggeration to say that 95% of the times something went wrong. Not catastrophically wrong, but wrong nonetheless.” 

The reasons for “this cocktail of confusion, sloppiness and broken promises” that, allegedly, is Italian academia, can be located in a peculiar equilibrium, described as the “L world.” This is not, as one might think, a world described by the PD-game, but rather a situation in which both (all) parties agree on delivering high quality (H) and both (all) deliver low quality (L), and, as Gambetta and Origgi explain, (more…)

1 July 2012 at 8:33 am 8 comments

What Is a Firm?

| Peter Klein |

Some of you have heard me suggest — at least half seriously — that we ban the word “entrepreneurship” from scientific discourse. The word has so many definitions that its use often obfuscates rather than clarifies. (If you mean self-employment, better to say say “self-employment”; if you mean opportunity discovery, say “opportunity discovery”; and so on.)

Yoram Barzel (right) listens to Harold Demsetz.

Harold Demsetz gave an interesting and entertaining presentation yesterday at ISNIE, in a session honoring Yoram Barzel on his 80th birthday. Demsetz’s remarks made me wonder if we should ban “firm” as well. Demsetz pointed out, quite rightly, that Coase (1937) defines the firm in terms of the employment relation. A one-person operation, in this definition, is not a firm, and vertical integration deals with the question of adding producers of intermediate products to the firm’s employment roll. Demsetz thinks independent contractors are firms, and hence it makes little sense to speak of “firm” and “market” as alternatives, as Coase does. (Oliver Williamson, during an earlier session, noted that Coase expressed more interest in intermediate product markets in his 1988 article than in “The Nature of the Firm.”)

For Knight, Williamson, Hart, and other notables, in contrast, the firm is defined not by the employment relationship, but by the ownership of alienable assets. In this approach, the question is who owns what, not who is employed by whom. (Dan Spulber offers yet another approach, defining the firm as nexus of transactions with objectives different from those of its owners.) Of course, even in the Knightian approach, to get from the one-person firm to the multi-person firm requires some theory about the relative transaction costs of employment versus independent contracting, a theory Nicolai and I try to provide in chapter 8 of our recent book, focusing on the conditions under which the entrepreneur to delegate judgment to subordinates.

So, what is a firm? Perhaps the better question is, What are the important research questions that can be answered when the firm is defined as X?

17 June 2012 at 11:58 am 14 comments

ISNIE 2012

| Peter Klein |

The 16th annual meeting of the International Society for New Institutional Economics starts today at the USC Gould School of Law at the University of Southern California. President-Elect Lee Epstein has put together a very interesting program with the usual set of good papers and keynotes, including two special sessions in honor of Yoram Barzel on his 80th birthday. No live streaming, but the papers are available online, and I’ll pass along any good gossip to the O&M readership.

14 June 2012 at 6:19 am Leave a comment

Collected Works of F. A. Hayek, Vol. 7: Business Cycles

| Nicolai Foss |

The University of Chicago Press has just published the seventh volume, “Business Cycles, Part I and II,” in their nineteen volumes Collected Works of F.A. Hayek project. The two books contain most of Hayek’s well-known interwar work on the business cycle, particularly his more methodological Monetary Theory and the Trade Cycle (originally published in 1928) and, of course, Prices and Production, in addition to a number of essays on, as they were called, “industrial fluctuations.” The two parts of Volume 7 both have excellent 40+ pages introductions penned by Hansjoerg Klausinger who may well be the scholar in the world with the deepest knowledge of Hayek’s contributions to business cycle theory and who does a superb job in terms of discussing Hayek’s work through the lens of modern economics.

13 June 2012 at 3:57 am 2 comments

Zero (Human) Intelligence Traders on Sex Markets

| Nicolai Foss |


12 June 2012 at 2:03 pm 3 comments

Annoying Summertime Pursuit Numero Uno: Writing Tenure Letters

| Nicolai Foss |

OK, it is June and high season for tenure letter requests. I have written tons of these letters within the last decade or so, and I confess that I find this activity increasingly annoying and the tenure letter institution increasingly hard to fathom. Deans will write me, saying that I have “been identified” (well, yes, in the sense that I was on someone’s shortlist, and you just picked me) as an “expert” (hmmm) in “X” (X may be strategy, organization theory, HRM, knowledge management, entrepreneurship — even organizational behavior, but not yet, alas, sociology), and I have “three weeks” to write up my letter (and I have nothing else to do in June?) for “Dr. Doe” (who didn’t bother to ask me whether I would write such a letter).

I once brought up the issue of compensation for at least one day of intense work effort with a dean, but that was not well received. However, at least for us Euro professors the “what’s in it for me” question is quite real. Euro schools typically don’t use the tenure letter institution (INSEAD and LBS do, but they are “Americanized” schools), and we get zero credit for this service. (Euro schools tend to pay for comparable services, BTW). Still, when I bring up these issues, righteous types will say things like “”Nicolai, citizenship isn’t tit-for-tat” or lecture me on “generalized reciprocity.” However, the argument that ultimately made me continue writing these letters, rather than turning requests down, was that apparently people are harmed by someone’s refusal to write the letter. 

So, I do it. But I reserve the right to bitch and whine. And speculate on the rationale of this institution. What is really its purpose? Anyone can produce a list of half a dozen people (close colleagues, former advisors, friends …) and get them to write nice letters. What kind of objective assessment is produced by some dean picking people from such a list? Is this empty ritual? Or, is there some underlying efficiency rationale?

12 June 2012 at 1:54 pm 4 comments

Explosive Economists

| Peter Klein |

I’ve always liked the actor John Lithgow, not only because of his smarmy yet likeable weirdness (keep your comments to yourselves, please), but also because he’s married to an economist, the UCLA economic historian Mary Yeager. (The late Fred Bateman told me that when he and Yeager were just starting out, no one in their professional circles could understand why she was hanging out with this struggling actor who was obviously never going to make it big.)

So I was amused by a profile in Thursday’s WSJ about Lithgow’s role in an upcoming Broadway play about cold-war journalist Joseph Alsop. Reporter: “You portray Joe Alsop as an explosive man. Did you model him on someone from your own life?” Lithgow: “I’ve known mercurial people who emotionally completely turn on a dime, and they’re very exciting people. My wife is a little like that.”

OK, most economists are not exciting, but I’ve known plenty of mercurial and explosive ones.

22 April 2012 at 9:10 pm 1 comment

Birger Wernerfelt Receives Honorary Doctorate from CBS

| Nicolai Foss |

Wernerfelt, a key originator of the resource-based view of strategy (here) who has made numerous important contributions to the economics of organization, marketing, and other fields, received the degree at a ceremony at the Copenhagen Business School yesterday (another recipient of the honorary doctoral degree was Deirdre McCloskey). I motivated the degree with the following remarks: (more…)

20 April 2012 at 4:58 pm 1 comment

Get Off My Lawn

| Peter Klein |

The boys from were parking in our maintenance lot, so we had to put up signs. (Spotted in Champaign, IL.)

13 April 2012 at 7:06 pm 1 comment

Qantum + Politics = Ψ(Fun)

| Lasse Lien |

O&M is nonpartisan, but this description of Mitt Romney as the first quantum politician is IMHO so funny that it would be downright irresponsible to ignore it.

After describing how other candidates operate under Newtonian principles, where a candidate’s position on an issue remains constant until acted upon by some outside force, David Javerbaum goes on to describe how things are very different in the quantum Romneality (excerpt):

Complementarity. In much the same way that light is both a particle and a wave, Mitt Romney is both a moderate and a conservative, depending on the situation. It is not that he is one or the other; it is not that he is one and then the other. He is both at the same time.

Probability. Mitt Romney’s political viewpoints can be expressed only in terms of likelihood, not certainty. While some views are obviously far less likely than others, no view can be thought of as absolutely impossible. Thus, for instance, there is at any given moment a nonzero chance that Mitt Romney supports child slavery.

Uncertainty. Frustrating as it may be, the rules of quantum campaigning dictate that no human being can ever simultaneously know both what Mitt Romney’s current position is and where that position will be at some future date. This is known as the “uncertainty principle.”

Entanglement. It doesn’t matter whether it’s a proton, neutron or Mormon: the act of observing cannot be separated from the outcome of the observation. By asking Mitt Romney how he feels about an issue, you unavoidably affect how he feels about it. More precisely, Mitt Romney will feel every possible way about an issue until the moment he is asked about it, at which point the many feelings decohere into the single answer most likely to please the asker.

Noncausality. The Romney campaign often violates, and even reverses, the law of cause and effect. For example, ordinarily the cause of getting the most votes leads to the effect of being considered the most electable candidate. But in the case of Mitt Romney, the cause of being considered the most electable candidate actually produces the effect of getting the most votes.

Duality. Many conservatives believe the existence of Mitt Romney allows for the possibility of the spontaneous creation of an “anti-Romney” that leaps into existence and annihilates Mitt Romney. (However, the science behind this is somewhat suspect, as it is financed by Rick Santorum, for whom science itself is suspect.)

What does all this bode for the general election? By this point it won’t surprise you to learn the answer is, “We don’t know.” Because according to the latest theories, the “Mitt Romney” who seems poised to be the Republican nominee is but one of countless Mitt Romneys, each occupying his own cosmos, each supporting a different platform, each being compared to a different beloved children’s toy but all of them equally real, all of them equally valid and all of them running for president at the same time, in their own alternative Romnealities, somewhere in the vast Romniverse.

David Javerbaum (NYT March 31).
HT: Svein T. Johansen

13 April 2012 at 4:47 am 3 comments

Evil Tw-Lin

| Peter Klein |

Jeremy Freese to his fellow sociologists:

Jeremy Lin’s favorite course at Harvard was Sociology 128: Methods of Social Science Research. Nevertheless, he majored in economics, so your department cannot staple his face to its “What Can You Do With A Sociology Major?” poster.

(If you don’t get the headline, ask the kittehs.)

27 February 2012 at 3:45 pm Leave a comment

Management in Popular Culture

| Peter Klein |

I recently read Planet of the Apes, the 1963 novel by Pierre Boulle that inspired the movie franchise. Not surprisingly, the book is far more interesting and intelligent than the films. In the novel (spoiler alert!), the ape planet isn’t a future Earth, but a distant world much like Earth in which apes gradually assimilated and displaced a former human civilization simply by imitating their masters. The discovery of this older civilization (confirmed by the remains a talking human doll, as in the 1968 movie) explains the mystery of why ape culture stagnated at the level of its former human model. The apes could imitate, but not innovate.

The human protagonist convinces himself that imitation could produce a reasonable quality of science and art, then turns to more mundane activities.

It seemed absolutely clear that industry did not require the presence of a rational being to maintain itself. Basically, industry consisted of manual laborers, always performing the selfsame tasks, who could easily be replaced by apes; and, at a higher level, of executives whose function was to draft certain reports and pronounce ceratin words under given circumstances. All this was a question of conditioned reflexes. At the still higher level of administration, it seemed even easier to concede the quality of aping. To continue our system, the gorillas would merely have to imitate certain attitudes and deliver a few harangues, all based on the same model.

Not a flattering portrait of management, but keep in mind that the protagonist (like the book’s author) is French.

20 January 2012 at 3:35 pm 7 comments

Applies to the Professoriate Too

| Peter Klein |

These remarks from Lord Uhtred, a character in Bernard Cornwell’s historical novel The Last Kingdom, caught my eye.

These days I employ poets to sing my praises, but only because that is what a lord is supposed to do, though I often wonder why a man should get paid for mere words. These word-stringers make nothing, grow nothing, kill no enemies, catch no fish, and raise no cattle. They just take silver in exchange for words, which are free anyway. It is a clever trick, but in truth they are about as much use as priests.

Adrian Belew understood.

6 January 2012 at 10:06 am 2 comments

Top Posts of 2011

| Peter Klein |

Here are our most popular posts published in 2011:

  1. The Value of Steve Jobs
  2. The Performative Effects of Social Constructionist Professors in Business Schools
  3. Creative Destruction, Music-Industry Edition
  4. The Organizational Structure of Al Qaeda
  5. The Confusing “Business Model” Construct
  6. Classic Professor Poses
  7. The Future of Managerial Economics
  8. The AER Canon
  9. Famous Quotations Taken Out of Context
  10. Why Do Firms Hire Management Consultants?
  11. What the Seminar Speaker Really Means
  12. Entrepreneurship Lives!
  13. Scientific Misconduct in Management Research
  14. The Downside of Case Studies
  15. Confusing Definitions of Entrepreneurship

Thanks to our readers, commenters, guests, and supporters for a great 2011. We’re looking forward to 2012!

31 December 2011 at 11:45 pm 2 comments

Professor Secrets

| Peter Klein |

Their odd appearance is public, but they have secrets too. Some dislike students. Many wish they ran a really cool Center. And one has a secret identity!

19 December 2011 at 12:31 pm Leave a comment

Classic Professor Poses

| Peter Klein |

I need a new head-and-shoulders shot for my webpage, and am trying to choose among the classic professorial poses. See samples below. What do you recommend?


In front of books

Holding chalk

In front of chalkboard


Arms folded

At computer

Hands folded

Hands folded (profile)

Holding book

Stern look (keeps 'em away at office hours)

Finger on side of head

16 December 2011 at 1:30 pm 20 comments

Urban Meyer’s Contract

| Peter Klein |

As sports-crazed American readers know, Urban Meyer was today named Ohio State University’s head football coach. The money’s not bad — $4 million per year. The contract itself, which you can find here, is pretty interesting (HT: Skip Oliva). There are lots of performance bonuses ($100k for winning the Big 10; $150k for making a BCS bowl; $250k for making the national title game), even some for academic achievement (e.g., $150k for an 80% player graduate rate — hmmm, no pressure on OSU professors here). Transportation will be by private jet; coach gets lots of free tickets; and the university will pay dues at “a mutually agreed-upon golf course.” I guess these are included in lieu of cash for tax purposes. The university also commits “to working with Coach to create the Urban Meyer Fellowship for Ethics and Leadership in Sports.”

28 November 2011 at 7:24 pm 4 comments

Rationalistic Hubris and Opportunistic Behavior

| Peter Lewin |

The October 2011 issue of the Journal of Economic Behavior & Organization is a special issue on the work of James Buchanan, guest edited by Pete Boettke, arising out of a recent FFSO conference. In addition to Boettke, the contributors are Kliemt, Marciano, Munger, Leeson, G. Vanberg, Voigt, Horwitz, Besley, Coyne, and Horn on a variety of topics. Amartya Sen and Elinor Ostrom contributed short appreciations. This issue is full of good stuff on a variety of topics.

I focus here on the lead article by Pete Boettke somewhat clumsily entitled, “Teaching Economics, Appreciating Spontaneous Order, and Economics as a Public Science.” For my part, this article alone makes the issue worthwhile getting. Boettke presents an overview of the many facets of Buchanan’s work (and as they developed over his career) helpfully connecting and contrasting it with Hayek. Some of these ideas are directly relevant to the organization and management context.

At the risk of distorting oversimplification, we may say that whereas Hayek concentrated on the problem of rationalistic hubris, Buchanan concentrated on the problem of opportunistic behavior. Both are inevitable and related problems of social systems, and each of their works thus complements the other. In a nutshell, each is an in-depth protracted examination of the knowledge problem and the incentive problem, respectively.

As points of emphasis in their respective works, Hayek concentrated on the limits on man’s knowledge at the abstract level, and the contextual nature of the knowledge residing in the economy at the concrete level, while Buchanan stressed the institutional/organizational logic of politics and the systemic incentives that different rule environments generate. In both, however, the central message of same players, different rules, produce different games is seen throughout their work in comparative political economy. To Hayek the puzzle was how to limit the rationalistic hubris of men, to Buchanan the puzzle was how to limit the opportunistic impulse of men. Both found hope in what they called a “generality norm” embedded in a constitutional contract — no law shall be passed, or rule established which privileges one group of individuals in society.

Hayek uses an evolutionary approach and Buchanan a “veil of ignorance” contractarian approach. But both are surely applicable to organizations of all types.

27 November 2011 at 2:42 pm Leave a comment

Entrepreneurial Paradoxes and Simulations

| Peter Lewin |

Back from the SEA meetings in Washington DC, the venue for our annual SDAE conference and membership meeting. At the annual banquet we honored Leonard Liggio for his contribution to the teaching of Austrian economics. Dick Wagner gave the presidential address. Both received a standing ovation.

The panels were well attended and, from what I could tell, the quality very high. I presented my paper on Entrepreneurial Paradoxes (which has been around for a while). Young Bak Choi commented on it and presented an interesting paper on the role of entrepreneurship in economic development and development policy. David Harper and Anthony Endres presented a paper on another variation on the theme of heterogeneous capital and its structure. Perhaps most interesting was a paper by a strategic management Ph.D candidate at York University, Mohammad Keyhani (co-authored with Moren Lévesque), on “The Role of Entrepreneurship in the Market Process: A Simulation Study of The Equilibrating and Disequilibrating Effects of Opportunity Creation and Discovery.” Randy Holcombe commented. Interesting that the issue of equilibration is considered important enough to investigate with simulations. But it raises some important questions. My own current view, having spent a lifetime contemplating the issue, is that we are no nearer an answer than we ever were, and that perhaps the more important distinction is between entrepreneurial actions that add value and those that do not.

Next year’s meetings will be in New Orleans. The president-elect of the SDAE is Larry White. He will be putting together the panels. So if you have an interest in presenting a paper, discussing one, or chairing a panel, let him know (

24 November 2011 at 12:15 am 7 comments

Rick Perry Episodes

| Nicolai Foss |

Watching Rick Perry commit political harakiri made me wonder whether academia can report similar incidents (and with similar career-destroying results?). To be sure, many of us academics have engaged in Rick Perry-like behaviors — as is only to be expected when, as many of us do, we regularly talk to (student, executive, colleague) audiences of varying sizes, often several times a week.

I have certainly had my share of situations similar to the Perry episode. Thus, about a decade ago I was supposed to talk about the challenges of managing “knowledge workers” to a bunch of middle-aged (and beyond) medical professors, all with management responsibilities, very impressive scientific records, and all supremely arrogant and self-confident. I got 5 mins into my talk, before I was cut down. Totally. Decisively. Left dumbfounded. Another example, more research-oriented, derives one from one of the BYU-UUtah winter conferences on strategy. I gave a talk on transaction costs economics and competitive strategy. It was rather abstract. After the talk a very (in fact, extremely) prominent strategy scholar asked me in a very pointed and inquisitive manner: “What is in this that I can teach my MBA students?” Again, I was left dumbfounded, probably in awe of this person (and didn’t come up with the obvious answer: “So, do you think that is a good criterion for scientific progress?”).

Of course, there are other Rick Perry episodes from my career, but these two must suffice. Of course, these gaffes just emphasize my humanity. And your Rick Perry episodes?

10 November 2011 at 12:50 pm 4 comments

Older Posts Newer Posts


Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts


Former Guests | posts


Recent Posts

Recent Comments



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).

%d bloggers like this: