Posts filed under ‘Former Guest Bloggers’
Deconstructing Bob and Jeff
| David Hoopes |
For better or worse the hard-hearted authors at O&M have hurt the feelings of our colleagues in other fields. In the spirit of being more specific about why the bloggers here are so harsh I’d like to take a look at an award-winning paper from the Academy of Management Review (Ferraro, F., Pfeffer, J., and Sutton, R.I., “Economics Language and Assumptions: How Theory Can Become Self-Fulfilling”). In this paper we are told how the language of economics (the assumptions that people are selfish cheats) encourages people to be selfish cheats. Aside: in my opinion sociologists have a much darker image of humankind than economists (if we must make careless generalizations).
As I note in an earlier post, the idea of self-interest is often grossly misrepresented. Perhaps economists can thank themselves for this. I don’t know. However, it is important to examine this component of price theory by looking at its roots. In developing public policy toward government intervention in the allocation of goods (mercantilists vs. free traders in Smith’s day) allowing people to make their own decisions is more efficient than having a handful of people making the decisions for everyone. And even if individuals focus on their own needs the result for society is better than having a few people guessing at what everyone else wants and imposing their guesses.
The starting point of the AMR critique is the ever-present complaint about the economics world telling us all that we need to be selfish and greedy (make decisions based on our own self-interest). From here, our friends in the org. theory camp state, “If people are relentless in the pursuit of their own self-interest and equally relentless in the their lack of concern for others’ interests. . . .” What? Where did that second part come in? A very important bridge theory has been added. If people pursue their own self-interest then they also cannot care about anyone else. Management scholars wonder why their (our) work is not used in public policy debates. Small wonder. (more…)
Organizational Learning: Observations from the Shadow of the Fires
| David Hoopes |
A few Mondays [more than a few now] ago the T.V. got turned on pretty early and we found a host of officials discussing a couple of very large fast-moving fires. Someone in charge of emergencies spoke. The sheriff spoke, the fire chief, and more. Winds were blowing above 40 miles per hour and fires were spreading . . . like wildfire! My wife and I started gathering important papers (my ES-137) and other things in case we needed to make a run for it.
We did have to evacuate. However, our house was fine except for some minor wind damage.
What amazed many in the San Diego area was how well local media, emergency institutions, the private sector, and the public coordinated. The news media were very helpful (wow!), fire fighters, sheriff’s office, and other such crews were clear about how people could help them (get out of the way), and local grocery stores delivered lots of food and other supplies to shelters.
It seems there was quite a bit of learning from the many problems that occurred in a previous fire (2003).
Things That Make You Go Hmmm . . . .
| Steve Phelan |
I had an interesting encounter with two economists in my college last week. The first was during a presentation I was giving to the MBA Association on buying opportunities in Las Vegas following the subprime debacle. I assured the audience that buying opportunities existed but you needed to to be very knowledgeable about the area of town in which you intended to buy. The professor of economics who preceded me in the presentation immediately retorted, “if so many opportunities exist then why isn’t everybody buying?” (more…)
Metanomics
| Steve Phelan |
I have used a lot of simulation studies in past papers and I currently sit on the editorial board of the Journal of Computational and Mathematical Organization Theory (CMOT). However, I was surprised to stumble upon an emerging field in economics called “metanomics.” (more…)
Relevance and Practice
| Steve Phelan |
Peter, thank you for the warm introduction. In addition to 15 years in academia, I also had another life working in strategic planning in major corporations in Australia and undertaking the odd strategy consulting gig. I’ve also had the pleasure of teaching executive courses on four continents.
In all this time, the most common critique I encounter is the lack of relevance of academic courses to the “real world”. I am sure that many readers will agree that the 1980s and 1990s were an exciting time to be a strategy practitioner or researcher. The work of Porter and Barney (among many others) brought a level of rigor to the discipline that promised to revolutionize the practice of strategy.
(more…)
Introducing Guest Blogger Steven Phelan
| Peter Klein |
We’re very pleased to welcome Steve Phelan as our newest guest blogger. Steve is associate professor of management at the University of Nevada, Las Vegas, founding editor of the Strategic Management Review, and author of many interesting papers on entrepreneurship, cognition, networks, and the resource-based theory of the firm. Steve’s been a regular commentator for some time and we’re happy to have him join us on the “main page.” Welcome, Steve!
Monty Python and the Health Insurance Business in California
| David Hoopes |
My wife was talking to our dental insurance company the other day and John Cleese, Michael Paline, Eric Idle et al. came to mind.
Wife (Chris): I don’t understand why you haven’t paid us for this.”
Dental non-insurer: “You went over your limit.”
C: “It was our first visit.”
DN: “Sorry.”
“You don’t pay for teeth cleaning?”
“Oh yes. We do.”
“But you are not going to pay for this visit for teeth cleaning?”
“No, I’m sorry but you can only do it so many times per year.”
“That was the first time.”
“Sorry.”
“Can you tell me why you haven’t paid the January visit?”
“I don’t think we’ve received the claim.”
“I’ve sent you that claim five times”
“Oh, that’s right. Sorry. We need to see the x-rays.”
“The dentist sent you the x-rays 10 months ago.”
“Well, we don’t have them anymore.”
“Where are they?”
“We sent them back.”
“Where did you send them? I didn’t get them.”
“We sent them to who[m]ever sent them to us.”
“Who was that?”
“Whoever we sent them to.” (more…)
Demsetz, Coase, Postrel, and Williamson
| David Hoopes |
A recent post by Nicolai ponders Demsetz’s approach to transaction costs. My understanding (interpretation) of Demsetz’s “The Theory of the Firm Revisited” is quite different from Nicolai’s. Here’s how I remember that paper.
One of Demsetz’s complaints about transaction costs economics is that a number of very different events are bundled together under the term “transaction.” Williamson’s take on transaction costs focuses largely on comparative governance costs. How does making sure a supplier doesn’t cheat you compare to making sure your employees don’t cheat you? Coase’s version of transaction costs is very different. Coase tends to talk about a variety of other frictions that can occur independently of governance costs. These are what Demsetz calls management costs. Demsetz thinks (quite correctly) that referring to these two types of costs using the same term is confusing. In his Nobel speech Coase notes how his beliefs were more consistent with Demsetz’s than with those emphasizing governance.
Steve Postrel and I (in disucssing capabilities in SMJ 1999) separate cooperation costs from coordination costs. I think of this as fitting the Williamson versus Demsetz and Coase types of transaction costs (or management costs as Harold says). Costs dedicated to aligning incentives are different from costs of making sure everyone has the same plan. Steve and I go on to differentiate the costs of sharing specialized knowledge from the costs of coordinating. (Notice how I moved from Coase and Demsetz to myself?!).
Back to Harold. Demsetz believes that you needn’t have oppourtunism to have organizations. Postrel (2003) in an earlier version compared knowledge and governance as theories of the firm. Where Demsetz believes firms economize on managerial costs (or Coasian transaction costs) Postrel believes that without opportunism the firm is unnecessary.
I’m more with Harold (at least in my own mind I’m not sure Harold really wants me tagging along).
A Truly Noble Nobel — Should Gore Really Have Gotten This Prize?
| David Hoopes |
So, my last use of the word noble was a typo, but I left it in case someone might think I’m clever.
Am I the only one who finds Vice President Gore’s prize to be a trifle disturbing?
Former guest blogger extrodinaire Steve Postrel’s post “Taxes al Carbon” raised a number of issues regarding common assumptions on the extent and causes of global warming.
Many people seem to concede (including Gore) that his movie is often incorrect. However, this is rationalized because the issue merits more attention than it gets.
Does anyone else wish the peace prize had more to do with peace?
More on the Noble Prize (or the Economics Prize in Memory of Nobel)
| David Hoopes |
Since the O&Mers have been so quiet about the N prize I guess I’ll ramble a bit. In a comment on one of Peter’s posts I mentioned Demsetz and Alchian. For some reason I had it in my head that A.A. had already won. That’s what I get for staying at UCLA for so long (Alchian had just quit teaching when I got there).
I don’t know why I thought Alchian had won it. “Production, Information costs and Economic Organization” (with Harold Demsetz), American Economic Review 62 (1972): 777-95 is a pretty amazing paper. And “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process” (with Robert Crawford and Bejamin Klein), Journal of Law and Economics (1978) has been very influential. Though I think people think of Ben Klein for that paper. As noted above, Alchian is very well known for (and thought of because of ) “Uncertainty, Evolution and Economic Theory,” Journal of Political Economy 58 (1950): 211-21.
Having said all that, I think srp is correct in that Alchian’s best chance is going in with Nelson and Winter for evolutionary economics or Demsetz and Williamson or Oliver Hart for theory of the firm. It’s hard to imagine that evolutionary economics is that appreciated. I think Sid Winter is grossly underrated. His body of work in economics and strategy is pretty amazing.
As readers of my posts might guess, I am a pretty big fan of Demsetz. I don’t know that Harold is as productive or quantitative as most award givers might like. Stilger and Coase were pretty big fans. But, Hart and Williamson seem more likely award winners.
Over at orgtheory.net they’ve been discussing sociologists and management people who (in some alternate universe) might win. There are not too many Herb Simons out there.
Why Are Markets So Scary? Some Things (Liberal) Academics Get Wrong
| David Hoopes |
Many people make incorrect assumptions about capitalism. Some would have us believe that capitalism is based on greed, selfishness, and promotes behavior that is completely self-centered. This is a common interpretation of Smith’s advice to allow people to make decisions based on self-interest. Examples are easy to find in the many organization theory-based papers complaining about economics and economists.
Two very good papers can aid in a deeper understanding of the invisible hand. First is James Q. Wilson’s “Adam Smith on Business Ethics.” A central point Wilson makes is that Adam Smith assumed people will behave with a moral sense. Wilson, “A moral man is one whose sense of duty is shaped by conscience; that is, by that impartial spectator within our breast who evaluates our own actions as others would evaluate it.” By suggesting people be allowed to make decisions based on their own self interest Smith was not advocating selfishness and greed. What then was he advocating?
This leads to the second paper, Harold Demstez’s “The Theory of the Firm Revisited.” In the third paragraph Demsetz notes that the debate between mercantilists and free traders was over the role of the government in the economic affairs of the state. “Is central economic planning necessary to avoid chaotic economic conditions?” The great achievement of the perfect competition model, what Demsetz argues should be called perfect decentralization, is its abstraction from centralized control of the economy.
Thus, the central element to capitalism is that decision making is pushed down as far as possible. (more…)
Columbia Dean Considers a Discussion With Hitler
| David Hoopes |
In today’s WSJ, Bret Stephens observes, “John Coatsworth, acting dean of Columbia University’s School of International and Public Affairs, made the remark that “if Hitler were in the United States and . . . if he were willing to engage in a debate and a discussion to be challenged by Columbia students and faculty, we would certainly invite him.” This was by way of defending the university’s decision to host a speech yesterday by Iranian President Mahmoud Ahmadinejad.” My own alma mater, Grinnell College, had Angela Davis speak at last year’s commencement to the chagrin of a few alumni. Granted A. D. is pretty small change compared to Ahmadinejad. Twenty years ago, students at Grinnell shouted down Jack Kemp because they disagreed with his perspective. I doubt A.D. got shouted down. I find it disturbing that it is considered progressive to listen to Dr. Davis but to shout down Mr. Kemp. Ahmadinejad got a rude welcome outside the U.N. But, it’s strange to think that Columbia’s faculty would probably treat George W. (hardly a perfect president) a lot worse than they treated this man who has called for and spent a great deal of money on the destruction of Israel (among other things).
Mental Illness in the Academy: Elyn Saks’ Brave New World
| David Hoopes |
Monday’s LA Times had an amazing story about a USC law professor who has managed to attend Oxford, Yale Law School, and become Dean of Research at the USC law school while battling schizophrenia. Many O&M readers have probably read the book or seen the movie, “A Beautiful Mind,” the incredible story of mathematician John Nash. Like Nash, Elyn Saks suffered hallucinations, delusions, and a litany of other terrible effects of her disease. I probably should not use the past tense because I don’t believe medicine can remove these things. However, they can be tempered. Saks recently published a memior, “The Center Cannot Hold: My Journey Through Madness.” Thus, in addition to the direct suffering of the disease, Saks is now willing to take on the problems of social stigma, no small thing.
I wish I could think of some profound comment or lesson. There are many among us who suffer from a variety of mental illnesses. For better or worse, more jokes about academics come to mind than profundities. Here’s to the day when the social stigma associated with mental illness is much smaller. I’ve always thought I’d wait until I got tenure to open up any of my (much more minor) nightmares.
9-11, Strategic Management, and Public Policy
| David Hoopes |
On this sad anniversary I find myself thinking about public policy and the field of strategic management. After six years, how well integrated are our intelligence agencies? A few management and strategic management scholars probably have a lot to say about such issues. Many more might struggle to apply what they work on to this problem or any other policy issue.
A few years back Bill Ouchi was commended by a panel at an Academy of Management meeting. Bill had long since forsaken traditional academic concerns and devoted his considerable intellect to public policy. His main target: public schools. Ouchi’s work has had a profound impact on a number of large and at one time largely dysfunctional school districts. Portions of the session were published in The Academy of Management Executive (recently renamed). I missed the session, but the account in AME had Bill’s talk followed by a number of notable management scholars opining about other applications of management research to public policy. I’ve met a few of the speakers. They are very nice people who are genuinely concerned about the field of management and about how we might be of service to a constituency beyond our students and the business world. Nevertheless, most of what these talented, hardworking, and successful scholars had to say about the field of management and its possible applications to public policy seemed far removed from a direct application to policy questions. (more…)
Culture, Cognition, and Strategy
| David Hoopes |
Although managers frequently refer to their companies’ culture, culture’s influence on business strategy receives limited attention in the academy. Over the years, organizational culture has gone in and out of fashion. Currently, it remains out of fashion. Yet, strategy researchers often stress the importance of shared beliefs, shared values, administrative history, and other organizational characteristics presumably influenced by or reflecting an organization’s culture. A cogent theory of culture and organizational culture can better integrate organizational beliefs, values, and knowledge with current theories of strategy (and for my interests in competitive heterogeneity). Of particular interest to me is a branch called cognitive anthropology.
Most anthropologists include themselves in one of two traditions. One, generally associated with Ward Goodenough, considers culture to be knowledge necessary to get along in a particular society. The other, generally associated with Clifford Geertz, considers culture as something outside of any particular person. Thus Geertz (1973: 12) decries “…the cognitive fallacy [that] culture consists of mental phenomena.” Building on Goodenough’s work, cognitive anthropologists describe culture in terms of member’s schema or cognitive models (e.g. D’Andrade, Hollins, Quinn, Hutchinson). D’Andrade states that cultural schema are “Socially inherited solutions to life’s problems” (1995: 249). (more…)
Thank You, Steve
| Nicolai Foss |
Steve Postrel has served for more than half a year as O&M guest blogger, our longest-serving GB so far. Peter and I have been extremely happy for Steve’s long tenure here, for he has contributed some of the most profound posts on O&M. Not surprisingly, these posts have also been among the most popular O&M posts. Peter and I coined the internal notion of the “Postrel Effect” to refer to the surge of O&M views that has always followed a Postrel post. Luckily, Steve has promised to frequently visit O&M and comment, so perhaps this way we may still benefit from the Postrel Effect. Thanks, Steve, for your excellent work here!!
I’ll Be the Terror Bird and You Can Be the Ostrich
| Steven Postrel |
In the July 2007 AMR, there is an interesting article by Matthew Cronin and Laurie Weingart that looks at “representational gaps” between differentiated specialists working together on problems like product development. They employ a Carnegie School approach and postulate that these gaps will tend to hinder joint problem solving. Different specialties conceptualize goals and constraints differently, they may have trouble communicating, and so on. (more…)
Incoherence Is Bad For You but Good For Us
| Steven Postrel |
I just finished reading David Hull’s remarkable Science as a Process (1988), and was struck by one of his arguments. One of his claims (not his major thesis) is that while each scientist strives to make his own work coherent and internally consistent, overall progress only occurs because the views of every school of thought and every discipline are somewhat incoherent. (more…)
Design Puzzles II
| Steven Postrel |
When I last posted on whether apparent inefficiencies in the design of objects and institutions were real opportunities or only mirages, there were many well-informed and thoughtful comments. One of the issues I addressed was the use of multiple queues at checkout counters, despite their theoretical inferiority to a single queue where the next available checker gets the next customer in line. (more…)
Thanks to Chihmao
| Peter Klein |
Thanks to Chihmao Hsieh for guest blogging over the last several weeks. We’ve greatly enjoyed his contributions and look forward to his continued participation in the comment threads and his insights on entrepreneurship, innovation, organization, and strategy. Thanks, Chihmao!
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