Posts filed under ‘– Foss –’
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…)
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…)
Podcast Interview with Nassim Taleb
| Peter Klein |
Mathematician, investor, and polymath Nassim Taleb’s books Fooled by Randomness and The Black Swan are attracting increasing attention among social scientists. (See previous O&M blog entries here and here.) Indeed, during the opportunity discovery workshop described by Nicolai Rich Makadok plugged The Black Swan so many times I figured he and Taleb must have a kickback arrangement. Anyway, here is an interview with Taleb by Russ Roberts on the EconTalk site for those of you into the podcast thing.
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…)
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