Posts filed under ‘– Foss –’
Professional Defenses
| Nicolai Foss |
In Critical Mass (an excellent book, although its treatment of economics is confused, but that is a different story), Philip Ball recounts an amusing anecdote about James Lighthill, an expert on the physics of fluid flow who did early work applying this part of physics to understanding traffic patterns:
In the Lighthill-Whitham model, the individuality of drivers is entirely submerged beneath average driving behavior. . . . This is ironic, for Lighthill himself was anything but average in his driving habits. He was a persistent speeding offender, but would explain in court that as Lucasian Professor of Mathematics at Cambridge (the chair once occupied by Newton), he was fully aware both of the laws of mechanics and of his social duty not to waste energy. As a result, he told the hapless judges, he felt obliged to desist from braking when going downhill. It seems that this defence was occassionally succesful (pp. 197-98).
Perhaps economists and management scholars should try something similar:
- The Decian Excuse: “Yes, your Honor, I did pay below the minimum wage, but that was because I know that what truly matters to the plaintiff is his intrinsic motivation.”
- The Kirznerian Excuse: “I did sell that stock in my company after learning from the CEO about the breakthrough in our drug development, but I did so in order to close pockets of ignorance in the market.”
- Etc. Please add.
Pomo Periscope XVIII: “The French Don’t Care What You Actually Say as Long as You Pronounce It Correctly”
| Nicolai Foss |
This line from My Fair Lady seems to be an accurate summing-up of the emphasis on rhetorics, conversation etc., a branch of pomo, in certain quarters in economic methodology and related fields and disciplines. Or, so Robert Solow argues in a review in the latest issue of the always-interesting Journal of Economic Methodology of Arjo Klamer’s Speaking of Economics; How to Get Into the Conversation (here is a site dedicated to the book, and here is another review).
Essentially, Solow criticizes those who engage in the conversation talk for not adding any substantive insights on the level of meta-theory (whether positive or normative). “I have real doubts,” he says about the utility of describing the practice of academic economics as a ‘conversation’ or a bunch of simultaneous conversations. . . . My claim is that it does not advance the serious understanding of what academic economists are up to, and its relation to what the economy is up to” (p. 94). He sums up by saying that “In the end, I did not find find the proposed connection between postmodernism and contemporary economics convincing. Maybe theories with little or no application, theories about chaos and complex systems, and theories that leave practical people clueless about the economy (those are all Klamer’s words) have something to do with the architecture of Frank Gehry or the philosophy of Gilles Deleuze, but the connection needs work” (p. 95). It seems so.
Lund Routines and Capabilities Workshop
| Nicolai Foss |
Niklas Hallberg, a post-doc researcher at the Lund University School of Economics and Management, and currently a visiting scholar at the Center for Strategic Management and Globalization at the Copenhagen Business School, has put together a nice afternoon workshop on the subject of “Routines and Capabilities — Useful Constructs for Management?”. It takes place on Thursday, June 25, so if you are in the vicinity of Lund University you may pop in and listen to various luminaries as well as yours truly. The program and other details are below. (more…)
Zupan on Leadership
| Peter Klein |
I’m not sure if leadership counts as an ill-defined, un-measured core construct but it certainly is an elusive one. Here is Mark Zupan’s attempt to get a handle on it. In brief, he describes leadership as the ability to convert a single-period prisoner’s dilemma game into a multiple-period game. “In a very fundamental way, leadership involves creating opportunity from a seemingly intractable setting that, if otherwise left to its own resolution, confines us to an inferior equilibrium. . . . This paper shows how effective leaders make this traverse through vision; enrolling others to participate in the ongoing play of the reformulated prisoner’s dilemma; commitment; integrity; communication; and authenticity.” Check it out.
My old friend Dwight Lee and I used to joke that we’d respond to the rise of leadership courses and programs in the MBA curriculum by developing our own program in followership, letting us exercise our comparative (and absolute) advantage freely. Of course no management concept is too droll to have its own academic literature.
One More Ill-Defined, Un-Measured (?) Core Construct: Routines
| Nicolai Foss |
It seems that O&M may usefully introduce a new category: “Constructs that are central to one or more management fields, but so far have not been measured.” Yesterday, we blogged on opportunity discovery, and could report only one existing scale in the entrepreneurship literature. Today the focus is on routines, a frequently discussed topic here on O&M.
Routines are, of course, absolutely central in much management research, notably strategic management, international business, technology strategy, organizational theory and much else. The construct itself was essentially introduced to management research in Nelson and Winter’s 1982 book, An Evolutionary Theory of Economic Change, although it is often argued that it originates somewhat earlier, namely with the behavioralists (Simon, Cyert, & March; for a critique of this interpretation, see this paper).
The boundaries of the concept are, even for management research, highly ill-defined and virtually everything in an organization, save for physícal capital, that has some degree of stability has been called a routine by some author. As if this extreme inclusiveness wasn’t enough, it has even been argued that routines can be “sources of continuous change.”
Such conceptual fuzziness would seem to imply that almost anything goes, empirically speaking. In fact, there is quite a lot of empirical work on routines, and of a rather diverse nature. However, it all seems to be qualitative in nature (e.g., this recent paper), as least as far as I can see.
So, do you know of any attempts to grapple empirically with routines in the sense of actual measurement? Are there any scales out there?
Opportunity Discovery Measurement Scale Bleg
| Nicolai Foss |
Opportunity discovery is a key construct in large parts of the recent management literature on entrepreneurship (e.g., this important paper). We have often blogged on opportunity discovery here on O&M, for example, noting the problematic relation of the management construct of opportunity discovery to Kirzner’s original notion, and suggesting that new projects may be superior units of analysis for certain purposes.
Still, the sensing, perception, discovery of, etc. opportunities is surely relevant in entrepreneurship studies and should not be bypassed. Which brings us to the issue of, How is it measured? Given that dozens of articles have been written now with “opportunity discovery” in the title, I am struck by the paucity of empirical work that actually makes a stab at measuring opportunity discovery. Most articles on opportunity discovery are theoretical. And most consider the antecedents of opportunity discovery (e.g., personal knowledge, psychological attributes, search costs) rather than the discovery itself. (more…)
The Extreme Makeover of the AMR
| Nicolai Foss |
I just received my copy of the April issue of the Academy of Management Review, stuffed with matrices, probability density functions, NKC models, Boolean algebra, isoquants, Max This and Max That, etc. etc. Yes — that’s right: The Academy of Management Review, the journal that over the last decade has only published one single formal article.
Of course, this is the long-awaited special issue, “Special Topic Forum on Formal Approaches to Management Theory,” edited by Ron Adner, Laszlo Polos, Michael Ryall, and Olav Sorenson. (One of the papers has already been extensively discussed here at O&M). The papers are a mixed bag in terms of the formal approaches that are applied, i.e., analytic methods, simulation, and formal logic. I have only read a couple of the papers (Alvarez & Parker on “Emerging Firms and the Allocation of Control Rights: a Bayesian Approach”) and Postrel’s “Multitasking Teams with Variable Complementarity: Challenges for Capability Management,” which both are excellent, but I look forward to reading the rest.
The editors supply an introduction which reiterates the often claimed benefits — familiar to those with an economics background — of formalization in terms of precision and transparency, logical consistency, and unanticipated implications (for a general treatment, see Suppes’s 1968 classic). They are careful to say that they “would not claim that verbal theorizing . . . has no place in management research”! (p. 206). (more…)
More Economic Institutions of Strategy
| Nicolai Foss |
In his post of yesterday, Peter failed to mention that among the O&M bloggers not just Klein and Lien but also yours truly contributed to the Nickerson and Silverman 2009 edition of Advances in Strategic Management. Specifically, with Stieglitz (Nils — and with an “e”) I have written “Opportunities and New Business Models: Transaction Costs and Property Rights Perspectives on Entrepreneurship.” The paper can be downloaded from SSRN.
Call for Papers for a Special Issue of JMS: “Micro-Level Origins of Routines and Capabilities”
| Nicolai Foss |
The micro-foundations theme is gaining increased attention in management research. As a partial reflection of this, please check the Call for Papers below for a SI of the Journal of Management Studies on the topic in the title of this post. Submit a paper! (more…)
New Foss Sell-Out (?) Paper
| Nicolai Foss |
With Siegwart Lindenberg, Professor of Cognitive Sociology at the University of Groningen, I have written “Why Firms Work? A Goal-Framing Theory of the Firm.” Colleagues already refer to it as the “Foss sell-out paper” (but wait until I blog on that recent sell-out paper on entrepreneurship and the government by a certain O&M blogger . . . ).
Whatever that is, the paper starts from the familiar and long-standing debate between organizational economists and proponents of the knowledge-based view, and the many interesting recent attempts to merge key insights from TCE with ideas on learning and capabilities (Argyres, Nickerson, Mayer, Leiblein, Zenger, Hoettker, and others). The underlying idea is that additional explanatory leverage, for example, with respect to understanding the boundaries of the firm, will emerge from an integration of the two (clusters of) theories. (more…)
Dynamic Capabilities: The Emperor’s New Clothes?
| Nicolai Foss |
One of the most delightful innovations in the recent history of management journals is the “SO!apbox Editorial Essays” in Strategic Organization. These are short and pointed “opinion pieces” by thought leaders, designed to provoke and raise debate. (Interestingly, these essays seem to be the most cited contributions to the journal).
The February issue of Strategic Organization contains an excellent critique of the dynamic capabilities view (DCV) — launched in the beginning of the 1990s by David Teece (however, the much cited Teece, Pisano, and Shuen paper wasn’t published until 1997) — by Richard Arend and Phil Bromiley, “Assessing the Dynamic Capabilities View: Spare Change, Anyone?” As Arend and Bromiley notes the DCV is the “new touchstone firm-based performance-focused theory” (p. 75).
Some of their critiques have been around for some time, but this is the first systematic compilation of these critiques, and the authors add quite a number of novel critical points. Inspired by Larry Laudan’s work in the theory of science, Arend and Bromiley assess the “ability of the DCV to explain successful change with logical consistency, conceptual clarity and empirical rigor” (p. 75). (more…)
The Danish Mortgage System to the Rescue?
| Nicolai Foss |
As many O&M readers will remember, George Soros recommended a “Danish fix” for the US mortgage crisis. The American Enterprise Institute is sponsoring a whole-day event today on the related, if more cautious, topic, “Can Elements of the Danish Mortgage System Fix Mortgage Securitization?” Here is the wiki on the Danish mortgage system.
New Friedman Book
| Nicolai Foss |
K. Puttaswamaiah has edited Milton Friedman, Nobel Monetary Economist: A Review of his Theories and Policies (Isle Publishing Co., 2009). I only know the names of a few of the contributors, but I do recognize a certain Samuelson, who recently “remembered” Friedrich Hayek in a scandalously superficial and misleading note published in the pages of the Journal of Economic Organization and Behavior. Ones hopes that Friedman isn’t up for a similar treatment, but perhaps he is: One of the chapters in the volume is titled, “Milton Friedman: A Late and Overestimated Master of Sophistry.”
Management Innovation Conference
| Nicolai Foss |
There are reasons to think that changes in organization designs, administrative systems, and managerial technologies are important sources of firm-level value creation. It is also quite conceivable that changes that amount to innovations in organization design, etc. may give rise to sustained competitive advantages. Business history, popular management writing, and some academic papers offer examples, notably the introduction of the M-form, TQM, the Oticon spaghetti organization, the HRM practices of Lincoln Electric, and so on. And yet, very little systematic, research-based knowledge exists about such “management innovation.” The first conceptual and theoretical treatment of management innovation as a subject deserving of focused inquiry is Julian Birkinshaw and Michael Mol’s paper in the Academy of Management Review — which was published in 2008!
To further research on management innovation, the Center for Strategic Management and Globalization at the Copenhagen Business School is arranging a conference on management innovation later this year (3-4 September 2009). Keynote speeches will be delivered by Julian Birkinshaw, Ed Zajac and Richard Burton. Details on the conference homepage (version 1.0). Submit a paper!
Oliver Hart: Hon Doc at CBS — and O&M Reader
| Nicolai Foss |
Every year in April the Copenhagen Business School confers honorary doctorates to prominent management theorists, finance scholars, economists, sociologists, etc. Oliver Williamson, James March, and Jay Barney have all received honorary doctorates. This year’s honorary doctors included no less than six scholars, of which one should be familiar to O&M readers, namely Professor Oliver Hart of Harvard University (Hart’s Harvard site is currently down — too many hits? ;-)). Hart is, of course, one of the authors of the seminal 1986 paper, “The Costs and Benefits of Ownership,” and the author of numerous other papers that build on this paper. His property-rights approach to the theory of the firm (really, the theory of the boundaries of the firm) is the dominant approach in economics.
Although I have met Hart on previous occasions, I didn’t expect him to recognize me. However, not only did he recognize me, he also greeted me with “You blog a lot!!” (I confess I didn’t disclose that it is Peter who blogs a lot ;-)). It turned out that Hart was well aware of O&M and apparently also likes it!
Austrian Economics and Strategic Management
| Nicolai Foss |
In terms of direct influence, the impact of Austrian economics (AE) on strategic management is fairly limited (e.g., Jacobson, 1992; Young et al., 1996; Foss et al., 2008). Different kinds of industrial economics, namely the SCP approach, the Chicago-UCLA school, and game theoretical industrial economics, have clearly been stronger influences. However, the points of contact and even overlap between the mainstream of strategic management and AE are many, and AE has the potential to contribute to the further development of the field. (more…)
Rizzo on Ideology
| Peter Klein |
Arguments about ideology are often the last refuge of the (intellectual) scoundrel. If you can’t refute someone’s scientific and technical arguments, accuse him of being an “ideologue,” thus rendering all his opinions tainted. Those of us sympathetic to markets are familiar with this rhetorical trick. “Only a free-market ideologue could oppose this government program. . . .” In other words, practical, open-minded, technocratic types all favor X, so only an irrational ideologue could favor Y. Of course, this argument cuts both ways. The point of my post on the ideology of Keynesian economists was to point out that one can just as easily say that interventionists are led by statist ideology to reject scientific and technical arguments in favor of laissez-faire.
Mario Rizzo has an excellent post on the proper use of “reasonable ideology” in framing political discussions. As Mario points out, ideology represents a set of default beliefs, beliefs that need not be irrational, but can be based on the accumulation of prior evidence. Like a Kuhnian paradigm, an ideology helps prioritize different types of evidence, helps establish ground rules for thinking about problems, and facilitates the operation of “normal science.” Like Bayesian priors, ideologies change slowly, as new information is revealed; indeed, they shouldn’t be abandoned based on one or two pieces of supposedly contrary evidence.
Reasonable ideologues of the world, you have nothing to apologize for.
Nifty Little Nuggets for Improving Your Impact
| Nicolai Foss |
OK — since we are apparently doing the ligther posts currently (cf. Lasse’s recent post, the Mahoney and Pitelis list, etc.), here’s some potentially useful (?), hands-on advice on how to improve your academic impact.
Academic impact is obviously a multi-dimensional construct. While often measured simply in terms of publications in high-ranking journals, many universities now increasingly look at citation counts (i.e., SSCI numbers). This makes considerable sense. While an uncited paper in, for example, the Academy of Management Journal (and such exist) may have some social value (after all, it does certify the author as a competent researcher), there is no social value in terms of broader knowledge dissemination (and the results thereof). While the US seems to have the lead (in social science) when it comes to letting citation counts matter, the European scene is rapidly changing towards an increasing emphasis on citation figures. After all, these figures can be easily gathered, compared, etc. by research and university bureaucrats, looking for new areas where they can meddle in a low-cost manner.
Here are some simple ideas that may help to increase your citation numbers: (more…)
Case Studies and Causal Inference
| Nicolai Foss |
Can case studies — in the extreme: a study of a single case — play any systematic role in causal inference? If so, how? These are the questions posed in a paper by brilliant LSE mathematical sociologist, Peter Abell, forthcoming in the European Sociological Review. The paper is essentially a summary of Abell’s work over more than two decades with building stronger foundations for “qualitative” or “case study” research (a more comprehensive statement can be found in the “A Case for Cases” paper on Abell’s site).
Of course, in the standard statistical interpretation of causal inference, N should be large, and certainly not equal to 1. And most social scientists believe there is no explanation without generalization (an issue discussed at length by Popper, Dray, Collingwood, and others in the philosophy of history as well as by more recent social scientists such as Ragin and Goldthorpe — and James March (here)), so causal inference is predicated on generalization and comparative method. (more…)
Copula Functions and the Current Crisis
| Nicolai Foss |
Forget about effective demand failures, malinvestments caused by expansionary monetary policy, or even political regulation of the US housing market: The true bete noire in the current meltdown is a specific copula function (here is the Wiki on copulas), or more precisely David Li’s application of it to the modeling of default correlation (here). Or, so Wired claims. Writer Felix Salmon is pretty explicit in his condemnation of Li’s approach:
It was a brilliant simplification of an intractable problem. And Li didn’t just radically dumb down the difficulty of working out correlations; he decided not to even bother trying to map and calculate all the nearly infinite relationships between the various loans that made up a pool. What happens when the number of pool members increases or when you mix negative correlations with positive ones? Never mind all that, he said. The only thing that matters is the final correlation number — one clean, simple, all-sufficient figure that sums up everything.
Apparently, major finance academics — like Darrell Duffie — had warned against the application of Li’s work.
I am by no means competent to pass any judgment on Salmon’s story. I merely recommend it as a highly interesting read — and wonder how long it will take before the performativity-in-financial-markets-crowd picks it up. Actually, it may rather support the Felin & Foss argument that false social constructions are eventually weeded out (here).
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