Posts filed under ‘Institutions’
Experimental Methods in Development Economics
| Peter Klein |
Readers interested in the J-PAL approach to development may enjoy an upcoming conference on “New Techniques in Development Economics,” 19-20 June at Australian National University. “[T]he conference will focus on new methodological approaches to development economics research, particularly field experiments and natural experiments.” Details, courtesy of SSRN, are below the fold. (more…)
Accountics in Japan
| Peter Klein |
We discussed earlier the increasingly quantitative nature of accounting research, what some call accountics. (When I hear that term I’m reminded of a cartoon I once saw showing a woman dressed as a dominatrix standing before a company reception desk: “Oh, you must be the new accountrix.”)
Tomo Suzuki’s paper, “Accountics: Impacts of Internationally Standardized Accounting on the Japanese Socio-economy” (Accounting, Organizations, and Society, April 2007), argues that the postwar spread of Western accounting practices “directed new courses of the Japanese economy and firms through the development of ‘statistical habits of thought.’ ” A follow-up paper (same journal, August 2007 issue) traces the history of Japanese accounting practices in more detail, emphasizing the role of academic accountants in fostering the postwar accounting revolution. (See, professors can make a difference!)
Summer Workshop on Social Norms
| Peter Klein |
It’s hosted by Spain’s Urrutia Elejalde Foundation and takes place in San Sebastián, 14-17 July 2008. (Basque Country, not Spain, if you prefer.) The impressive speaker list includes Jon Elster, Diego Gambetta, Herb Gintis, Russell Hardin, and Edna Ullmann-Margalit, among others. Details here.
Best Web-Themed Passage I Read Today
| Peter Klein |
A succinct summary of government’s attitude toward the web, courtesy of today’s NY Times:
[M]any in the business world . . . understood years ago that the Web represented not simply another mass medium to be gamed but also a fundamental shift in the once static relationship between producer and consumer. It is by nature a participatory medium, in which customers demand a more personal stake in the products they consume. . . . Companies have realized that since they can no longer expect to unilaterally define the market the way they once did, they might as well let the market have some control over designing and branding the product.
Perhaps only in Washington, where so few people have dominated so much for so long, is this trend viewed as inherently negative.
From a short piece on the spontaneous, decentralized, web-fueled Ron Paul campaign (via Lew Rockwell). See more here and here.
Pomo Periscope XVII: Intellectual Property as Narrative
| Peter Klein |
[T]here remains a dissatisfying lack of a comprehensive explanation for the value of intellectual property protection. This is in part because the economic analysis of law tends to undervalue the humanistic element of intellectual property. This Article aims to fill that void. It offers a new explanation for intellectual property rooted in narrative theory. Whereas utilitarianism and natural rights theories are familiar, there is at least another basis for intellectual property protection. This Article contends that all the U.S. copyright, patent and trademark regimes are structured around and legitimated by central origin myths — stories that glorify and valorize enchanted moments of creation, discovery or identity. As a cultural analysis of law, rather than the more familiar economic theory of law, this Article seeks to explain how these intellectual property regimes work the way they do.
This is from Jessica M. Silbey’s paper, “The Mythical Beginnings of Intellectual Property,” in of the Berkeley Center for Law and Technology working-paper series. Postmodernism has had a growing influence in legal theory since at least the critical legal studies (CLS) movement of the 1970s. Proponents of that movement, according to the Legal Information Institute’s dictionary, “believe that logic and structure attributed to the law grow out of the power relationships of the society. The law exists to support the interests of the party or class that forms it and is merely a collection of beliefs and prejudices that legitimize the injustices of society.” (more…)
New Paper on Law and Entrepreneurship
| Peter Klein |
Gordon Smith and Darian Ibrahim’s paper “Entrepreneurs on Horseback: Reflections on the Organization of Law,” is up on SSRN. The paper surveys the emerging field of law and entrepreneurship and urges legal scholars to pay closer attention to the entrepreneurship literature. “In making our case, we argue that research at the intersection of entrepreneurship and law is distinctive. In some instances, legal rules and practices are tailored to the entrepreneurial context, and in other instances, general rules of law find novel expression in the entrepreneurial context.”
(The paper’s title alludes to an inside joke about the mythical “law of the horse,” a hyper-specialized branch of legal theory no serious law school would include in its curriculum. Law and entrepreneurship, in other words, is not quite as silly as the law of the horse.)
Do Transactional Lawyers Add Value?
| Peter Klein |
What do bosses do? asked Stephen Marglin in his famous 1974 article. Nothing productive, he said; they create hierarchies with task specialization to extract value from laborers. Despite heroic efforts by David Landes and others to set the record straight, the myth has persisted, in some quarters, that “management” — including intermediation, market-making, the facilitation of transactions, etc. — does not create economic value, but merely redistributes it. Making widgets is OK, but merely facilitating widget transactions is wasteful or redundant.
How about transactional lawyers? Do they add value by reducing transaction costs, minimizing the chance of ex post litigation, reducing regulatory burdens, acting as reputational intermediaries, providing confidentiality, or exploiting economies of scope? Or do they simply extract value from the transacting parties?
An interesting paper by Steven Schwarcz, “Explaining the Value of Transactional Lawyering,” uses survey data to examine this question and finds that reducing regulatory costs appears to be the main source of added value. The results “present a very different picture of how business lawyers add value than that portrayed by existing scholarship, challenging the reigning models of transactional lawyers as ‘transaction cost engineers’ and ‘reputational intermediaries,'” activities in which lawyers do not necessarily have a comparative advantage. Instead, suggests Schwarcz, it is precisely lawyers’ expertise in (business) law that gives them a role in the contracting process. (The broader question of whether legislators, most of whom are also lawyers, deliberately design rules of contract law, regulation, administrative procedure, and the like so that only other lawyers can understand them, is not addressed.) (more…)
Doing Business Blog
| Peter Klein |
The World Bank’s Doing Business group, which provides valuable information on business regulation and enforcement across the globe, has a new blog. (Via PSD.)
Ratings Agencies
| Steve Phelan |
One of my hobbies is to perform counterfactual exercises in organization design (yes, sad, I know). Here is my current challenge. Ratings agencies like Moody’s are paid by the issuers of securities rather than the purchasers of the securities. This creates an agency problem because the rater has an incentive to give high ratings to stay in the good graces of the issuer — who will presumably “shop around” to get the best ratings.
Assuming this arrangement is efficient then what are the counterbalancing factors that offset the agency costs? How much would agency costs have to increase to trigger an adjustment in design? Was the the subprime fiasco such a trigger? What would the new design look like?
I know that economists are reluctant to second-guess how the market will work out its problems — but strategists are in the business of being proactive about these things :-)
Pros and Cons of Academic Blogging
| Peter Klein |
Scott Eric Kaufman, a PhD candidate in English literature who blogs at Acephalous, says academic blogging connects scholarship to the wider world:
There’s no reason our community needs to consist solely of people we knew in grad school. Why not write for people who don’t already how you think about everything? Why not force yourself to articulate your points in such a way that strangers could come to know your thought as intimately as your friends from grad school do?
The informal publishing mechanisms available online can facilitate such communication so long as bloggers write for an audience informally. Senior faculty might continue to orient their scholarly production to the four people whose scholarly journals don’t pile up in the corner of the living room, slowly buried beneath unpaid bills and unread New Yorkers. Whether they know it or not, bloggers write for an audience larger than the search committees we hope to impress. They have already started eye-balling the rest of the world, asking themselves how they can communicate with it without seeming to pander to it.
But the signal-to-noise ratio is very low, counters Adam Kotsko, a PhD student in theology: (more…)
The Perils of Microcelebrity
| Peter Klein |
I was pleased to learn that I might be a microcelebrity: someone “extremely well known not to millions but to a small group — a thousand people, or maybe only a few dozen.” This definition comes from Clive Thompson, who suggests in the current issue of Wired that anyone with a blog, a Facebook page, a Flickr account, or a similar web presence can be a microcelebrity in this sense. “Odds are there are complete strangers who know about you — and maybe even talk about you.”
Okay, in my case perhaps “nanocelebrity” is the better term. The broader point, according to Thompson, is that in today’s highly transparent, densely networked, web 2.0 world in which more and more of our personal information ends up preserved for posterity in the Google cache, people may be reluctant to say or do anything that could be controversial.
Blog pioneer Dave Winer has found his idle industry-conference chitchat so frequently live-blogged that he now feels “like a presidential candidate” and worries about making off-the-cuff remarks. Some pundits fret that microcelebrity will soon force everyone to write blog posts and even talk in the bland, focus-grouped cadences of Hillary Clinton (minus the cackle).
As a university professor I worry about this from time to time. Will some off-hand remark made in class end up on a student’s blog? Some students record my lectures on their mp3 players (usually, though not always, with prior permission). Will audio clips — or, heaven forbid, video clips — of me fumbling and stumbling over some difficult concept end up on YouTube?
Fundamental Questions About Organizations
| Peter Klein |
Our most popular tag here at O&M seems to be ephemera, but occasionally we write a “big think” post (e.g., this one). Today I’ll offer another. A colleague recently asked me to write down, for a research project we’re sketching out, some “fundamental questions about organizations.” He wanted my off-the-cuff response, not a carefully crafted set of ideas. Here’s what I came up with:
1. Does organizational form matter? How much does it really affect performance, however measured? Organizational form might not be that important because (a) its effects on performance are small relative to the performance effects of technical or allocative efficiency; (b) organizational form is easily changed and always chosen optimally to fit the circumstances; or (c) organizational form is merely a legal distinction without any economic significance. (more…)
Integrity and the Academy: Are Academicians in a Position to Preach About Social Responsibility?
| David Hoopes |
Do college faculty — generally untrained in ethics (except for philosophy professors, etc.) — have any business teaching social responsibility and ethics? This question comes from my most recent post.
I interviewed for a job at the Army War College a few years back. I was fortunate enough to hear a high-ranking general speak to the students (mostly lt. colonels). One of things he said is that he stayed in the armed services because of the high integrity of its members. I know in some corners this will be scoffed at. However, I think there is no small amount of truth to this.
I thought, “Cannot say that about academia.” Why so cynical? There are many things one could complain about. There are more passive-aggressive people in the academy than most other place. Academics seem especially prone to speaking with a forked tongue.
The clearest example I can think of is the tenure process. Certainly the tenure process can bring the worst out in people. Beyond that, it is amazing how sexually biased the tenure process seems to be. It is especially amazing to see how entrenched the “old boy” network is among men who fancy themselves liberal or progressive.
I have no proof that the tenure process is sexually biased. Nevertheless, in management it certainly seems easy to think of women getting left out of the loop. Thus, fewer social interactions, fewer coauthored papers, less mentoring. Now part of this may have to do with where I have worked: schools that have had multiple discrimination and harassment charges brought against them.
Yet, I don’t think this is limited to management departments. It’s pretty strange that an institution that fancies itself as being so progressive is so backwards when it comes to mentoring and networking women through the old (or young) boys clubs.
Here is a link that offers some evidence. I found the stuff at the bottom of the page most useful.
Gobble, Gobble
| Peter Klein |
Happy Thanksgiving to our American readers, who gather around the table today to celebrate with family and friends and give thanks for that great legacy bequeathed to us by our Pilgrim forebears — property rights, of course!
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).
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…)
Ghemawat: Borders Matter
| Peter Klein |
The world is still round, says Pankaj Ghemawat in his new book Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter (HBS Press, 2007). Here’s an interview that lays out the main argument. FDI, for example, is growing, but remains only about 10% of total global investment. If the world is flat, asks Ghemawat, why isn’t it much more? The answer is institutions, though the exact mechanisms by which the institutional environment contributes to home-country bias are unclear. (Thanks to Marshall Jevons for the video pointer.)
See also Ghemawat’s blog posts on global strategy from the HBS Discussion Leaders site.
More on Recommendation Letters
| Nicolai Foss |
An earlier blog post addressed the ever fascinating topic of recommendation letters. Last week I had the opportunity to discuss this with a prominent MIT Professor who provided some inside information. According to her, if the expression “solid worker” or “hard-working” or the like appears in a recommendation letter, this is likely to be a signal that the recommended person isn’t too bright. That sounds reasonable enough. But I was somewhat disturbed to learn that what I took to be uncontroversial boilerplate — namely, the standard ending “Don’t hesitate to contact if you need further information about NN” (or some such formulation) — is a signal that something is likely to be wrong with the applicant and that the recipient of the letter better drop the writer a phone call. I have ended all my recommendation letters with that formulation! Here is a question for the O&M readership: Is it a problem to have a Euro professor recommending you?
AEI Conference on Private Equity
| Peter Klein |
Those of you in the Washington, DC area may wish to drop by “The History, Impact, and Future of Private Equity: Ownership, Governance, and Firm Performance,” November 27-28 at AEI. The lineup features heavyweights like Michael Jensen, Glenn Hubbard, Josh Lerner, Steve Kaplan, Ken Lehn, Karen Wruck, Annette Poulsen, Mike Wright, and David Ravenscraft, along with a few not-so-heavyweights like me. From the conference announcement:
From humble beginnings twenty-five years ago on Wall Street, the leveraged buyout boom has developed into a veritable industry; today, 30 percent of all corporate merger and acquisition activity in the United States is driven by buyout firms, and the sector commands over $2 trillion in leveraged assets. Along with hedge funds and real assets, private equity is now seen as an important alternative investment class, and fundamental changes in corporate control, governance, modern capital markets, institutional investing, and the funding of entrepreneurial pursuits have all been driven by the growth and evolution of the private equity sector.
My view is that the growth of the PE sector represents an increasingly important manifestation of entrepreneurship — not only because private equity helps fund new ventures, but because the creation of new financial instruments such as high-yield (“junk”) bonds, the establishment and management of diversified buyout funds, the use of private equity to restructure public enterprises, and the like are themselves entrepreneurial acts, given an appropriately broad understanding of entrepreneurship.
The Social Transformation of American Business Schools
| Peter Klein |
Is management a profession? Are collegiate schools of business legitimate professional schools? The answers Rakesh Khurana’s book provides to both questions are “not yet” and “maybe never.”
Thus opens Donald Stabile’s EH.Net review of Rakesh Khurana’s From Higher Aims to Hired Hands: The Social Transformation of Business Schools and the Unfulfilled Promise of Management as a Profession (Princeton, 2007). Business schools, argues Khurana, emerged in the late 19th and early 20th centuries to provide “legitimacy” to management, giving it the same professional status as medicine or law. In Khurana’s account, this project failed largely because business schools, under the influence of powerful foundations such as Carnegie, Rockefeller, and Ford, promoted a curriculum focused on quantitative methods rather than the softer elements of ethics and social responsibility. (The main culprit: economics, or at least a 1970s-era Chicago school caricature of economics, as we’ve seen many times before.)
For additional commentary and discussion see Jim Heskett’s HBS Working Knowledge piece and this article from Business Week.
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