Posts filed under ‘Institutions’
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…)
More on Legal Origin
| Peter Klein |
Back to the debate over the role of legal origin in economic performance (see here and here). Stefan Voigt proposes an interesting natural experiment: In many international transactions parties can choose the contract-law regime governing their relationship by designating a particular national legal system in a mandatory arbitration clause. As expected, English common law is most frequently chosen. Surprisingly, however, Swiss (German civil law) and French civil law are chosen almost as much. Unfortunately the data do not permit an econometric analysis of legal-regime choice that controls for other possible influences. Still, the fact that civil-law codes are chosen so often raises questions about the view of LLSV (not to mention Hayek, Leoni, and many others) that common law is fundamentally superior to civil law.
What’s In a (University) Name?
| Peter Klein |
An organization’s name is an important part of its identity. Names can also be valuable signals to market participants about mission, values, and strategy. Certainly, names seem to matter: a 2001 paper by Michael J. Cooper, Orlin Dimitrov, and Raghavendra Rau, “A Rose.com by Any Other Name,” documented a positive and significant stock-price reaction to announcements of adding “dot-com” to company names. (No word on the reaction to the reverse, as when Monster.com changed its name to Monster in 2003.)
Two universities in my state have gotten into the act. In 2005 Southwest Missouri State University changed its name to Missouri State University to reflect a more national orientation. (In most US states the “University of XYZ” is the original state university and “XYZ State University” is the newer, land-grant institution; in Missouri, however, the land-grant designation was given in 1870 to the already-existing University of Missouri, officials of which strongly opposed giving the name Missouri State to a rival institution.) Now the University of Missouri system has announced that the University of Missouri-Rolla, one of four campuses in the state system (and home of guest blogger Chihmao Hsieh), will change its name to Missouri University of Science and Technology. The name change is “is part of chancellor John S. Carney III’s goal of making UMR one of the nations top 5 technological research universities by 2010,” according to a news release. But will it smell as sweet?
Update: My old college classmate Jim Surowiecki, author of The Wisdom of Crowds, wrote about corporate name changes for Slate back in 1997.
Political Instability and Financial Development
| Peter Klein |
The latest salvo in the debate over the role of legal origin in financial-market performance comes from Mark Roe. In “Political Instability and Financial Development” (with Jordan Siegel) he argues that political instability is a more important determinant of financial development than trade openness, latitude, and, particularly, legal origin as modeled by LLSV. “Surprisingly, despite the widespread view in the law and finance literature of legal origin’s importance, not only is political stability highly robust to legal origin, but, for many years, our results for key indicators and specifications neither show Common Law to be consistently superior nor French Civil Law to be consistently inferior to other legal families in generating strong financial development outcomes.”
See also my “Politics and Productivity” on the interaction between political institutions, economic freedom, and national economic performance.
The Growth of Cities: A Formal Model
| Peter Klein |
Luís Bettencourt, José Lobo, Dirk Helbing, Christian Kühnert, and Geoffrey West’s paper “Growth, Innovation, Scaling, and the Pace of Life in Cities” (Proceedings of the National Academy of Sciences 104, no. 17, April 24, 2007) is getting a lot of attention, garnering plugs in Scientific American and Nature. They use data on innovation, employment, wages, GDP, consumption, crime, disease, housing, and infrastructure from US, European, and Chinese cities to estimate a “power law scaling function” linking demographic, socioeconomic, and behavioral indicators to city size. Such indicators, 
Findings:
Many diverse properties of cities from patent production and personal income to electrical cable length are shown to be power law functions of population size with scaling exponents,
that fall into distinct universality classes. Quantities reflecting wealth creation and innovation have
(increasing returns), whereas those accounting for infrastructure display
(economies of scale). We predict that the pace of social life in the city increases with population size, in quantitative agreement with data, and we discuss how cities are similar to, and differ from, biological organisms, for which
Finally, we explore possible consequences of these scaling relations by deriving growth equations, which quantify the dramatic difference between growth fueled by innovation versus that driven by economies of scale. This difference suggests that, as population grows, major innovation cycles must be generated at a continually accelerating rate to sustain growth and avoid stagnation or collapse.
For more on cities see these posts on Jane Jacobs and this one on clusters. Here is Ed Glaeser’s influential 1992 paper (with Hedi Kallal, Jose Scheinkman, and Andrei Shleifer) on growth in cities. Other important Glaeser papers on cities include this one with Jesse Shapiro, this one with Albert Saiz, and this one with Christopher Berry. Here is Glaeser’s review of Richard Florida’s Creative Class and here is Florida’s blog. And here is an interesting special issue of the Review of Austrian Economics on the new urbanism.
Update: Here is Florida’s take on the paper.
Theoretical vs. Teórico vs. 理论: How the Precision of Foreign Language Relates to the Cost of Innovation
| Chihmao Hsieh |
Recently, bloggers Nicolai and Peter have highlighted the unfortunate confusions corresponding to the usage of the terms conceptual vs. theoretical, as well as usage of “method” vs. “methodology.”
A few inquiries could deserve some attention. First, is this confusion specific to those terms as they appear in the English language? For instance, perhaps other languages have their own labels indicating the concepts of “conceptual” and “theoretical” but the root words (e.g. concept, theory) involved are less substitutable. I’m also guessing that other languages have distinct labels for “method” and “methodology,” whereby less confusion emerges. (more…)
Media, Dummy Variables, Fame, Fathers of Sociology, and School Shootings
| Chihmao Hsieh |
By now, all readers of this blog are probably well-aware of the massacre at Virginia Tech that took 33 lives. (My own prayers go out to all those affected by the tragedy.)
Some controversies are bound to be re-visited during and after the investigation (e.g. gun control) but others are starting to reveal themselves as mainstream for the first time. Namely, the media itself may be promoting these types of shootings. (more…)
Does Your Neighborhood Really Need Traffic Signs?
| Chihmao Hsieh |
A month ago, I was traveling and spotted on a newsstand the then-current issue of US News & World Report, the one where the cover story addresses what societal lessons the USA could learn from the rest of the world. Being born and raised in the USA for 30 years, I found this to be one of the unusually humble headlines by a US publication, and picked a copy up.
The news article reports on 30 short accounts of societal behaviors or conditions elsewhere, which the US should envy. Major differences in sociocultural norms and regulatory policies are evidenced.
The first such account profiles recent policymaking in Ipswich, England, where that city’s traffic planner has removed all traffic signs (including traffic lights and even curbs!) in an effort to reduce traffic accidents. (more…)
The As-Is Journal Review Process
| Peter Klein |
Eric Tsang and Bruno Frey urge editors to dump the revise-and-resubmit option, using “as-is” reviews instead. (Published version here, SSRN version here.)
[A] manuscript should be reviewed on an “as is” basis. Similar to developmental review, the process is double-blind and referees are encouraged to provide constructive comments on a manuscript. In contrast with developmental review, referees are given only two options when advising the editor regarding whether the manuscript should be published: accept or reject. The option of (minor or major) revision and resubmission is ruled out. Based on the referees’ recommendations, and his or her own reading of the manuscript, the editor makes the decision to accept or reject the manuscript. If the editor accepts the manuscript (subject to normal copy editing), he or she will inform the authors accordingly, enclosing the editorial comments and comments made by the referees. It is up to the authors to decide whether, and to what extent, they would like to incorporate these comments when they work on their revision for eventual publication. As a condition of acceptance, the authors are required to write a point-by-point response to the comments. If they refuse to accept a comment, they have to clearly state the reasons. The editor will pass on the response to the referees. In sum, the fate of a submitted manuscript is determined by one round of review, and authors of an accepted manuscript are required to make one round of revision.
Tsang and Frey identify four potential advantages to as-is reviewing: (1) authors don’t have to incorporate silly reviewer suggestions; (2) published papers reflect more closely the views of their authors, reducing “intellectual prostitution”; (3) the review process proceeds more quickly; and (4) authors are more likely to provide frank feedback to reviewers, improving the quality of the dialogue between peers. (Certainly this would eliminate the gratuitous “Thank you so much for your insightful comments” that begins every author response to referees.) There are drawbacks too, of course, but Tsang and Frey make a strong argument that the advantages outweigh the disadvantages. What do readers think?
The Excuse Doctrine in Contract Law: Country and Western Edition
| Peter Klein |
Tom Bell entertains his contract law class with a country-and-western song illustrating the excuse doctrine. Tom says he performs the song every year wearing cowboy boots and a bolo tie, then makes the students take a not-so-fun quiz to make sure they got the point. Not at the level of the Glenn Hubbard music video, but still pretty good for a stodgy law professor.
Promises, promises, I made to you,
And you, Darlin’, promised right back at me, too.
But my commitment is over. I’m cuttin’ you loose.
I owe you nothin’! Here’s my excuse:(refrain 1:)
Mistake, frustration, impratiCAbility:
Thanks to these reasons, I am now are free.
Mistake, frustration, impratiCAbility!
The whole deal is OFF, between you and me.
Organizational Innovation: Evidence from Food and Agriculture
| Peter Klein |
Just in time to address some of the issues raised in Nicolai’s provocative post, my colleagues Harvey James, Mike Sykuta, and I have revised our paper, “Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form,” which focuses on organizational innovation in US agriculture. Here is the abstract:
The rise of contract farming and vertical integration is one of the most important changes in modern agriculture. Yet the adoption and diffusion of these new forms of organization has varied widely across regions, commodities, and farm types. Transaction cost and other modern theories of the firm help explain the advantages of contracting and integration over reliance on spot markets and commodity brokers. However, these theories do not address the variation in adoption rates of new organizational forms. This paper lays out a more dynamic framework for understanding the evolution of organizational practices in U.S. agriculture, drawing on theories of the diffusion of technology and organizational complementarities. Using recent trends as stylized facts we argue that the agrifood sector is characterized by strong complementarities and that identifying and describing these complementarities more fully sheds considerable light on the organizational structure of agricultural production. We illustrate our arguments with case studies from the oilseed, poultry, and hog industries.
This is a draft, and comments are most welcome.
Organizational Innovation
| Nicolai Foss |
Organizational economists, new institutional economics, contract theorists, etc. are taken up with assessing alternative feasible allocations of decision and income rights, contracts, governance structures and institutions in terms of their impact on value creation for a relevant social system, whether a dyad, a multi-person firm, an industry, or a whole economy.
However, they usually assume that the set of alternatives is given to the choosing agent or set of agents. For example, in the Grossman/Hart/Moore property rights view, agents may not entirely understand the sources of payoffs, but they know exactly how alternative allocations of property rights impact payoffs. Of course, this is entirely in line with what we — given Peter’s post on Lionel Robbins below — may call “Robbinsian maximizing” in which the discovery and/or creation of new alternatives is deliberately disregarded. (more…)
Kicking Some AAS
| Peter Klein |
Bob Sutton may have a clever name with his “No A–hole” project, but here’s an even better one: Kick All Agricultural Subsidies, a.k.a “kickAAS.” It’s a blog, sponsored by the Guardian (UK), seeking the abolition of farm subsidies. Lots of interesting material there.
Paging the Pigou People
| Steven Postrel |
It looks like the rent-seekers at US-CAP are way ahead of the Pigou Club on CO2 restriction policy. So it looks like I’ll be able to oppose CO2 restriction not just on its own merits but because the policy instrument will be inferior.
Brayden King, Fabio Rojas at Missouri
| Peter Klein |
If you’re within driving distance of the University of Missouri campus in Columbia please join us for two upcoming seminars. Brayden King of BYU and orgtheory.net will present his paper with Gordon Smith, “Contracts as Organizations,” in the CORI seminar series April 11. Indiana University’s Fabio Rojas (also blogging at orgtheory.net) will present work on social movements and networks in an April 16 seminar jointly sponsored by McCEL and the Division of Applied Social Sciences. Visitors are welcome. (Contact me for details.)
Utility Strategy
| Steven Postrel |
Skeleton of a Harvard Business Review article:
How do you get sustainable advantage in a service business today? One approach: Become a new-wave utility. Think about Google or Yahoo, eBay, Amazon, etc. on the Internet; think about UPS or FedEx, Grainger, Ryder, Public Storage in logistics; think about McDonald’s, Starbucks, 7-Eleven, in convenience food consumption. (more…)
Secondary Markets
| Peter Klein |
Bet these guys prefer cap-and-trade to Pigouvian taxes:
I think this was a case of command and control, however.
Speaking of secondary markets, my longtime associate Dwight Lee proposes setting up a market for citizenships. “America’s homeless and panhandlers . . . are actually quite wealthy. Almost all own an asset — their United States citizenship — that is worth several hundred thousand dollars. The problem is that they are denied the right to sell that asset.” Dwight has a unique talent for spotting potential gains from trade where others fear to tread. . . .
Political Economy of the Internet
| Peter Klein |
Some time ago I wrote a short, popular piece on the political economy of the internet, focusing on its origins as a set of federal government projects. For a more comprehensive, scholarly take, see this paper by Massimiliano Neri, presented at this past weekend’s Austrian Scholars Conference.
Management Journal Impact Factors 2005
| Nicolai Foss |
The 2006 figures aren’t there, but the 2005 ones are out on the Web of Science (SSCI) (you should be able to find these if your library has access to the Web of Science; look under “Journal Citation Reports”). (more…)
Taxes al Carbon
| Steven Postrel |
Let’s suppose you’ve been swept up in the recent frenzy and decided that it actually makes sense to apply coercive regulations to reduce human carbon dioxide emissions. Let’s further suppose that you’ve caught up to the 21st century and know that imposing specific technology standards on particular sources of emissions is a sign of policy incompetence: (more…)
Organizations and Markets 
Recent Comments