Posts filed under ‘Management Theory’
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?
The Latest Management Bestseller
| Peter Klein |
Followers of the management-guru literature won’t be surprised by this Daily Telegraph report that Mein Kampf is a business bestseller in India. Alas, like Good to Great, the book suffers from the fatal flaws of sampling on the dependent variable and choosing a non-representative sample period. (In a longitudinal sample, the Führer’s managerial performance doesn’t doesn’t look so great, does it?)
As is often the case, the best commentary on this (apparently true) story comes from the Onion: “Well, they sure don’t want to follow Gandhi’s model. All that guy ever did was lose money.”
Peters Against Aggregation
| Peter Klein |
When I saw the title of Brayden’s post, “Don’t Give Up on Aggregation Yet, Peter,” I thought he’d been reading my macroeconomics posts. Alas, Brayden, prefers meatier fare, such as this post by Barnard College sociologist Peter Levin. Levin is worried about the aggregation of knowledge represented by the open-source, wikified, crowdsourcing movement about which people are all, well, atwitter. (We’ve expressed more than a few reservations about this stuff ourselves.) His main concern, if I understand correctly, is the possibility of information cascades. However, much of the cascades literature deals not with the wisdom of crowds, but the wisdom of experts (tulip-bulb traders, mortgage-backed securities underwriters, etc.). The more expertise decision-makers grant to their peers, the more likely they — in the face of uncertainty — will interpret their peers’ (ostensibly expert) opinions as reliable indicators of underlying reality, and hence the greater the likelihood of cascades.
Brayden takes a different tack, arguing that aggregation mechanisms can be designed to mitigate the chance of outliers biasing the results. I think Brayden is right but am not sure his comments address the underlying mechanism — the microfoundations, to use a certain co-blogger’s favorite term — that Levin is worried about.
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…)
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…)
Killing the Fax
| Lasse Lien |
I’m in Spain, and I just got a fax. It’s been quite a while since I got one of those (faxes). The experience got me thinking about why the fax network still exists. The technology is clearly inferior to other technologies for any use I can think of, and has been so for quite a while now. Still you will be hard-pressed to find a business address that does not include a fax number. We seem to be in a prisoner’s dilemma situation now. The aggregate benefits are probably smaller than the aggregate costs, but nobody wants to exit first.
In general there seems to be a bias in the literature on network technologies, where a lot of attention has been devoted to bandwagon effects on the adoption side, but little has been said about the exit phase (based on a 5-minute poolside literature review). This could be because the two phases are completely symmetric, with the disincentive to exit early mirroring the disincentive to enter early. If the two phases are not fully symmetric, however, it would be nice to know more about the exit side. Since new network technologies are invading our lives at an accelerating pace (MsN, Facebook, Twitter, etc.), the problem of exit is IMHO as acute as the problem of adoption.
HT: Peter Klein (who adopts them all).
Sutton Alert
| Peter Klein |
I haven’t made way through all of Bob Sutton’s contribution to the HBR symposium, “How to Fix Business Schools,” but I read the summary on Sutton’s blog, and Bob manages to work two whoppers into the opening paragraph. First, he calls Oliver Williamson “a major proponent of Agency Theory.” (Bob, for the differences between agency theory and transaction cost economics, try Williamson’s 1988 Journal of Finance paper. Or any introductory textbook.) OK, a nit-pick. But consider this: “Many economists teach and believe that humans are selfish and greedy.” Apparently Bob has read Williamson’s description of opportunism as “self-interest seeking with guile.” Rather than think about what this means, or consider the context in which Williamson uses the term, Bob turns to his dictionary, which tells him that guile means “treacherous cunning, skillfull deceit.” Ergo, economics teaches cunning and deceit!
In the HBR piece itself, Bob manages to make the obligatory link between Alan Greenspan and Ayn Rand, though calling Greenspan a follower of Rand is a bit like saying the Black Panthers were inspired by Gandhi. (As Greenspan repeatedly reminded us, he believed in Rand’s ideas “at the high philosophical level,” i.e., not at all, where actual policies were concerned.) The opening of the HBR piece is informative, however, in suggesting how Sutton may have came to his views about economics and economists:
In my experience, most economists at top business schools are clueless about the nitty-gritty of management, which can’t be captured in elegant mathematical models. They treat any teaching remotely related to what leaders actually do on their jobs as a low status activity; at faculty meetings, I’ve seen economists and their followers dismiss and ridicule professors who teach “soft” skills. Those who speak in simple language and use words instead of numbers are often screened out, expelled or sentenced to spend their days at the bottom of the pecking order. And even faculty who bring rigorous evidence that challenges economic assumptions are badly treated.
I’m sorry that Sutton’s interactions with economists haven’t been more pleasant. But, really, what do his personal experiences have to do with the substance of economic doctrine, or its application to management? You won’t learn anything about these from reading this stuff.
Cooking by the Numbers
| Peter Klein |
Management by the numbers is out; will cooking by the numbers be next? The WSJ reports:
[A]s people look for quicker and easier ways to make everyday meals, some are moving away from the rigidity of recipes and advocating improvisational cooking, where measurements are approximations and ingredients are interchangeable.
It’s common to distinguish between two personalities in the kitchen: the deliberate, systematic, careful personality, which tends to excel in baking, and the wilder, risk-taking, adjust-on-the-fly personality, which does better with other types of cooking. But the use of careful and precise measurements has been a staple of most kinds of home cooking for a hundred years:
The rise of recipes that use precise measurements is widely credited to Fannie Farmer, a student, and later, director of the Boston Cooking School, who published “The Boston Cooking-School Cookbook” in 1896. Until Ms. Farmer’s manual, cookbooks were written in prose, calling for a pinch of this or a handful of that.
“The Boston Cooking-School Cookbook,” which survives today as “The Fannie Farmer Cookbook,” featured nearly 2,000 recipes that gave detailed instructions using a standardized system of measurement (teaspoon, cup, etc.). Ms. Farmer also included scientific explanations with her recipes, and wrote essays on housekeeping and cleaning. The rising middle-class and subsequent growth in the number of women looking to homemaking as a profession turned Ms. Farmer’s book into a hit — it has sold more than 4 million copies to date. (more…)
New Online Books
| Peter Klein |
Thanks to the Mises Institute, the Institute of Economic Affairs, the Library of Economics and Liberty, and other organizations, great works in social science continue to appear in free online editions. Some of the newest include:
- Carl Menger’s Investigations into the Method of the Social Sciences (1883), which features the famous section (book 3, chapter 2) on unintended consequences;
- Larry White’s Free Banking in Britain (1984); and
- Hayek’s Individualism and Economic Order (1948), which contains the classic essays “Economics and Knowledge,” “The Use of Knowledge in Society,” and “The Meaning of Competition,” among others.
Public Entrepreneurship
| Peter Klein |
A surprising aspect of the recent growth in the entrepreneurship literature is the number of papers, projects, courses, centers, etc. studying entrepreneurship in non-market settings: “social entrepreneurship,” “cultural entrepreneurship,” “environmental entrepreneurship,” and so on. At my own university students can take entrepreneurship courses not only in the Colleges of Business or Engineering but in the College of Agriculture, the School of Natural Resources, the College of Journalism, and even the School of Social Work. (One of my colleagues organized a conference last year aimed at cattle ranchers seeking to market their, um, byproducts as fertilizer, with the classic title: “Manure Entrepreneurship: Turning Brown into Green.”
Translating concepts, theories, and research methods from the entrepreneurship literature to non-market settings raises challenging issue, however. How is entrepreneurship defined? What corresponds to entrepreneurial profit and loss? What is the entrepreneur’s objective function? Are there competitive processes that select for the better entrepreneurs? None of the classic writers on entrepreneurship — Cantillon, Say, Schumpeter, Knight, Mises, Kirzner — wrote explicitly on entrepreneurship in non-market settings, as far as I am aware. Mises, in fact, distinguishes sharply between “profit management” (or entrepreneurial management) and “bureaucratic management,” identifying the former with initiative, responsibility, creativity, and novelty and the latter with rule-following within strict guidelines (see Bureaucracy, 1944, and chapter 15, section 10 of Human Action, 1949). (more…)
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!
Management Theory and the Current Crisis
| Peter Klein |
Here is a short piece by Nicolai and me written for a general audience, “Management Theory Is Not to Blame.” We discuss the role of resource heterogeneity in management theory and critique the vulgar Keynesianism that dominates mainstream commentary on the crisis. The graphic with the shovel alone is worth the click. Comments welcome here or at the Mises blog.
New McKinsey Videos
| Peter Klein |
Acumen Fund founder and CEO Jacqueline Novogratz shares stories of social-sector entrepreneurship in an excerpt from her new book, The Blue Sweater. A video interview with the author takes you behind the book.
Google’s chief economist says executives in wired organizations need a sharper understanding of how technology empowers innovation.
Tarun Khanna says their common optimistic entrepreneurialism makes them a formidable force.
Change Management Bleg
| Peter Klein |
I am giving some lectures next week at the University of Angers, France, a series on change management and another on globalization. (And hanging out with old friend Guido Hülsmann.) I have some change-management materials prepared but am looking for additional readings, classroom exercises, cases, etc. If you have any teaching materials on change management suitable for MBAs or undergraduates (whose first language isn’t English!), I’d appreciate seeing them.
Computable Entrepreneurship
| Dick Langlois |
I just returned from New York, where I was a discussant at a session on entrepreneurship. (Peter was supposed to have been part of the session — too bad he couldn’t make it.) I discussed a presentation by my old friend Roger Koppl. I have written before about Roger’s work on forensic science administration. This presentation, which drew on a couple of Roger’s recent papers (see here and here), was called “Who Needs Entrepreneurs?” Here is the abstract:
The mathematics of “computable economics” proves that entrepreneurship policy is unlikely to succeed if it presumes policy makers can replace the unplanned results of the entrepreneurial market process with ex ante judgments about which enterprises are best. It is mathematically impossible for policy makers or their assignees to make the required computations of opportunity costs. Some business professors dream of finding a grand algorithm that will allow them to guide entrepreneurial decisions and to judge in advance which decisions are good and which bad. The logic of computable economics, however, reveals this dream to be a form of magical thinking.
This is fascinating stuff that should be of considerable interest to O&M readers.
Slides on “Putting Entrepreneurship into Strategy and Organization”
| Peter Klein |
You’ve read the book. You’ve seen the movie. You attended the seminar. Now download the slides. Or something like that. Anyway, Lasse begged me to post the slides from this morning’s talk at NHH — or maybe he begged me not to post them, I forget which — so here they are. Some of the slides may not make much sense without the animation (and accompanying patter), but sadly the event was not captured on video, where it could have won next year’s Oscar in the “Best Obscure Academic Talk” category.
Klein Seminar at NHH
| Lasse Lien |
Monday will be a big day at the Norwegian School of Ecomics and Business Administation. P. G. Klein will give a seminar under the title “Putting Entreprenurship Into Organization and Strategy Research.” Not only will he give a seminar, but we shall have the pleasure of his company from Sunday until Wednesday. If Peter’s blogging frequency goes down early next week it will be because he’s having such a good time here, and if it goes up, it will be because he is so inspired by being here.
Pixar’s HR Strategy
| Peter Klein |
Mostly, it’s about hiring ultra-nerds with good communication skills. To wit: You want people who have become exceptional at a tiny discipline, no matter how obscure or dorky, since it’s that compulsion to truly master something that predicts how they’ll handle a new task. (Wannabe Pixar employees: Don’t bury your unicycle or juggling skills on your resume.) Another idea is looking for people who have failed and overcome — as [HR chief Randy] Nelson puts it, “The core skill of innovators is error recovery not failure avoidance,” which is key if you’re asking someone to solve a never-before-solved problem. But perhaps the squishiest trait is the ability to make others around you better, through communication and camaraderie.
From Kottke via Fast Company. See also “How Pixar Fosters Collective Creativity” from last September’s HBR.
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