Posts filed under ‘Management Theory’
HBS Case on Wikipedia
| Peter Klein |
Karim Lakhani and Andrew Mcafee have written a Harvard Business School Case on Wikipedia. Unlike normal Harvard case, it’s available free online. (But you can’t edit it!)
What Would Genghis Do?
| Peter Klein |
After reading Jack Weatherford’s book on Genghis Kahn last year I imagined writing a business bestseller, “Genghis Kahn on Leadership,” or maybe “Genghis Kahn: Five Lessons for Managers.” Unfortunately I’ve been beaten to the punch (1, 2). (Thanks to Tommy Sallee for the links.)
Syllabus Exchange III
| Peter Klein |
Four syllabi for PhD courses on organization theory:
- Andrew Van de Ven’s Macro-Organization Behavior (Minnesota)
- Tim Pollock’s Organization Theory (Penn State)
- Mikko Ketokivi, Juha-Antti Lamberg, and Saku Mantere’s Advanced Organization Theory (Helsinki University of Technology)
- Teppo Felin’s Microfoundations of Strategic Organization (BYU and Helsinki University of Technology)
Thanks to Teppo for all four links.
Alfred D. Chandler, Jr. (1918-2007)
| Peter Klein |
Alfred D. Chandler, Jr., passed away last Wednesday at the age of 88. Chandler was an inspiration and informal mentor to my own dissertation adviser, Oliver Williamson, so I feel like I’ve lost a grandparent. Essential reading on Chandler (besides Strategy and Structure and The Visible Hand) includes Williamson’s 1981 The Modern Corporation: Origins, Evolution, Attributes, David Teece’s review essay of Chandler’s Scale and Scope, and former guest blogger Dick Langlois’s Vanishing Hand project. Chandler’s 2006 paper on the technology sector turned out to be (I think) his last published paper. Chandler’s father, by the way, may have been a closet Misesian.
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…)
HBR Freebies
| Peter Klein |
Harvard Business Review’s “Forethought” essays are now free, one month at a time, to non-subscribers. Here’s one on open-source R&D by Nicolai’s CBS colleague Lars Bo Jeppesen.
Taxis and Limos
| Peter Klein |
Murray Rothbard told a story about his first encounter with the terms taxis and cosmos, used by Hayek to distinguish “planned” from “spontaneous” orders. Upon seeing a lecture announcement Rothbard’s wife Joey exclaimed, “Look, Hayek’s giving a lecture on taxis!” As life-long New Yorkers they naturally assumed Hayek meant the yellow ones with lights on the roof.
Even Rawley, a PhD Candidate in strategy at Berkeley, is doing interesting work on taxis (the yellow ones). I recently read his paper “Diversification and Adaptation: How Organization Drives Taxi Firm Performance,” which exploits a change in taxicab regulation to perform a natural experiment on the effects of related diversification on firm performance. Until the mid-1990s US taxi firms were prohibited from entering the market for limousines (the airport kind, not the stretch kind). As those restrictions were relaxed, taxi firms began to diversify into the limo market. Rawley uses Census data to show that diversifying taxi firms were less efficient and less likely to adopt computerized dispatching systems than non-diversifiers, which he interprets as a story of costly organizational adaptation. (more…)
History of Best Practices Bleg
| Peter Klein |
A friend asks for help tracing the history of management thought on best practices:
I believe I can separate out two schools: the incrementalists (incremental improvement) and the revolutionists (redo your firm, industry). . . . Is there a journal article categorizing the big names (Drucker, Deming, Hamel, Collins) in a history of thought manner? That would really help me.
Any suggestions?
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.
Teaching Management through Demotivators
| Peter Klein |
Like many of you, I’ve considered using teaching my managerial economics course using a Dilbert collection as a secondary, or even primary, text. There are so many good ones! One could also use the wickedly funny Demotivators to illustrate key managerial and organizational theories and concepts. For example:
- Gains from trade: Consulting
- Agency costs: Get to Work, Indifference, Mediocrity
- Human capital: Incompetence, Potential
- Time preference, discounting: Procrastination
- Risk aversion: Risks
- Relative performance evaluation, internal labor markets, tournaments: Blame, Delusions, Elitism, Success
- Organizational innovation, strategic change management: Change
- Free riding, teams: Irresponsibility
- Hierarchy: Power
- Role of the institutional environment: Effort, Underachievement
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…)
Athey on Organizational Complementarities
| Peter Klein |
Harvard’s Susan Athey has won the John Bates Clark medal. Commentators are hailing her age (one of the youngest Clark medalists at 36), gender (the first female winner), and reputation (profiled in the New York Times as a 24-year-old PhD candidate). Here I’ll offer a few remarks about one of her most important papers for organizational scholars, “An Empirical Framework for Testing Theories About Complementarity in Organizational Design” (with Scott Stern). (An NBER version of the paper is here; as far as I know it is still unpublished.)
I blogged recently about complementarities among organizational form, technology, and market conditions. Athey and Stern’s paper tackles the problem of measuring complementarities among organizational practices. If particular practices occur in clusters (as modeled, for example, by Holmstrom and Milgrom, 1994), it is difficult to estimate the marginal impact of adopting any particular practice. Moreover, the endogeneity of the decision to adopt individual practices makes it difficult to judge whether practices are in fact complementary (i.e., performance enhancing). Athey and Stern develop a method for identifying complementarities by constructing “activity-specific instruments” that control for unobserved heterogeneity. The proposed approach, which jointly estimates the adoption decision and the productivity effect of organizational practices, is becoming increasingly influential in the empirical literature on organizational design. (more…)
Communication Channels, Asset Specificity, and Some Humor
| Chihmao Hsieh |
First off, I’d like to thank Nicolai and Peter for adding me on as a guest blogger at O&M. I have admired it from afar. Hopefully I can introduce other provocative topics universal to the esteemed readership, but also practice my more text-oriented sense of humor. Ergo, this opening post…
Last week I gave a lecture to my undergrad class that included remarks about the differential ability of communication channels in handling messages of varied complexity or “equivocality.”
The research cited (Lengel and Daft, 1988) during the lecture categorizes communication channels into 3 groups: email, fax, voice mail; telephone and video conferencing; and face-to-face interaction. I independently argued that these 3 categories distinctly varied in terms of their relation to asset specificity: excepting underdeveloped countries, email, fax, and voice mail each involve investments low in asset specificity (no need for shared location, no need for shared timing); (more…)
Interview with Bill Starbuck
| Peter Klein |
The March 2007 Academy of Management Learning & Education features Michael Barnett’s interview with William H. Starbuck, recently retired as ITT Professor of Creative Management at NYU. (SSRN version of the interview here.) Topics: statistical significance versus “substantive importance” (à la McCloskey — but see Siegler and Hoover 2005); complex versus simple forecasting techniques; keys to organizational learning (and “unlearning”); organizational design as process, not outcome; the relationship between management research and social issues more broadly; and more. A good read.
Empowerment at Netflix
| Peter Klein |
Strong delegation, despite potential drawbacks, can be effective in particular circumstances. DVD-by-mail pioneer Netflix has gone this route, with apparent success:
Netflix’s time off rules — or lack thereof — are part of a broad culture of employee autonomy instilled in the company when [CEO Reed] Hastings founded it a decade ago. The executives trust staffers to make their own decisions on everything — from whether to bring their dog to the office to how much of their salary they want in cash and how much in stock options. Workers are treated, as Chief Talent Officer Patty McCord likes to say, as adults.
“We want our employees to have great freedom — freedom to be brilliant or freedom to make mistakes,” Hastings said.
Curiously, there is nothing in the news story about how output is measured, how employees are compensated, or other elements of the firm’s organizational architecture. What happens, for instance, when employees make mistakes? As argued by Brickley, Smith, and Zimmerman in their 1995 article (and textbook), decentralization works only when bundled with appropriate compensation and performance evaluation systems. Or, in the words of that great philosopher, Spider-Man’s Uncle Ben, “With great power comes great responsibility.”
Thanks to Eddie Garrett for the tip.
Vaguely Defined Property Rights
| Peter Klein |
The shareholder model of the firm has come under increasing criticism from a variety of quarters. Stakeholder approaches argue that employees, suppliers, customers, community members, and others with relationships to the firm should have their preferences taken into account. Theories of worker empowerment, “flatter hierarchies,” and similar approaches advocate delegating decision rights to employees, not top management. Models of loose and open collaboration treat the firm as simply a node in a cluster or network of firms, with decision authority widely dispersed throughout the larger structure.
All these approaches, despite their differences, reject the standard shareholder model in which the firm’s owners, as residual claimants, possess unique rights of decision management and control. And yet, there is a substantial literature on the organizational costs of alternative models, particularly those in which residual claims are not alienable, separable from other agent roles in the organization, or marketable. These costs have not been widely appreciated in the literature on stakeholder management, worker-managed teams and firms, and the like.
My colleague Mike Cook, a specialist in cooperatives, describes these as costs of “vaguely defined property rights.” Mike argues that cooperatives, partnerships, and similar structures are plagued by two kinds of free-rider problems, a horizon problem, a portfolio problem, a control problem, and an influence costs problem, all because their equity shares are not alienable assets that trade in secondary markets. Consider each in turn. (more…)
Has Strategy Forgotten About Rivalry?
| Nicolai Foss |
Austrian economists and other “process economists” have often argued that what is (or at least was) called “competition” in mainstream/neoclassical/orthodox/etc. economics has rather little to do with the real phenomenon. Hayek made the point famously and forcefully in his 1946 essay, “The Meaning of Competition,” and several Austrians have echoed him since then. (The best study of the transformation of “competition” (particularly, “perfect competition”) into the opposite of competition is Frank Machovec’s 1995 book, Perfect Competition and the Transformation of Economics).
It seems that strategy scholars may also have forgotten about rivalry. (more…)
The Kaleidic Career
| Peter Klein |
Old-timers may remember Ludwig Lachmann’s metaphor of the kaleidoscope, popularized in his 1976 essay “From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society” (Journal of Economic Literature 14, no. 1: 54-62). Lachmann borrowed the metaphor from G.L.S. Shackle, who wrote of a society “interspersing its moments or intervals of order, assurance and beauty with sudden disintegration and a cascade into a new pattern.” In this fundamentally disorderly system, Lachmann maintained, there are no systematic equilibrating tendencies. As Roger Garrison succinctly put it, “In a kaleidic world, one pattern of prices gives way to another, but there can be no claim that a given pattern is any closer to a general equilibrium, or represents any higher degree of coordination, than the one that preceded it.”
Personally, I find the kaleidic metaphor rather unhelpful. As I’ve noted before, I see the Kirzner-versus-Lachmann debate over the “tendency toward equilibrium” that dominated Austrian economics during the 1980s as a big distraction. The point is not whether markets actually converge to some kind of long-run equilibrium, but whether in the absence of any change in the underlying data prices would tend to converge toward “final” equilibrium values. The founding Austrians such as Menger, Böhm-Bawerk, and Mises thought the profit motive was sufficient to establish such tendencies, but they were not primarily interested in long-run equilibrium prices. Instead, they sought a framework for explaining the actual, day-to-day prices that unfold in historical time. (Look for a paper on this soon.)
Anyway, the kaleidic metaphor eventually fell out of favor with Austrian economists. But now it’s back, in the context of the “kaleidic career.” (more…)
Design Puzzles
| Steven Postrel |
So you’ve purchased your coffee and chosen to sit at one of those round outdoor tables. As you lean on the table to write comments on a paper, it rocks annoyingly, possibly spilling some of your coffee. You try moving the table slightly on the uneven pavement, hoping to stumble into a stable configuration for its four feet, but several attempts fail. Eventually you resort to shimming one of the table feet with a piece of folded up paper, or a stack of sweetener packets, and this creates at least a metastable condition. Looking around, you notice that many other tables have similar combat repairs, so that the cafe looks like a furniture trauma ward. (more…)
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