Posts filed under ‘Recommended Reading’
Two Papers on Entrepreneurship
| Peter Klein |
Joe Salerno, “The Entrepreneur: Real and Imagined.” Contrasts Kirzner’s concept of the pure entrepreneur, an agent who possesses superior alertness to profit opportunities but himself owns no resources, with an alternative concept of the entrepreneur as property owner, a concept with equally strong roots in the Austrian tradition. Complements the Knightian approach emphasized in several of these papers.
Steve Phelan, “Entrepreneurship as Expectations Management.” Starting from the resource-based view of the firm, explores how firms can influence market participants’ beliefs about the value of resources it possesses. An interesting attempt to integrate entrepreneurship into the RBV.
New JC Spender Essay
| Nicolai Foss |
JC Spender is one of my favorite management thinkers. I may disagree with him, but he is usually challenging and very often profound (in contrast to some other management thinkers who have been discussed here at O&M). And he writes extremely well. JC has a new essay coming out in Journal of Management Inquiry, “Management as a Regulated Profession.” (It can also be downloaded from JC’s site). Much of the content of the paper is a discussion and diagnosis of the theory-practice gap, including pointing out that this discussion has been going for a very long time: “Redlich (1957) tells of the 19th-century German steel town that, its business failing, pressed the local business school principal to take charge. The business failed anyway, and he was put in jail — where he died — to ponder the gap between rigor and relevance. Deans beware!” (more…)
Aoki on Institutional Change
| Peter Klein |
The April 2007 issue of the Journal of Institutional Economics (3:1) features Masahiko Aoki’s paper “Endogenizing Institutions and Institutional Changes.” Abstract:
This paper proposes an analytical-cum-conceptual framework for understanding the nature of institutions as well as their changes. First, it proposes a new definition of institution based on the notion of common knowledge regarding self-sustaining features of social interactions with a hope to integrate various disciplinary approaches to institutions and their changes. Second, it specifies some generic mechanisms of institutional coherence and change — overlapping social embeddedness, Schumpeterian innovation in bundling games, and dynamic institutional complementarities — useful for understanding the dynamic interactions of economic, political, social, organizational, and cognitive factors.
Other papers from the same issue that look interesting include “Hayek and Popper on Ignorance and Intervention” by Celia Lessa Kerstenetzky, “Why Are Cooperatives Important in Agriculture? An Organizational Economics Perspective” by Vadislav Valentinov, and David Reisman’s review of Richard Swedberg’s New Developments in Economic Sociology.
Enacting Privatization
| Nicolai Foss |
Here at O&M we have often criticized and poked fun at ideas on social construction and their derived notions in management, such as Weickian “enactment.” Still, it is a fundamental tenet of classical liberalism that ideas matter and matter crucially (although some classical liberals, notably George Stigler, have argued that ideas matter much less than economists would like to think). One crucial area where ideas would seem to have mattered a great deal is privatization (a term that seems to have been invented by Peter Drucker).
In a paper, “Palace Wars and Privatization: Did Chicago Beat Cambridge in Influencing Economic Policies,” just published in the European Management Review, J. Muir McPherson adds to his earlier work with Bruce Kogut (this paper; for a related idea diffusion paper, see this), and examines the influence of “the epistemic community of American-trained economists” (based on the number of non-US, US and Chicago PhD degrees in a given country) on privatization policies. The dataset encompasses self-collected data on 13,422 economists. The statistical methodology is a hazard model. The results indicate a clear impact of the frequency of US-trained economists on the probability of privatization, but it is also noteworthy that among theUS economists, “As Chicago ideas won out . . . the difference between Chicago economics PhDs and graduates from other schools could no longer be detected from the general influence of US-trained economists on the decision to privatize.”
The Essential Rothbard
| Peter Klein |
My admiration for the great libertarian polymath Murray N. Rothbard is no secret. Indeed, I would name Rothbard and Oliver E. Williamson as the most important influences on my own intellectual development. So I was delighted to receive a copy of The Essential Rothbard, an overview of Rothbard’s intellectual contributions by former O&M guest blogger David Gordon. David makes use not only of Rothbard’s published works — a bibliography, included at the end of the book, fills 53 pages of small type! — but also a huge collection of unpublished correspondence, memos, and manuscripts. (Justin Raimondo’s biography An Enemy of the State is also worth a read, but focuses more on Rothbard’s political activities than his core scholarly contributions.)
Particularly interesting is the 9th chapter, “The Unknown Rothbard: Unpublished Papers,” covering Rothbard’s thoughts on Leo Strauss, Willmoore Kendall, and Ernest Nagel (one of Rothbard’s teachers at Columbia) along with generally negative reviews of Hayek’s Constitution of Liberty, Anthony Downs’s Economic Theory of Democracy, and Douglass North’s Economic Growth of the United States, 1790-1860, among other books.
Toyota at the Crossroads
| Steven Postrel |
The recent NYT article (not the Sunday Magazine story but an earlier business sectiion piece by Martin Fackler) describing Toyota’s struggle to transmit its methods and culture to large numbers of foreign workers, in the face of unprecedented recalls and quality problems, provokes a number of thoughts about the company’s past successes and its current problems. (more…)
Chip and Dan Heath on NPR
| Peter Klein |
The Made to Stick guys were interviewed on today’s NPR’s Morning Edition.
In other book news, check out this USA Today review of Phil Rosenzweig’s excellent The Halo Effect, which we blogged about earlier.
Does Catholic Social Teaching Matter in the Classroom?
| Cliff Grammich |
Starting with Leo XIII’s encyclical Rerum Novarum and continuing notably in the writings of Pius XI and John Paul II (and, to be sure, others as well), the Catholic Church has fostered a tradition of social teaching for application to modern business organizations. During John Paul II’s pontificate, the Church also sought to strengthen the identity and clarify the mission of Catholic higher education.
So what impact does the Church’s social teaching have in the undergraduate business classrooms of Catholic institutions? Roland and Linda Kidwell suggest it is muted; indeed, they “conclude that if Catholic institutions wish to provide an ethics-based business education, familiarity with and use of [Catholic social teaching] appear to be unnecessary at AACSB-accredited schools.” (more…)
18 February 2007 at 10:11 pm Clifford Grammich Leave a comment
Twilight of Sociology?
| Peter Klein |
I haven’t seen anything from our sociologist friends at orgtheory.net about Wilfred McClay’s piece in last Friday’s WSJ, “Twilight of Sociology,” so I’ll take a stab. (The gated version is here; this public link should work for a few days.) Ruminating on Seymour Martin Lipset’s death in December, McClay wonders “whether the discipline of sociology itself may now be ebbing away, as so many of its leading practitioners depart the scene without, it seems, anyone standing ready to replace them.”
McClay blames the decline of sociology on two factors: politics and scientism. (more…)
Knowledge Governance Primer
| Nicolai Foss |
Along with Euro colleagues such as Prof. Anna Grandori (Bocconi University) and my colleagues at the Center for Strategic Management and Globalization here at the Copenhagen Business School I have championed the notion of “knowledge governance” as a distinct perspective on knowledge management that explicitly relies on “rational” organization theory (including organizational economics), is methodologically individualist, etc. (more…)
New Paper by Mario Rizzo
| Nicolai Foss |
Just back from a loooong vacation in Vietnam, involving plenty of trashy crime novels; what better way is there to recover intellectually than reading a characteristically thoughtful paper by Mario Rizzo?
In “Paternalist Slopes,” Mario and his co-author Glen Whitman take issue with those who use arguments from the “biases” part of the bounded rationality literature to justify interventionism. Here is the abstract:
A growing literature in law and public policy harnesses research in behavioral economics to justify a new form of paternalism. Contributors to this literature typically emphasize the modest, non-intrusive character of their proposals. A distinct literature in law and public policy analyzes the validity of “slippery slope” arguments. Contributors to this literature have identified various mechanisms and processes by which slippery slopes operate, as well as the circumstances in which the threat of such slopes is greatest. The present article sits at the nexus of the new paternalist literature and the slippery slopes literature. We argue that the new paternalism exhibits many characteristics identified by the slopes literature as conducive to slippery slopes. Specifically, the new paternalism exhibits considerable theoretical and empirical vagueness, making it vulnerable to slopes resulting from altered economic incentives, enforcement needs, deference to perceived authority, bias toward simple principles, and reframing of the status quo. These slope processes are especially likely when decisionmakers are subject to cognitive biases – as the new paternalists insist they are. Consequently, soft paternalism can pave the way for harder paternalism. We conclude that policymaking based on new paternalist reasoning should be considered with greater trepidation than its advocates have suggested.
The Business of Weddings
| Peter Klein |
The wedding business is a $70 billion industry in the US. Vicki Howard’s Brides, Inc.: American Weddings And the Business of Tradition (University of Pennsylvania Press, 2006) explains how it got this way. Janice Traflet’s review for EH.Net focuses on the industry’s great marketing achievement:
As Howard expertly highlights, it was no easy task for businesses to supplant certain older wedding practices (which often held religious and ethnic significance) with newer ones that held more profit potential for them. Doing so required the creation of “invented traditions,” to borrow historian Eric Hobsbawm’s phrase. To make new practices (like diamond engagement rings and the groom’s band) acceptable and desirable, the wedding industry needed to make them appear as if they were rooted in ancient customs. At the same time, the industry also sought to subtly encourage the public to jettison practices that were not conducive to growing their businesses — such as the bride wearing an heirloom ring or a handed-down dress.
But the book does not support the Galbraithian image of consumers as hapless dupes. Notes Traflet:
It is interesting to contemplate (as Howard does) the degree to which consumers had the power to accept or reject the wedding industry’s “strategies of enticement,” to borrow William Leach’s term. Howard insists, “Women, who were understood to be the main consumers of wedding-related goods and services, were not mere victims of advertising and merchandising campaigns, nor did they simply accept wedding industry advice uncritically” (p. 5). In one example of a failed “invented tradition,” the male engagement ring never caught on, in part because it was unable to transcend contemporary gender mores. Howard also emphasizes the ways in which women, not just men, historically have been involved in marketing wedding products and services.
Don’t get me started on Galbraith, the celebrity “economist” who didn’t know any economics. As Murray Rothbard aptly observed, “Galbraith’s entire theory of excess affluence rests on this flimsy assertion that consumer wants are artificially created by business itself. It is an allegation backed only by repetitious assertion and by no evidence whatever — except perhaps for Galbraith’s obvious personal dislike for detergents and tailfins.”
Capital and Its Structure in PDF
| Peter Klein |
Ludwig Lachmann, a colleague of F. A. Hayek at the LSE in the 1930s and later professor of economics at the University of the Witwatersrand in Johannesburg, made major contributions to the Austrian theory of capital. His most important book, Capital and Its Structure (1956), is now available on the web as a PDF file (courtesy of the Mises Institute, which continues to add to its impressive online book collection).
Built to Regress to the Mean
| Peter Klein |
Of 35 “Excellent” companies studied in In Search of Excellence, 30 declined in profitability over the 5 years after the authors’ study ended in 1979. . . . Similarly, of 17 of the 18 “Visionary” companies studied in Built to Last, only 8 outperformed the S&P 500 market average for the 5 years after the authors’ study ended in 1990.
This is from Phil Rosenzweig’s The Halo Effect (Free Press, 2007) (I’m quoting this summary in CFO Magazine). Rosenzweig’s book reads like a primer on research methods for producers (and consumers) of popular management literature. Rosenzweig, a management professor at IMD, explains the problem of selection bias, the difference between correlation and causality, the need to compare rival explanations, the difference between absolute and relative performance, and more.
“Some of what I talk about in The Halo Effect is Research Design 101,” Rosenzweig tells CFO. “You gather your independent variables, independently of the thing you’re trying to explain. You don’t confuse correlation with causality, and you don’t confuse ends with means. You control for other variables. It’s basic stuff.”
But that basic stuff is hard to translate into a BusinessWeek best-seller.
Thanks for the link to Gary Peters, who notes that the book might be good reading for a doctoral seminar on research methods.
StrangEconomics
| Peter Klein |
Freakonomics not freaky enough for you? Try the papers listed at StrangEconomics. Learn the economics of olympic medals, primping (not pimping, though that has been studied too), toilet seat etiquette, long-distance running, and more. (HT: Bayesian Heresy)
Who says economists are attracted to puzzles, not problems?
Richard Florida’s Blog
| Peter Klein |
Richard Florida, author of The Rise of the Creative Class, has a new blog.
The Canon of Management Thought
| Peter Klein |
Gordon Smith points us to David Kennedy and William W. Fisher’s edited volume The Canon of American Legal Thought (Princeton, 2006). The volume features the “twenty most important works of American legal thought since 1890.” Click Gordon’s link for the list, which includes a few items familiar to O&M readers (Coase’s 1960 “The Problem of Social Cost”; Calabresi and Melamed’s 1972 “Property Rules, Liability Rules, and Inalienability”; and possibly Macaulay’s 1963 “Non-Contractual Relations in Business”). The more recent stuff is mostly “critical legal theory” (pomo alert!).
So, what are your selections for the canon of management thought? Both books and articles are fair game. (I imagine the after-1890 constraint won’t be binding.) You can include works in organizational economics if you like.
It’s Built to Last, But Is It Made to Stick?
| Peter Klein |
Chip and Dan Heath’s Made to Stick: Why Some Ideas Survive and Others Die (Random House, 2007) is being touted as the Next Big Thing in the popular management literature. Here is the Amazon link. Here is Guy Kawasaki’s interview with the authors. Here are words of praise from Bob Sutton. And yes, of course, the authors have a blog.
AEA Papers on Organizations
| Peter Klein |
A selection of papers on firms, contracts, organizations, and institutions from this weekend’s American Economic Association meeting in Chicago.
Incomplete Contracts and Ownership: Some New Thoughts
Hart, Oliver (Harvard University)
Moore, John Hardman (University of Edinburgh)
Diversity of Governance Governance-Organization Architecture Linkage: Complementarities and Human Assets Essentiality
Aoki, Masahiko (Stanford University)
Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice
Herbst, Patrick (Goethe University, Frankfurt)
Prufer, Jens (Goethe University, Frankfurt)
Firm Boundaries in the New Economy: Theory and Evidence
Subramanian, Krishnamurthy (Emory University)
Gladwell on Enron
| Cliff Grammich |
Something more germane, perhaps: Malcolm Gladwell on Enron in the January 8th issue of The New Yorker. (more…)
Organizations and Markets 
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