Posts filed under ‘Recommended Reading’
Jacques Barzun
| Peter Klein |
Rafe Champion offers a thoughtful tribute to Jacques Barzun (1907-), the great historian of ideas, culture, and education whose magnum opus From Dawn to Decadence: 1500 to the Present: 500 Years of Western Cultural Life appeared in 2000. Unlike Joseph Schumpeter, who believed that a scholar must make his key contributions during the “golden decade” of his 20s, Barzun began this ambitious work a bit later in life:
When I was just beginning to teach, about 1935, I thought I would write a history of European culture from 1789 to the present. I was dissuaded from it by a friend of my father’s who was the director of the Bibliotheque Nationale. I was doing research there and he asked me what I was doing, and I told him, and he said, “Oh, young man, please don’t do any such thing. You’ll write about things that you know at first hand, and you will fill the rest out with things you get out of secondary texts. There’s no need of that at any time.” So I said, “How long should I study original works before I begin?” He said, “Well, why don’t you wait until you are 80.” I think I waited until I was 84, 85.
Re: Christmas Reading
| Peter Klein |
I don’t like to compete with Nicolai in the “what-I’ve-been-reading” department — he consumes a dozen books for every one I manage to read (or color) — but he broke the ice so I might as well follow suit.
1. Jack Weatherford, Genghis Khan and the Making of the Modern World (Crown, 2004). Genghis is rehabilitated as not a barbarian at all, but a great military commander, skilled administrator, and “progressive” leader, at least by the standards of his age. The author much admires the Great Khan for practicing religious toleration, funding universal public education, establishing a post office, and the like (what else would you expect from an American college professor?). Plenty of plunder and pillage too, of course. Anyway, an interesting and well-written piece of revisionist history.
2. Orhan Pamuk, The White Castle (George Braziller, 1991). A thoughtful and engaging meditation on the nature of identity, wrapped inside a historical novel about a 17th-century Venetian captured by Turks and sent to Constantinople as a slave and tutor to a young Turkish scholar. Good reading for the identity theory crowd.
3. Michael Ruhlman, The Soul of a Chef: The Journey Toward Perfection (Viking, 2000). You’ve heard of chick lit? Now there’s food lit, a new genre for foodies. A group of chefs spends a grueling week at the CIA (no, not that one, the Culinary Institute of America) seeking the title Certified Master Chef. The exams make comprensive PhD examinations look easy by comparison. Perhaps you have to be a foodie to enjoy the book fully, but there’s interesting information on the economic organization of the food and restaurant industry.
4. Neal Stephenson, Quicksilver (William Morrow, 2003). A prequel, of sorts, to Stephenson’s highly successful Cryptonomicon, which I enjoyed tremendously. Interesting historical fiction about the birth of modern science. At nearly a thousand pages — and just volume 1 of the three-volume Baroque Cycle — it makes Human Action and Foundations of Social Theory look like novellas.
Christmas Reading
| Nicolai Foss |
Not much is usually happening during Christmas, so why not engage a bit in the narcissistic (and non-creative) blogger’s delight — the “what I am reading at the moment” list:
1. Charles C. Ragin and Howard S. Becker, eds. 1992. What is a Case? Exploring the Foundations of Social Inquiry. This is a collection, mainly by thoughtful (in fact, extremely thoughtful) sociologists (yes, they do exist) on the methodological/ philosophical foundations of qualitative research, a subject that I have become increasingly interested in.
2. Yoram Barzel. 2002. A Theory of the State. As the resident Barzel fan here at O&M, I have surely waited too long before I began reading this book, published back in 2002. Barzel applies his highly original ideas on property rights economics to the state. However, the result strikes me as less original than Barzel’s other work.
3. Steve Berry: The Templar Legacy. Yes, I do have a weakness for this kind of templar pulp (this one comes endorsed by Dan Brown, so you know it is going to be bad). The Templar Legacy is one of the better ones (certainly better than this one). And parts of the story takes place in Denmark. I have toyed with writing a Templar novel myself. The title? Frank Knight’s Templars.
4. Rodney Stark. 1996. The Rise of Christianity: How the Obscure, Marginal Jesus Movement Became the Dominant Religious Force in the Western World in a Few Centuries. I enjoyed The Victory of Reason and this one is perhaps better. It is certainly less speculative, its reasoning seems stronger.
Four Theories of the Firm
| Peter Klein |
This week in my PhD course, “Economics of Institutions and Organizations,” we discussed Bob Gibbons’s paper ”Four Formal(izable) Theories of the Firm” (JEBO, 2005; working-paper version here). Lest readers think I oppose formalization per se, let me take a moment to strongly recommend this paper, which provides an excellent summary and synthesis of several critical issues in the economic theory of the firm. (This review is also pretty good.) While the paper can be read profitably even without working through the mathematical models, Gibbons’s training in formal theory was obviously an asset in sorting out the similarities and differences among theories, harmonizing the diverse and sometimes-confusing terminology in this literature, and identifying the core assumptions of various approaches.
Gibbons distinguishes among four theories of the firm: rent seeking, property rights, incentive systems, and adaptation. Rent seeking is his label for TCE as expressed by Williamson and Klein, Crawford, and Alchian (1978). Students find the formulation of TCE in rent-seeking language, a la Tullock — “individually optimal (but socially destructive) haggling over appropriable quasi-rents” — useful and informative. Gibbons also provides an excellent discussion of the differences between TCE and the property-rights approach, showing that Grossman, Hart, and Moore’s model is not “a formalization of Williamson” (a distinction also emphasized by Williamson in his 2000 JEL piece and by Mike Whinston here and here). (more…)
The October Issue of the AMJ
| Nicolai Foss |
The October issue of the Academy of Management Journal is the best in a very long time. It contains at least three articles that 1) are excellent and 2) should be of direct interest to O&M readers. They are:
- Rekha Krishnan, Xavier Martin and Niels G Noorderhaven. “When Does Trust Matter to Alliance Performance?”. One of the few empirical studies that takes seriously the Williamsonian distinction between behavioral uncertainty and environmental uncertainty.
- Kyle J Mayer and Robert M Salomon. “Capabilities, Contractual Hazards and Governance: Integrating Resource-based and Transaction Cost Perspectives” (WP version here). The latest paper in a small but expanding literature that empirically integrates TCE and RBV. Argues that strong internal technological capabilities may ease outsourcing.
- Stephen J Carson, Anoop Madhok, and Tao Wu. “Uncertainty, Opportunism, and Governance: The Effects of Volatility and Ambiguity on Formal and Relational Contracting.” Clearly distinguishes between the effects of ambiguity and the effects of volatility on opportunism, and compares the effectiveness of relational and contractual governance with respect to constraining opportunism under these two situations. Interesting that Madhok seems to be coming full circle round to TCE.
The Collected Works of Armen Alchian
| Nicolai Foss |
It has been said that “Armen Alchian’s output may be sparse and informal, but it has been among the most influential.” Still, his “virtuoso work on neoclassical price theory” has been sufficiently voluminous that his collected works run 1,620 pages!
The two volumes that contain all these pages were published in November by Liberty Fund at the ridiculously low price of $15 for the set. Over the years Liberty Fund has published an unbelievable amount of true classics in economics, law, history, philosophy and classical liberal scholarship in general at absolute bargain prices. (more…)
Foss, Klein, Kor, and Mahoney on Entrepreneurship
| Nicolai Foss |
As readers of O&M will know, Peter and I are highly sympathetic to subjectivist economics, mainly Austrian economics, and both take an interest in entrepreneurship and the theory of the firm. Yasemin Kor is an expert on the RBV and top management, and former O&M guest blogger Joe Mahoney is, of course, an expert on the RBV and the theory of the firm. This makes, we think, for an excellent author team. Thus, we have collaborated in writing a paper, “Entrepreneurship, Subjectivism, and the Resource-based View: Towards a New Synthesis.” Here is the abstract:
This paper maintains that the consistent application of subjectivism helps to reconcile contemporary entrepreneurship theory with strategic management research in general, and the resource-based view in particular. The paper synthesizes theoretical insights from Austrian economics and Penrose’s (1959) resources approach, arguing that entrepreneurship is inherently subjective and firm specific. This new synthesis describes how entrepreneurship is manifested in teams, and is driven by both heterogeneity of managerial mental models and shared team experiences.
Enjoy!
New Edition of Menger’s Principles
| Peter Klein |
The Mises Institute has produced a new edition of Carl Menger’s path-breaking Grundsätze der Volkswirtschaftslehre [Principles of Economics], originally published in 1871. Menger’s Principles not only introduced the concept of marginal analysis, it presented a radically new approach to economic analysis, an approach that still forms the core of the Austrian theory of value and price.
The new edition includes Hayek’s introduction to the 1934 English edition and a new foreword by yours truly. The book itself continues to be availble in a free online edition.
Micro-Foundations and Realism
| Nicolai Foss |
As readers of O&M know, I have often endorsed the search for the badly missing micro-foundations in management research (e.g., here, here and here). Building micro-foundations means providing accounts (whether formal or verbal-logical) of how human action and interaction produce collective outcomes (whether intended or unintended).
To me such an approach is inherently mechanism-oriented. Accordingly, I tend to think of methodological individualism and mechanismic explanation as close philosophical allies. I also think that in terms of theorizing, attention to micro-mechanisms rooted in individual action and interaction requires close attention to behavioral assumptions. Apropos Milton Friedman the one part of his thinking that I have never made peace with is his methodological instrumentalism.
Until recently, I thought that virtually nobody in management research — with the exception of Teppo Felin — entertained similar views (OK — a bit over the top, but not much), until, that is, the advent of the November issue of the Strategic Management Journal features an article, “Behavioral Assumptions and Theory Development: The Case of Transaction Cost Economics,” by Eric Tsang that is explicit about how behavioral assumptions link to realistic explanation. (I just noticed that Tsang also has an earlier paper on critical realism). (more…)
Pomo Periscope VI: Performativity
| Nicolai Foss |
Teppo Felin at orgtheory.net has an excellent post today on Donald MacKenzie’s An Engine, Not a Camera: How Financial Models Shape Markets — a book that has received praise from Michel Callon, Karin Knorr-Certina — and Paul Samuelson!
As the title of the book indicates, the book puts our old friend here at O&M — reflexivity (cf. this post) — to work in the context of the interplay between financial markets and financial economics. It sounds as if this will be a great read for the Ferraro-Pfeffer-Suttons of this World. (I haven’t read the book yet myself, so I cannot judge the accuracy of what Teppo says about it). (more…)
Network Positions and Competitive Advantage
| Nicolai Foss |
One of the most important trends in strategic management research over the last decade or so has no doubt been the application of arguments developed in sociology by the likes of Mark Granovetter and Ron Burt. In the hands of able interpreters, such as Gautam Ahuaja, Olav Sorenson, Brian Uzzi, Toby Stuart, and many others, these arguments mark the real advent of sociology as a forceful voice in the conversation of strategic management scholars, a conversation that had until clearly been dominated by arguments drawn from various fields in economics.
Although I am usually impressed with the efforts of the above scholars, I have also sometimes felt a bit uneasy when reading papers that draw on the sociology literature on networks. Theoretical development seems conspicuous by its absence. Many things seem to be taken as exogenos, notably positions themselves. Moreover, the literature often seems to suggest that network positions may be associated with competitive advantage, but the precise mechanism that makes this happen is far from clear. (more…)
Political Correctness and Public Sector Management
| Nicolai Foss |
The following is ephemera, but we have noted from the blog stats that our readership appreciates this category of posts. And we believe in giving the market what the market wants.
I was recently accused by an (admittedly weird) external lecturer here at CBS for having fascist sympathies. I thought my political leanings were classical-liberal, which I would tend to associate with rather the opposite of fascism. Oh well; the reasoning of this person was that I ran a blog that linked to the Ludwig von Mises Institute; that institute was known for being associated with people who had an unconventional view of the American Civil War; a view, this person added, that any sane human being would recognize as fascist! QED
I was reminded of this incident when I read this story in the UK newspaper, The Daily Mail. (more…)
Grounded Theory
| Nicolai Foss |
At least until recently I considered “grounded theory” to be one of my favorite Hermann Göring words (“When I hear the word ‘grounded theory’ I reach for my Browning”). I know that this is an assessment that many practicioners of a, dare we say more “positivist” research methodology share. Too often I have witnessed presentations where “grounded theory” comes across as a bad excuse for not knowing the relevant literature. Epistemologically, grounded theory sometimes stands out as a variant of naïve inductivism. (more…)
New Perspectives on Political Economy
| Nicolai Foss |
New Perspectives on Political Economy is a Prague-based journal, edited by Josef Sima and Dan Stastny of the University of Economics in Prague. It is now in its second year of existence. It is a much like a mix of the Journal of Libertarian Studies and The Quarterly Journal of Austrian Economics. All issues/articles can be downloaded here. Here is the list of contents of the most recent issue: (more…)
Pomo Periscope IV: A Rothbard Classic
| Nicolai Foss |
Pomo had no greater enemy than the late Murray Rothbard. Here is a hilarious comment on “the hermeneutical invasion of philosophy and economics,” which was originally published in 1989 in the Review of Austrian Economics (and published a bit later in Danish translation by yours truly in the rather short-lived Danish Austrian economics journal, Praxeologica). (more…)
Economics and Literature Redux: Panics in Fiction
| Peter Klein |
On the heels of these remarks on economic analysis in fiction comes a review of David Zimmerman’s Panic! Markets, Crises, and Crowds in American Fiction (University of North Carolina Press, 2006), reviewed by Scott Dalrymple for EH.Net.
In _Panic!_, David Zimmerman, a professor at the University of Wisconsin, Madison, has chosen a fascinating lens through which to view the phenomenon of bank panics: contemporary novels written in response to the panics. As Zimmerman points out, bank panics left people searching for answers about what had just happened, and why. And as they always do, authors of fiction stepped forward in an attempt to make sense of it all.
See also this discussion on teaching economic history through fiction and narrative.
Was Coase Right About the Lighthouse?
| Peter Klein |
A few years ago I attended a Liberty Fund conference on the private provision of public goods. In preparation for the conference I re-read Coase’s classic 1974 article, “The Lighthouse in Economics,” for the first time since my graduate-school days. I recall being surprised how much weaker the argument was than the way I had remembered it. Far from showing that British lighthouses were “private” — as the paper is widely thought to have demonstrated — Coase’s analysis shows simply that public goods can be financed through user fees, rather than general tax revenue. But, in the case of the British lighthouses, the user fees were compulsory, government-enforced levies on ship owners, not voluntary market transactions. The British lighthouses were government-granted monopolies, more like the East India Company or a local public utility than “free-enterprise” institutions. (more…)
Coordination (Games) in Organizations
| Nicolai Foss |
The basic thrust of new institutional economics and contract-theory approaches to organizations and contracts is to conceptualize virtually any issue related to economic organization in terms of solving incentive conflicts. The motivation for this presumably is an underlying argument that in the absence of such conflicts, the first-best can be reached without major obstacles. (more…)
Roundup of Interesting Working Papers
| Peter Klein |
Kathy Fogel, Randall Morck, and Bernard Yin Yeung, “Big Business Stability and Economic Growth: Is What’s Good for General Motors Good for America?” NBER Working Paper 12394. On the relationship between Schumpeterian competition and overall economic performance.
Thomas Malone, Peter Weill, Richard K. Lai, Victoria T. D’Urso, George Herman, Thomas Apel, and Stephanie Woerner, “Do Some Business Models Perform Better than Others?” MIT Sloan Research Paper No. 4615-06. Interesting attempt to classify all 10,970 publicly traded US corporations from 1998 to 2002 according to two dimensions, what asset rights are sold (Creators, Distributors, Landlords, and Brokers) and what type of assets are involved (Financial, Physical, Intangible, and Human). Finds that some types outperform other types on particular performance dimensions, though no single type dominates all other types on all dimensions.
Naomi R. Lamoreaux and Jean-Laurent Rosenthal, “Contractual Tradeoffs and SMEs Choice of Organizational Form, A View from U.S. and French History, 1830-2000,” NBER Working Paper 12455. Asks why partnerships, rather than corporations, were the dominant business structure before the twentieth century. Uses US and French data to argue that partnerships and corporations are complementary organizational forms.
Salvation Through Corn?
| Peter Klein |
I enjoyed this rant against agricultural subsidies by Kyle of Impudent Domain. Kyle is mostly on target (though E. C. Pasour provides a more systematic overview of the relevent issues here and here). The best part is the closing line, on the ethanol boondoggle, which echoes William Jennings Bryan. I say, you shall not crucify American energy consumers on a cross of corn!
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