Posts filed under ‘Recommended Reading’
Classical Liberal Sociology
| Peter Klein |
At the risk of turning O&M into a sociology blog, let me call your attention to yet another item on the ideological leanings of sociologists. The Summer 2006 issue of The Independent Review, one of my favorite journals, is hot off the press, and it contains an essay by Daniel Klein and Charlotta Stern, “Sociology and Classical Liberalism.” Here is the abstract:
Sociology inspired by classical liberalism isn’t as far fetched as the profession’s current collectivist tilt might suggest. In addition to developing the social insights of Adam Smith, Alexis de Tocqueville, Herbert Spencer, William Graham Sumner, and F. A. Hayek, a classical liberal sociology might take up such topics as the differences between cooperation and coercion; the interrelations between commerce and community; the role of privilege, prestige, status, and power in “rent seeking”; and the social mechanisms that foster and reinforce statism.
O&M readers may also enjoy, from the same issue, “Four Years After Enron: Assessing the Financial-Market Regulatory Cleanup” by Roy C. Smith and Ingo Walter and “Holding ‘Governance’ Accountable: Third-Party Government in a Limited State” (on government outsourcing) by Sheila Suess Kennedy.
Theories of Religion
| Richard Langlois |
My previous post was in part a comment on Nicolai’s Bastille Day post. While I’m at it, I thought I might comment on another aspect of that post, namely Armstrong’s theory of religions of the “Axial Age.” I haven’t read the book (of course), but I’m skeptical, since most of human history until recently (and still now in much of the world) was a time of “violence, political disruption and extreme intolerance.” Another theory of religion that readers of this blog might find interesting is that suggested by Burton Mack in “Who Wrote the New Testament?” (which I actually have read). He argues — perhaps reflecting a generally accepted view among secular biblical scholars — that Christianity was the product of ancient “globalization.” Judaism was (or at least grew out of) an ethnic temple-state religion, and its innovation of monotheism was useful in helping to bind together an ethnic community. (We have been chosen by the one true God.) By contrast, as Morris Silver has argued, Greek religion was a congeries of local gods assembled from the various peoples the Greeks and later Romans had conquered — and thus a useful kind of religion for empire-builders, since you could just add the local god to the pantheon to make the locals happy. (The Jews never bought into that, of course, and suffered for it.) (more…)
Robustness
| Nicolai Foss |
Empirical economists tend to exalt the property of “robustness.” Robustness is a priori taken to be epistemologically virtuous. However, this is not so obvious as it may seem. As Kevin Hoover points out in the preface to the most recent (June) issue of the Journal of Economic Methodology, most of which is dedicated to a symposium on “Fragility and Robustness in Econometrics”:
The idea that robustness is an epistemic virtue across the entire range of measures is not obvious. Suppose that the efficient-markets hypothesis works well in the United States but not in China. Does that count against the efficient-markets hypothesis? Or does it instead point to a substantive difference between American and Chinese financial markets?
A lot of things in econometrics are closely related or depend on robustness, such as omitted-variable bias and extreme-bounds analysis, but robustness has seldom been explicitly discussed. The contributors to the symposium are John Aldrich, Aris Spanos, and Jim Woodward. For somebody who is not an econometrics buff, Jim Woodward’s “Some Varieties of Robustness” is likely to be particularly informative.
Vacation Reading
| Nicolai Foss |
The more narcissistic bloggers often inform their readership on the subject of What I am Reading This Summer (substitute Spring, Fall, Winter). Of course, no reason to not adopt this well-established practice.
As of tomorrow, I will be on vacation for two weeks in Antibes in the sourthern part of the perhaps most commie country in the World. This is what I will bring with me: (more…)
Intellectual Property: The New Backlash
| Peter Klein |
In the “new economy” or “knowledge economy” literature it is taken for granted that strong intellectual-property protection is not only efficient, but also just and fair. Without the temporary monopoly protection granted by copyrights and patents, who would have sufficient incentive to innovate? And don’t innovators deserve to reap the benefits of their creations?
There have always been doubters, and lately the critics have become more vocal. Stephan Kinsella makes a strong normative case, based on libertarian principles, against legal protection for intangibles. (See also his bibliography and blog.) For the utilitarian case against IP see Michele Boldrin and David Levine’s Against Intellectual Monopoly (and their blog). And for a summary of arguments against using patent counts to measure innovative activity see this article by Pierre Desrochers.
Interesting New Paper by JC Spender
| Nicolai Foss |
One of the puzzles of business administration/management is that the fields of entrepreneurship and strategic management have existed, and continue to exist, in such relative separation. Intuitively, one would think of entrepreneurship — the identification and seizure of new opportunities for profit — as constituting the core of the strategic management field. This, however, is not the case. However, there are various indications that strategic management scholars are about to develop interest in entrepreneurship (e.g., work by Kim and Mahoney, Alvarez and Barney).
One specific indication is an excellent and highly recommended recent paper by JC Spender, “The RBV, Methodological Individualism, and Managerial Cognition: Practising Entrepreneurship.” Here is the Abstract:
If we consider Schumpeter’s methodological individualism and entrepreneurship, the ‘managerial cognition’ arguments can contribute new insights to the RBV discourse. I open by examining the links between resource inputs and firm outputs , and argue the types of rents implied by the RBV cannot arise or be sustained if these links are logical and explainable. The only rents then available are Marshallian quasi-rents arising from information asymmetry or the Ricardian rents from initial allocation, i.e., those of Porter’s analysis. Today’s RBV lacks the components necessary to create and manage the value at the core of Barney’s VRIO model. Causal ambiguity or uncertain inimitability might imply sustainable rents but clearly do not explain how the arise, any more than asserting the firm has dynamic capabilities does. To illustrate how value might be created and brought into the analysis, I look at Penrose’s model of managerial learning, primarily as an accessible instance of the epistemological approach proposed by Austrian economists such as Hayek, Kirzner, and Schumpeter. This concept of value creation parallels the sense-making concepts of the managerial cognition literature. I conclude that an alliance of BPS and MOC approaches can complement and so complete the RBV, synthesizing notions of value creation, heterogeneous and immobile resources, and endogenous growth into a dynamic theory of the firm. It balances rational choice and Schumpeterian entrepreneurship. To wrap this argument up, I discuss the theoretical and practical implications of the amended RBV.
Information versus Knowledge
| Peter Klein |
Here’s a fascinating symposium from the April 2005 issue of EconJournalWatch on the distinction between information and knowledge in economics. The contributors are Brian Loasby, Thomas Mayer, Bruce Caldwell, Israel Kirzner, Leland Yeager, Robert Aumann, Ken Binmore, and Kenneth Arrow. (Via Jeff Tucker)
Evidence for “Selfish Genes”?
| Nicolai Foss |
I am reading Deepak Lal’s In Praise of Empires: Globalization and Order at the moment. In a discussion of the Mongolian empire, initiated by Genghis Khan, Lal tells the well-known and terrifying anecdote about Genghis Khan’s reaction when told by his generals that life’s sweetest pleasure lies in falconry:
“You are mistaken. Man’s greatest good fortune is to chase and defeat his enemy, seize his total possession, leave his married women weeping and wailing, ride his gelding, and use the bodies of his women as a nightshirt and support.”
Lal goes on to observe that
“This pursuit of booty along with glory also succeeded in a massive spread of Genghis’s genes, as has been recently confirmed in a study examining the chromosomes of 2,123 men from across Asia. It found that an estimated 16 million males in a vast swath from Manchuria to Uzbekistan and Afghanistan are the direct descendants of Genghis as they carry his unique bits of DNA in their chromosomes. Genghis’s fighting thus allowed him to propagate his selfish genes to an unparalleled extent” (p.16).
(The study that Lal cites is this paper, which notes that in the examined sample, 8 percent of the men had virtually identical Y chromosomes, which indicates a common forefather. The 23 authors argue that this forefather is very likely to have lived in Mongolia and to have been Ghengis Khan).
In contrast to the Khan, Hitler, Stalin, and Kim-the-Older were no great gene disseminators, while Mao apparently was and Kim-the-younger apparently is (cf. this blog).
The Birth of Big Business in the US
| Peter Klein |
David L. Mason reviews David O. Whitten and Bessie E. Whitten’s The Birth of Big Business in the United States, 1860-1914: Commercial, Extractive and Industrial Enterprise (Praeger, 2005), in the latest EH.Net book review. It sounds like a valuable overview of an extremely important period:
The roughly fifty-year period between the end of the Civil War and the start of World War I was one of the most dynamic periods in American economic history, in no small part because of the rise of big business. _The Birth of Big Business in the United States_, an introductory work intended for students and the general reader, chronicles the developments and processes that led to the rise of large-scale firms in both well-known industries like oil and steel, as well as in the extractive industries like mining and forestry. Throughout the concisely written narrative, the authors highlight the role of government in both encouraging and restraining the expansion of big business. This work succeeds in placing industrialization in the broader context of American history, an important consideration for first-time students of business history.
Good to see the role of government highlighted. As an aside, many economists and management scholars seem surprisingly uninformed about the role of the state in the emergence of modern business enterprise. As a young lad I was strongly influenced by the Kolko thesis, at least as interpreted by Murray Rothbard and his students (1, 2). Today, while the better strategy and managerial economics texts include some modern political economy, fields like organizational behavior, labor economics, industrial organization, and some others appear stuck with the naive, high-school-civics-class view of government as benevolent and efficient protector of the common man against the rapacious capitalist.
Incidentally, let me take this opportunity to plug one of the best, and underappreciated, recent books in this area: Butler Shaffer’s In Restraint of Trade: The Business Campaign Against Competition, 1918-1938 (Bucknell University Press, 1997).
What’s In a Name?
| Peter Klein |
Speaking of Levitt, another of his characteristically quirky studies is this one on baby names (nontechnical summary here), showing that “distinctively black” names are indicators, not determinants, of socioeconomic status. Baron and Kreps summarize the literature on job titles and conclude, similarly, that titles are primarily signals, not drivers of job characteristics or performance (though titles can be important motivators).
I was thinking about names when watching a little Wimbledon this morning. (I grew up in the era of Connors, Borg, McEnroe, Lendl, Wilander, Edberg, etc., and remain a huge Wimbledon fan.) Former champion Maria Sharapova won her first-round match easily, dispatching clay-court specialist Anna Smashnova in straight sets. Smashnova — what a great name for a tennis player! (I’m considering changing my legal name to Publishnova.)
A Brief History of Time (in Management)
| Peter Klein |
My colleague Allen Bluedorn, Professor of Management at the University of Missouri, recently published an interesting book, The Human Organization of Time: Temporal Realities and Experience (Stanford University Press, 2002). The book explores a number of philosophical, sociological, and cultural issues related to time and our perception of time and develops applications for business administration. Of course, attention to time, process, and history is a hallmark of the Austrian, evolutionary, and dynamic capabilities approaches to economics and management featured frequently on this blog.
For a short introduction to these issues check out the June 2006 issue of the Academy of Management Learning and Education, which features “Time and the Temporal Imagination” by Bluedorn and Rhetta Standifer. Here is the abstract:
Time has been one of the most challenging and elusive concepts in human thought, and it is only now beginning to receive the attention it deserves in organizational scholarship. To this growing scholarly attention we present the case for including material about this most universal of phenomena in our teaching, just as we are beginning to do in our theoretical and empirical investigations. We argue for developing a temporal imagination, a concept we proposed recently, and then describe reasons for teaching about time as well as present first principles that provide a foundation for the teaching of time and temporal phenomena. These reasons and principles are then illustrated in a discussion of temporal depth (time horizons) and how it might be taught.
New Paper by Kirzner and Sautet
| Nicolai Foss |
Israel Kirzner is surely one of the more neglected of economists. Now that entrepreneurship has become almost a mainstream theme in economics, Kirzner certainly deserves more recognition and credit for his four decades long insistence on the importance of the entrepreneur as the prime mover of the market process. (Here is a great Israel Kirzner site.)
What appears to be Kirzner’s latest paper is “The Nature and Role of Entrepreneurship in Markets: Implications for Policy,” written with Frederic Sautet and published by the Mercatus Center at George Mason University.
The paper is particularly interesting as it is taken up with a theme that has often been claimed to be absent from Kirzner’s work, namely that of institutions and how institutions can be designed (or influenced) to impact entrepreneurship. The new stuff arrives at about p. 14. In addition to discussing how the institutional matrix impacts entrepreneurship, there is so much emphasis on creativity as an aspect of entrepreneurship that the paper sounds Schumpeterian in places. There is also much emphasis on entrepreneurship being embedded in a cultural context.
So, has Israel Kirzner gone applied? Well, not exactly, as the discussion still moves on a fairly abstract level (for an applied exercise that is rather related to Kirzner and Sautet’s, see this excellent paper), but certainly is more “applied” than the Kirzner of, say, Competition and Entrepreneurship.
Economics: Puzzles or Problems?
| Peter Klein |
I’ve enjoyed reading Wittgenstein’s Poker: The Story of a Ten-Minute Argument Between Two Great Philosophers, an engaging account of the famous “poker incident” at which Ludwig Wittgenstein may or may not have threatened a visiting Karl Popper with a fireplace poker during a 1946 meeting of Cambridge’s Moral Sciences Club. David Edmonds and John Eidinow perform a forensic reconstruction and conclude that Popper probably exaggerated what happened but that Wittgenstein did act like a boor. More important, Edmonds and Eidinow explore the background and aftermath and use the incident to anchor an elegant survey of twentieth-century philosophy putting Popper’s and Wittgenstein’s contributions in context.
(Incidentally, neither philosopher comes across as the sort of guy you’d want to spend an evening with. Popper appears petty and insecure, almost paranoid. As for Wittgenstein . . . I’m no philosopher, but I know what I like, and Wittgenstein — in his later incarnation, anyway — isn’t it. He’s revealed here as a spoiled brat, petulant and overbearing, and his linguistic approach to philosophy strikes me as little more than clever nonsense. In the spirit of full disclosure, I should mention that I first heard about the poker incident from Popper’s student W. W. Bartley, III, who was far from impartial. See The Fortunes of Liberalism, p. 179, footnote 5.)
At issue between Popper and Wittgenstein that night was the status of philosophy itself. Are there real philosophical problems, as Popper maintained, or merely “puzzles,” as Wittgenstein and his disciples insisted? Contemporary analytic philosophy has tended to gravitate toward the latter view, that philosophy is little more than word-play, a fun and interesting exercise but one with little bearing on the “big questions” of life.
What about economics? Over the last couple of decades economists have paid less attention to the “big questions” of unemployment, inflation, capitalism versus socialism, the quality of life, and so on, focusing instead on finding clever solutions to small, empirical puzzles — call it the “Freakonomics approach.” There are exceptions to this trend — the literature on institutions and economic growth, for example — but on the whole economists seem more interested in puzzles than problems. (more…)
New Issue of Industry and Innovation
| Nicolai Foss |
Now in its 13 year of publication, Industry and Innovation is a journal dedicated to "scholarship on the dynamics of industries and innovation". (It was originally launched as the Journal of Industry Studies).
Its closest competitors are arguably journals such as Industrial and Corporate Change and Research Policy. In terms of intellectual affiliation, I&I serves the communities that are organized in the Schumpeter Society, attend the DRUID conferences, and the like. In other words, I&I is taken up with research in evolutionary economics, dynamic capabilities stuff, parts of economic geography, technology studies and so on. Its editorial board includes Anita McGahan, Richard Nelson, and yours truly. The editor is my CBS colleague, Mark Lorenzen (check his photo!).
Usually, there may not be much of interest for the readers of O&M in I&I. However, the latest issue — guest edited by my former PhD student, Volker Mahnke (CBS, Informatics Dept.) and Serden Ozcan (CBS, Dept of Industrial Economics and Strategy)– features a set of papers that are clearly relevant to those with an interest in organization and organizational strategy.
Rings and Promises
| Peter Klein |
Brayden King caught my eye today with a post titled "Is Power Sexy?" He's referring to a 2005 American Journal of Sociology paper with the same title. Of course, contemporary academic prose can make even sex and power seem dull — Using a set of network data from a large number of naturally occurring groups, this study seeks to determine whether powerful people are more likely to be seen as sexy by others than are persons without power [, and] disentangles two aspects of power that are often confused, namely power as a dyadic relationship and power as an individual characteristic or position (which the author calls "status") — but I believe Brayden when he says it's a fun paper to read and blog about.
This made me think, what are some papers in organizational economics that are fun to read? One is Margaret Brinig's "Rings and Promises" (1990), which applies Williamson's hostage model to diamond engagement rings. (more…)
Time Inconsistency and a Stakeholder Theory of the Firm
| Joe Mahoney |
Recently I have become more persuaded that the incomplete contracting literature potentially offers a theoretical foundation for a stakeholder theory of the firm.
In this light, two industrial organization economists — Dan Kovenock and Stephen Martin — have “inspired” me to learn more about the concept of time inconsistency problems. In a world of incomplete contracting, we often face the potential for time inconsistency problems (Grossman and Hart, 1986) and opportunistic rent extraction. A policy that is optimal ex ante but sub-optimal ex post can be described as “time inconsistent.”
How Heterogenous is Economics, Really?
| Nicolai Foss |
At seminars and conferences, I have often heard management scholars make the following kind of remark: "The economists think that management is fragmented, but look at economics itself. Economists disagree about virtually everything."
It easy to argue that this argument is entirely shallow, and is reflective of reading in the newspaper that this chief economist disagrees with that chief economist and generalizing this to the whole econ profession, while not understanding that economists hold a strong disciplinary core in common, and that disagreements tend to be over application and interpretation rather than about the most fundamental principles. Seen in that light, economics is not fragmented, while management is, even absurdly so. (In fact, some of the management critics of economics that we routinely blast here at O&M (i.e., Ghoshal, Pfeffer et al.) have a correct understanding of the unity of economics, even though their view of economics is entirely outdated).
However, increasingly the argument is being made by economists themselves, albeit mainly so-called "heterodox" economists that economics is changing from a situation in which a single paradigm held uncontested sway to a much more differentiated picture with multiple fundamentally different approaches. (more…)
Summer Reading on Management for Graduate Students?
| Nicolai Foss |
Perform the Gedanken Experiment that a graduate student would actually approach you for summer reading suggestions (not sure this would ever happen, but it is nice imagining). Specifically, the student — say, either a budding management graduate student who wishes to familiarize himself quickly with the very best in management thinking or an econ graduate student who consider a business school a likely future place to work — would like to know what are the indispensable papers from the last two decades in management that anyone who wishes to write a dissertation in management should (ideally) know. Are there any? Is management so fragmented that we cannot up with any papers that everybody should have some knowledge of? Or can we do better?
Please, readers of O&M, suggest 2-3 papers from the last two decades that you would consider indispensable. If you like, explain why you consider them important. (HT to Crooked Timber).
Continuing the Micro-foundations Crusade
| Nicolai Foss |
With Teppo Felin and Peter Abell, I am continuing the crusade for building micro-foundations for management theory that Teppo and I initiated with our editorial essay in Strategic Organization last year ( “Strategic Organization: a Field in Search of Microfoundations"). We have now written the paper, "Building Micro-foundations for the Routines, Capabilities and Performance Links" as a further stride forward in the struggle against macro-mysticism in strategic management and organization theory. Here is the abstract:
Micro-foundations have become an important emerging theme in strategic management. This paper addresses micro-foundations in two related ways. First, we argue that the kind of macro (or “collectivist”) explanation that is utilized in the capabilities view in strategic management –which implies a neglect of micro-foundations –is incomplete. There are no mechanisms that work solely on the macro-level, directly connecting routines through capabilities to firm-level outcomes. While routines and capabilities are useful shorthand for complicated patterns of individual action and interaction, ultimately they are best understood at the micro-level. Second, we provide a formal model that shows precisely why macro explanation is incomplete and which exemplifies how explicit micro-foundations may be built for notions of routines and capabilities and for how these impact firm performance.
Because we may submit to a journal that prohibits uploading of papers while they are under review, reluctantly I must refrain from making the paper downloadable . However, If you would like to get a copy, send me a mail on njf.smg@cbs.dk
Wicksteed on “Economic Man”
| Peter Klein |
As an economist, I'm continually frustrated by complaints from my fellow social scientists that economics falsely conceives human beings as narrow, selfish, greedy materialists — a canard refuted in even the most elementary textbooks. Economics is a theory of preference and action; it assumes nothing whatsoever about the content of people's preferences, whether they be noble or base, pure or vile, or whatever.
The proper conception of economics as a general theory of action has been around for, I don't know, about a hundred years, at least. I recently came across this nice statement from Lionel Robbins, introducing the 1933 edition of Philip Wicksteed's Common Sense of Political Economy (1910).
Before Wicksteed wrote, it was still possible for intelligent men to give countenance to the belief that the whole structure of Economics depends upon the assumption of a world of economic men, each actuated by egocentric or hedonistic motives. For anyone who has read the Common Sense, the expression of such a view is no longer consistent with intellectual honesty. Wicksteed shattered this misconception once and for all. . . .
[Modern value theory has] thrown the whole corpus of economic science into an entirely new light — a light in which Economics is seen to be a discussion not of the nature of certain kinds of behavior arbitrarily separated off from all others, but of a certain aspect of behavior viewed as a whole. . . . [W]hen [the] final history [of modern economics] comes to be written, I think it will be found that Wicksteed's exhaustive examination of the "economic relationship," and his insistence that there can be no logical dividing line between the operations of the market and other forms of rational action, are by no means among the least important or least original." (pp. xxi-xxii)
I wonder how much of the current contretemps over economic methods in organization and management is simply a re-hash of controversies already covered by Wicksteed, Clark (1, 2), Robbins, etc.
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