Jack of All Trades and Master of . . . Administration?
| Nicolai Foss |
CEOs, leaders, and entrepreneurs are typically seen as generalists (e.g., here). They are confronted with the broadest decision domains and have the responsibility of making sometimes crucial decisions within those domains.
In “Congratulations or Condolences? The Role of Human Capital in the Cultivation of a University Administrator” (here; scroll down), John McDowell, Larry Singell, and Mark Stater argue that this also holds for universities. They develop and test a probit model of the decision between administration (from dept. head all the way to university pres.) and the pure academic career. The model is conditioned by training, career background, and (juicy!) academic performance. The data are drawn from the American Economic Association directories. Among the findings: economists with doctoral degrees from less prestigious universities are more likely to select into admin. Women and foreigners are less likely to become administrators. The experience level also positively influences the probability of getting into admin.
I am not convinced that the authors truly capture the specialized versus general human capital dimension. Some of their measures (e.g., whether the PhD degree was awarded by a top-35 PhD institution or not) are measures of quality rather than of the degree of specialization (in fact, this may be consistent with the view that many “pure” academics hold of admins!). Nevertheless, definitely worth a read and good ammo for harassing your local dean! (more…)
HR Graphic of the Week
| Peter Klein |
From Wired’s “New Rules for Highly Evolved Humans” feature: “Use a Plausible Excuse When You Call In Sick.”
“Unskilled and Unaware of It”
| Nicolai Foss |
In general I enjoy teaching and interacting with students. But some students can be a pain, particularly those who are too intellectually challenged to realize the nature of their predicament. They don’t accept (their low) grades (particularly not the grade of “i” ;-)), and blame the professor/instructor for their own low achievement. Here is why.
A Dark Summer Reflection
| Lasse Lien |
Words like science, scientific, university, professor, etc. still command considerable respect in society. Why? I would suggest that the brand equity of “scientific” (and associated concepts) is almost entirely created by the great advances and visible impact of fields such as physics, engineering, chemistry, medicine, mathematics, and other natural sciences. The massive advantages and explanatory power these fields have provided to society have created a status that the social sciences benefit from, but offer (relatively) modest contributions to. If I were in, say, physics or medicine, I think I would be particularly provoked by those strands of the social sciences that seem to want all the benefits of the “brand,” but also insist on the freedom to break all the rules that created it. I would presumably cry out that if you don’t like our brand, build your own, don’t destroy ours. But then again, I might just have a bad case of physics envy.
The New Issue of JEM
| Nicolai Foss |
No doubt a sure sign of impending senility, I take a huge interest in economic methodology, that is, meta-theory as it applies to economics. I serve on the editorial board of the Journal of Economic Methodology and usually enjoy reading the journal. The latest issue of JEM features at least two papers that should be of direct interest to O&M readers, namely Alain Marciano’s “Buchanan’s catallactic critique of Robbins’ definition of economics” (basically a discussion of Buchanan’s famous 1964 presidential address to the Southern Economic Association), and Oliver Williamson’s “Pragmatic methodology: a sketch with applications to transaction cost economics” (pragmatic methodology meaning “keep it simple,” “get it right,” “make it plausible,” and “engage in predictions and empirical testing”). Ah, and for those who take delight in economic controversy there is a rather thorough smashing by Ken Binmore of a recent Deirdre McCloskey book.
What Are the Bounds on the Right to Healthcare?
| Russ Coff |
My last blog dealt with the efforts to reform U.S. healthcare to reduce costs. Now I turn to the other key objective of achieving universal coverage. This seems at odds with lowering costs since covering 46 million uninsured people would not come cheap.
As Karl points out in his comment to my earlier post, many believe that healthcare is a right. Certainly there is an ethical and moral obligation to help those who are ill: it is part of the oath to which all physicians pledge as well as the UN charter.
But how far does this right extend? What level of healthcare is a human right and what level becomes a luxury? This is a very practical question. Currently there is a proposal for a luxury tax on insurance plans that offer too much coverage (Listen on NPR). Clearly some believe it is no longer a human right at that level. . . .
But let’s unpack the 46 million uninsured. (more…)
Raising the Bar: The Strategy Research Initiative
| Nicolai Foss |
The Business Policy and Strategy Division is the largest and arguably dominant division of the Academy of Management. Strategy’s leading journal, the Strategic Management Journal, consistently ranks among the top-5 management journals. What is being done in strategy clearly matters to the rest of the Academy.
Strategy has a general reputation for being a relatively rigorous management field (whether this is well deserved or not is another matter), something that is often ascribed to the heavy influence of economics on the development of the field over the last three decades. And yet, strategy also exhibits a plethora of different approaches; there is still no agreement on the nature of the key dependent variables; and the field unabashedly employs key explanatory constructs (e.g., capabilities, dynamic capabilities, absorptive capacity, etc.), the nature, operationalization, and measurement of which are still unclear. It may also be noted that although strategy does rely quite a lot on economic reasoning in comparison to other management fields, the formal way of reasoning of modern economists seldom finds its way into the pages of the leading strategy journals.
Prompted, apparently, by similar observations and frustrations, a group of Young(er) Turks (“mid-career scholars,” to use their own words) has gathered under the banner of the Strategy Research Initiative. (more…)
Strategic Management Theory and the Financial Crisis
| Nicolai Foss |
We (well, in fact, mainly Peter) have blogged extensively on the current financial crisis. Guest blogger Benito Arruñada suggested that macroeconomists may learn something from forest management. In a recent paper Rajshree Agarwal, Jay Barney, Peter, and I suggest that macroeconomists may learn something from strategic management theory. The paper is forthcoming as a SO!apbox Essay in the November issue of Strategic Organization. Hopefully it will stir considerable controversy. Here is the abstract:
Macroeconomic theory assumes that factors of production in the economy are homogeneous and fungible. As a result, it is poorly suited for analyzing and developing policy responses to the recent financial crisis. Theories of strategic management and organization, with their emphasis on heterogeneous resources and capabilities, are better positioned. We provide examples of how macroeconomic theory may lead policies astray, and how theories of strategic management provide insight into the nature and causes of the financial crisis and the appropriate policy response.
The Integration of Micro and Macroeconomics from a Historical Perspective
| Peter Klein |
That’s the title of a conference next week at the University of São Paulo featuring eminent economists and historians of economic thought such as Robert Gordon, Kevin Hoover, Wade Hands, and Phil Mirowski. According to the conference website the proceedings will be streamed live, so you can participate even if you can’t make it to São Paulo.
Attack of the Public Finance Utility Monsters
| Dick Langlois |
I just saw this amusing abstract from Greg Mankiw. I think it will be far too subtle for most people.
The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution
Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard Utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wages implies a substantial height tax: a tall person earning $50,000 should pay $4,500 more in tax than a short person. One interpretation is that personal attributes correlated with wages should be considered more widely for determining taxes. Alternatively, if policies such as a height tax are rejected, then the standard Utilitarian framework must fail to capture intuitive notions of distributive justice.
Extra credit: how would such a tax affect NBA salaries — like that of UConn’s seven-foot-three Hasheem Thabeet, who was taken number two in the recent draft?
Special Issue of HRM on “HRM and Knowledge Processes”
| Nicolai Foss |
With Scott Snell (Darden Graduate School of Business) and my SMG colleague Dana Minbaeva, I have edited this just-published special issue of Human Resource Management on the intersection of knowledge management and HRM. One of this highlights of the special issue is an excellent paper by Teppo Felin, Todd Zenger, and Joshua Tomsik that takes issue with some influential ideas on how “knowledge” prompts the emergence of “communal” forms of organizing.
Organizations, Markets, and Health Care Reform
| Russ Coff |
Amidst the fierce debate about the U.S. health care system is a raving lack of clarity. At the core, is whether organizations and markets fail to produce an optimal solution. Even the most neoclassical of economists these days acknowledge that market externalities exist and that these should be the focus of government intervention. Unfortunately, I don’t feel that the debate has been rigorous or well-informed in defining the market failure or why a government run system would be superior.
Liberal Economist Paul Krugman explains why markets fail summarizing Kenneth Arrow’s arguments (here). Basically, the third-party payee system and the information asymmetries render comparison shopping ineffective (and hence competition fails to yield an optimal solution).
Indeed, there is a good bit of inefficiency in the current U.S. system. A recent NY Times article notes that health care costs the average U.S. household $6,500 more each year than other comparable wealthy nations. Unfortunately, looking at many of the important outcomes, it appears that consumers are not getting much for their money on many dimensions (e.g., chronic disease outcomes). So it should be possible to lower costs and improve outcomes. Of course, this ignores the question of whether costs are higher to subsidize R&D that ultimately spills over into other countries.
Unfortunately, the article continues to point out how the reform efforts seem to ignore this low-hanging fruit. (more…)
Introducing Guest Blogger Russ Coff
| Peter Klein |
We’re delighted to introduce Russell Coff as our newest guest blogger. Russ is Associate Professor of Organization and Management at Emory University’s Goizueta Business School. He has published widely on the knowledge- and resource-based foundations of competitive advantage, with a particular focus on human capital and its role in M&A, compensation policy, and other aspects of organizational design. Russ is past Chair of the Academy of Management’s BPS Division and will be pretty busy leading up to and during the AoM meeting, but he’s promised to carve out some blogging time now and between sessions. We’re really looking forward to his insights. Welcome, Russ!
Plus ça change. . .
| Peter Klein |
Another quip from 1215:
The politician’s need to peer at least a short distance into the future, in the hope of getting the timing of difficult choices right, meant that few rulers could afford to dismiss astrology. Non-astronomical methods were tried too: Henry II’s chancellor, Thomas Becket, consulted a palm-reader before embarking on an expedition against the Welsh in 1157. But the transfer of Arabic science made astrology the most impressively academic of all methods for telling the future in the twelfth-century West and many rulers turned to astrologers much as politicians today turn to economists.
Danzinger and Gillingham go on to discuss some twelfth-century critics of astrology: “Evidently then, as now, different people held varying opinions about the science of forecasting.”
IBM Buys SPSS for $1.2 billion
| Peter Klein |
Wow. “In acquiring SPSS, IBM said it was expanding its focus on business-analytics technology and services to meet a growing client need to cut costs. According to IDC estimates, the world-wide market for business analytics software will grow by 4% to $25 billion this year.” SPSS must be the most valuable product ever created by a political science professor. (I may or may not mean just monetary value.) HT: Cliff.
Patenting Economics (and Other Things)
| Nicolai Foss |
The Google Empire appears to be expanding continually, and it is not easy to keep track of its recent conquests. Actually, I learned only yesterday that Google indexes patents and patent applications from the United States Patent and Trademark Office under www.google.com/patents.
The engine — which comprises 7 million patents — is fun to explore. Surprisingly many patent (applications) relate to economics. Many seem downright cranky, such as the application for a Method for the Determination of Economic Potentials and Temperatures (or perhaps I am just ignorant). Lots of management tools are also patented. For example, here is a patent describing a tool for analyzing “strategic capability networks.”
Ian Stewart claims (here) that two prime numbers have been patented (here is the short one: 7,994,412,097,716,110,548,127,211,733,331,600,522,93757,046,707,3,776, 649,963,673,962,686,200,838,432,950,239,103,981,070,728,369,599,816,314,646, 482,720,706,826,018,360,181,196,843,154,224,748,382,211,019 (now, don’t reproduce this, unless you want to get into trouble ;-)), but I haven’t been able to locate them.
Alliances and Internal Capital Markets
| Peter Klein |
An interesting contribution to the literature on internal capital markets from David Robinson, “Strategic Alliances and the Boundaries of the Firm,” appeared recently in the Review of Financial Studies (now the third-ranked journal in finance behind the JF and JFE):
Strategic alliances are long-term contracts between legally distinct organizations that provide for sharing the costs and benefits of a mutually beneficial activity. In this paper, I develop and test a model that helps explain why firms sometimes prefer alliances over internally organized projects. I introduce managerial effort into a model of internal capital markets and show how strategic alliances help overcome incentive problems that arise when headquarters cannot pre-commit to particular capital allocations. The model generates a number of implications, which I test using a large sample of alliance transactions in conjunction with Compustat data.
The model builds on Williamson’s concept of forbearance, the idea that courts will enforce contracts between distinct legal entities but will not intervene in intra-firm disputes. The idea is that moving project with particular characteristics — Robinson calls them “longshots” — from a subunit of a diversified firm to an alliance partner allows the firm’s management to make a credible commitment not to expropriate value from the project manager ex post. Empirical evidence shows that projects with longshot characteristics, measured in various ways using Compustat segment data, are indeed more likely to undertaken by alliance partners. A nice paper with a good mix of theory and evidence.
Is This In the Training Manual for Academic Deans?
| Peter Klein |
Matilda, mother of King Henry II, advising her son on the business of royal patronage (quoted in Danny Danzinger and John Gillinghman, 1215: The Year of Magna Carta, London, Hodder and Stoughton, 2003, p. 178):
He should keep posts vacant for as long as possible, saving the revenues from them for himself, and keeping aspirants to them hanging on him hope. She supported this advice by an unkind parable: an unruly hawk, if meat is often shown it and then snatched away or hid, will become keener, more attentive, and more obedient.
Speaking of deans, I happened to catch Indiana Jones and the Kingdom of the Cyrstal Skull the other day. The film, you probably know, takes place in the 1950s and centers on Indy’s confrontation with a group of Soviet treasure-hunters. Early in the film Indy loses his academic post because of suspected Communist sympathies. At the end, after defeating the bad guys (hope that’s not a spoiler), Indy not only gets his job back, but is made Associate Dean. That this is considered a reward shows how little anyone in Hollywood knows about university life!
Thanks to Guest Blogger Benito Arruñada
| Peter Klein |
Thanks to Benito Arruñada for a provocative and insightful series of posts over the last few weeks. We look forward to Benito’s continuing participation in the comment threads here at O&M. You can also follow the action (in English and Spanish) at Benito’s own blog.
Watch for more guest bloggers to be announced soon!
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