Snow Job in New Jersey: Crony Capitalism Comes in Many Sizes

23 02 2015

The Wall Street Journal recently ran a piece called Regulation is Good for Goldman Sachs. It was occasioned by remarks made by the firm’s CEO in a recent conference call with investors. During the call, Lloyd Blankfein suggested that the burden of new government regulations was a net benefit to the bank, since its competitors were less able to carry the associated costs.  “More intense regulatory and technology requirements have raised the barriers to entry higher than at any other time in modern history,” said Mr. Blankfein. “This is an expensive business to be in, if you don’t have the market share in scale. Consider the numerous business exits that have been announced by our peers as they reassessed their competitive positioning and relative returns.”

This article is a reminder of the sheer importance of regulatory capture in explaining the emergence of crony capitalism and concentrations of economic power. Regulations that are often intended to protect the weak and the powerless often end up being perverted into measures that enrich particular groups of wealthy individuals at the expense of both other firms and society as a whole.

Spare a thought, though, for the impact of regulation on the degree of competition in humbler sections of the economy. Regulation can protect incumbents and reduce competition in banking, but it can also do so in the world of snow removal, a type of economic activity that is rarely if ever discussed in the financial press.  Banks and their regulators are always in the media spotlight.  Relative to their share of GDP, the zillions of obscure guys who do the vitally important work of removing snow get fewer column inches, at least most of the time.

The New York Times reports that two New Jersey teenagers have been stopped by the police from offering snow removal services to their neighbours.  Needless to say, this sort of harassment will cause future would-be entrepreneurs to think twice before handing out snow-removal flyers to their neighbours. Unfortunately, the Times story does not reveal whether the reporter investigated the possibility that the cops who stopped the teenagers are linked to any of the existing snow removal players. It may be that the cops have friends who are incumbents in this industry, although they also may simply have been on a little power trip.

For the impact of excessive occupational licensing in the United States, see this piece by Matt Yglesias. The website of the Cato Institute’s Police Misconduct project is also worth reading.





BLOG #3: Update On Andrew Smith’s activities for the Timber Project

23 02 2015

andrewdsmith:

The blog for the Empire, Trees, Climate project recently had a post about one of my current papers.

Originally posted on empire trees climate:

In the last few months, Andrew Smith (University of Liverpool Management School) has been contributing to the timber project in several ways.

First, he has been supervising the collection trade statistics so that we can reconstruct the international flows of timber in the nineteenth century. Collecting the data has been involved looking at the table of figures that were printed each year in the British parliamentary papers and then entering the relevant numbers into an Excel file. This essential data entry work has been performed by an able Research Assistant working under Andrew’s supervision. (The able RA in question is Joe Kelly, a PhD student over in Liverpool’s history department). Andrew has been responsible for analysing the resulting data and turning it into a form useful to other members of the project. He has also engaged in archival research about the international timber trade, using materials in the University…

View original 1,009 more words





Project Update: Trees, and Climate in the British North Atlantic: Towards Critical Dendro-Provenancing (2014-2016).

21 02 2015

As readers of this blog will know, I’m involved in a collaborative, inter-disciplinary research project called Trees, and Climate in the British North Atlantic: Towards Critical Dendro-Provenancing (2014-2016). This project has been generously funded by SSHRC, the social-scientific research council in Canada. The PI for the project is Kirsten Greer. The other team members include  include: Dr. Kirby Calvert (Geography, Penn State University), Dr. Adam Csank (Geography, Nipissing), Dr. Kimberly Monk (Archaeology & Anthropology, Bristol University),  and Margot Maddison-MacFadyen (Interdisciplinary Program, Memorial University). Our institutional partners are the National Museum of Bermuda, the Department of Conservation Services (Government of Bermuda), and the Bermuda National Trust.

There are many cool aspects of this project, but the greatest of them is the sheer inter-disciplinary nature of the research. In a modest way our project, which bring together physical scientists, humanities scholars, and social scientists, helps to bridge the cultural gaps identified by C.P. Snow in his 1959 lecture Two Cultures.

We have a blog where we provide updates on our project. This month’s update focuses on my research, so I am re-posting it here:

Update On Andrew Smith’s activities for the Timber Project

In the last few months, Andrew Smith (University of Liverpool Management School) has been contributing to the timber project in several ways.

First, he has been supervising the collection trade statistics so that we can reconstruct the international flows of timber in the nineteenth century. Collecting the data has been involved looking at the table of figures that were printed each year in the British parliamentary papers and then entering the relevant numbers into an Excel file. This essential data entry work has been performed by an able Research Assistant working under Andrew’s  supervision . (The able RA in question is Joe Kelly, a PhD student over in Liverpool’s history department). Andrew has been responsible for analysing the resulting data and turning it into a form useful to other members of the project. He has also engaged in archival research about the international timber trade, using materials in the University of Liverpool Library’s   Special Collections & Archives as well as the Archive in the Liverpool Museum.

Andrew wrote a lengthy report on the history of British timber tariff policy for the group. Andrew has also researched and prepared a long note on the history of the Canada Dock, a specialised facility for handling timber in Liverpool’s waterfront that opened in 1859.    The information in these documents will be incorporated into the various co-authored papers that emerge from our group project. Moreover, the material in the reports has fed into a paper Andrew is co-authoring with Kirsten Greer and Kirby Calvert.

This paper seeks to answer the question of whether it is possible for a government to use protective tariffs and other interventionist trade policies to permanently increase the competitiveness of the nation’s firms . Free-market purists argue that protectionist policies are almost always wrong, since they nurture incompetent companies that almost always fail once the artificial support of government intervention is removed. Other academics and policymakers, however, argue that under very particular circumstances, it is possible to use industrial policy to nurture companies that are genuinely competitive.  These companies  will survive and thrive once the supportive industrial policy, the training wheels as it were, is removed. These academics, who include figures such as Dani Rodrik, tend to use data  taken from the post-1945 history of East Asia to support their theory. However, the advocates of active IP certainly consider the economic histories of other countries. Indeed, the edited collection University of Toronto Press published last year, Smart Globalization, uses Canadian case studies to try to address this debate.

Our paper, which is called “The Role of IP-Induced Resource Accumulation by the Liverpool Timber Cluster,” uses the Liverpool timber merchants on the 19th century to engage with the issue of whether IP can permanently strengthen the capacity of firms to compete in the global economy.  In the paper, we operationalize a theoretical framework that was recently developed by Sergio Lazzarini, a professor of strategy at Insper Institute of Education and Research in São Paulo, Brazil. (see his “Strategizing by the government: Can industrial policy create firm‐level competitive advantage?.” Strategic Management Journal 36, no. 1 (2015): 97-112)

Here is an abstract of our paper.

The Role of IP-Induced Resource Accumulation by the Liverpool Timber Cluster

Andrew Smith, Kirsten Greer, Kirby Calvert

Abstract:

In 1810, the British government introduced an Industrial Policy (IP) designed to create alternative to Britain’s traditional supplies of wood in the Baltic region. This IP consisted of a differential duties to induce timber importing firms to switch from Baltic to Canadian suppliers. As a result of this policy, the firms acquired capabilities related to the import of wood over long distances. Between 1810 and 1842, Britain’s timber merchants developed thriving businesses based on trans-Atlantic supply chains. The tariff structure in place in these years created an artificial cost structure that benefited timber merchants with ties to Canada, many of whom were in Liverpool, over timber merchants with ties to the Baltic, a group disproportionately located in Hull, Newcastle, and the other North Sea ports that faced towards the Baltic. Between  1842 and 1860, this tariff structure was gradually eliminated. At the same time, the development of Britain’s railway network intensified competition among British ports to serve timber consumers in the interior of the country. Liverpool’s timber merchants thus faced a number of strategic threats in the 1850s and 1860s. The firms in Liverpool’s timber cluster responded to these challenges with strategies that involved a mixture of intra-cluster cooperation and intra-cluster, inter-firm competition. They learned to use the resources they had accumulated during the 1810-1842 period of mercantilist tariffs in novel ways to cope with the new strategic environment. The historical case study presented in this paper is intended as a contribution to the project of integrating research in IP and Strategic Management (SM), a research agenda that has been outlined by Lazzarini (2015).  The paper uses this historical case study to provide prescriptions for policymakers in different groups of nations. The paper uses the experience of the Liverpool timber cluster in the nineteenth century to argue that interventionist IP is most likely to result in the accumulation of Support-Adjusted Sustainable Competitive Advantage (SASCA) by firms in polities have long been characterized by stable and inclusive political systems, low levels of corruption, and high levels of transparency and state capacity. In such countries, interventionist IP may be able to produce SASCA, provided there is vigorous competition between firms in the sector targeted by the IP. The IP should also ensure that the firms in the targeted sector should be integrated into global production networks. However, the IP is most likely to be effective if targeted sector has high degree of geographical specificity of the type seen in clusters.

Andrew will be presenting this paper at the University of York Management School on Tuesday, 24 February. He also plans to get feedback on this paper at the summer conference circuit, with presentations at the Association of Business Historians annual conference (Exeter, 3-4 July ) and a pre-conference paper development workshop at the joint meeting of the Business History Conference and the European Business History Association (Miami, 24 June).  Andrew will then, he hopes, present the paper to Society for Strategic Management conference in  Denver, Colorado, October 3 – 6, 2015. (Andrew is aware that the application process for this conference is very competitive and the chances of getting our paper accepted at the SSM conference are fairly lwo). The aim is to submit this co-authored paper to strategy journal by the end of 2015. Papers in top economic geography and business history journals may also result from this research.

To conclude, Andrew Smith and his collaborators are using these funds provided by SSHRC to produce high-quality, archive-based historical research that is relevant to policy issues that are being faced by governments around the world. We also believe that our research will be of interest to decision makers in the private sector, as well as to academics in a range of disciplines.





CFP: Using Historical Approaches in Organizational Research

18 02 2015

This year’s EGOS conference (2-4 July, Athens, Greece) there will be a paper development workshop on historical approaches in organization studies. Information about how to apply for this workshop appears below.

Convenors:
R. Daniel Wadhwani, University of the Pacific, USA dwadhwani@pacific.edu

Eero Vaara, Hanken School of Economics, Finland eero.vaara@hanken.fi

Roy Suddaby, University of Victoria, Canada roy.suddaby@ualberta.ca

Matthias Kipping, Schulich School of Business, Canada mkipping@schulich.yorku.ca

William M. Foster, University of Alberta, Canada wfoster@ualberta.ca

Gabrielle Durepos, Mount Saint Vincent University, Canada gabrielle.durepos@msvu.ca

Purpose

In recent years, interest in history and research incorporating historical perspectives has grown within organization studies, with both new theoretical perspectives and methods for studying the relationship between past and present in organizations. The main objectives of this pre-Colloquium Development Workshop (PDW) are to introduce participants to the range of historical perspectives and approaches used in organizational research and to spur the continued development of new ideas and innovative contributions that explore the relationship between history and organization studies, broadly conceived. Those involved will learn about the theories and methods used in engaging history as a lens for study organizations and organizing, as well as discuss strategies for publishing such research in leading journals. They will also learn about the range of historically oriented scholarship being produced in organizational studies today. The workshop is open to researchers at all career stages who are interested in exploring the potential of using historical methods and perspectives in their research and would like to discuss how best to do so.

The PDW will be broken into two main parts:

The first part will focus on the range of ways in which scholars have used theories of history and historical methods in published research. The emphasis here will be on examining published work and considering how the authors used historical research and reasoning to address questions about organization(s), as well as the prospects for publishing research in the future. Part 1 will also cover practical topics, such developing papers that respond to the CFPs for special issues on history in Organization Studies (deadline: March 2016) and in Strategic Entrepreneurship Journal (deadline: July 2016) as well as publishing in management history journals, such as Management and Organizational History.

In the second part, we will examine the working papers of participants in small groups with the aim of improving and sharpening the papers with regards to their use and interpretation of historical sources and their explanations of historical methods.

Participants will be expected to read the papers of their fellow session presenters, attend both parts of the PDW, and engage actively in discussions.

Applications

All scholars interested in developing their papers towards publishable articles are invited to apply. Please submit (through the EGOS website) a single document of application that includes:
On the first page: a short letter of application containing full details of name, address (postal address, phone, fax and email), affiliation (date of PhD completion for early career scholars), a statement of why the applicant considers it valuable to attend the workshop as well as an indication of what journal(s) the paper is likely to be submitted to.

R. Daniel Wadhwani is Associate Professor of Management at University of the Pacific, USA, and Visiting Professor at Copenhagen Business School, Denmark. His research has used historical approaches to study a range of organizational issues, including the emergence of new markets, the nature of entrepreneurial agency, and the processes of categorization and value determination in organizational fields. He is co-editor (with Marcelo Bucheli) of “Organizations in Time: History, Theory, Methods” (Oxford University Press), which examines the role of historical research and reasoning in organization studies.

Eero Vaara is Professor of Management and Organization at Hanken School of Economics in Helsinki, Finland. He is also a permanent visiting professor at EMLYON Business School, a distinguished visiting scholar at Lancaster University, and Adjunct Professor at Copenhagen Business School. His research interests focus on strategy and strategizing, organizational change, multinational corporations and globalization, management education, and methodological issues in management research. He has worked especially on discursive and narrative perspectives.
Roy Suddaby is the Winspear Chair of Business at the Peter B. Gustavson School of Business, University of Victoria. He is the Editor of the ‘Academy of Management Review’, an Honorary Professor at Copenhagen Business School and a Strategic Research Advisor at Newcastle Business School. He has published on a wide array of topics, including historical approaches to the study of institutions and on the uses of history in strategy. His research has appeared in a number of top journals, including Administrative Science Quarterly, Academy of Management Journal, and Academy of Management Review.

Matthias Kipping is Professor of Policy and Chair in Business History at the Schulich School of Business, York University in Toronto, Canada. His research has focused on the development and role of the different institutions of management knowledge, namely management consulting and business education. In his publications, as well as in his teaching, he has been trying to link historical research with organizational theory. He is active in a variety of scholarly associations in both business history and management and organization studies.

William M. Foster is an Associate Professor of Management at the Augustana Campus of the University of Alberta. His research interests include rhetorical history, social memory studies and business ethics. He has published in ‘Advances in Strategic Management’, ‘Management and Organizational History’ and ‘Journal of Business Ethics and is currently an Associate Editor at the ‘Academy of Management Learning & Education‘.

Gabrielle Durepos is an Assistant Professor at Mount Saint Vincent University in Halifax, Canada. Her co-authored book: “ANTi-History: Theorizing the Past, History, and Historiography in Management and Organization Studies” seeks to address the call for an historic turn. She is a co-editor of both the SAGE “Encyclopaedia of Case Study Research” as well as the “SAGE Major Work on Case Study Methods in Business Research”. Her recent publications appear in ‘Management & Organizational History’, ‘Journal of Management History‘, ‘Critical Perspectives of International Business’, and ‘Organization‘. Gabrielle is a co-investigator on a SSHRC funded project focused on Reassembling Canadian Management Knowledge with a special interest in dispersion, equity, identity and history. She is the past-president of the Atlantic Schools of Business Conference as well as the newsletter editor of the Critical Management Studies Division of the Academy of Management. She is currently engaged in an organizational history of a provincial museum complex in Canada.





Killing the Golden Goose: Corporate R&D and Shareholder Value Ideology

5 02 2015

An article in Vox reports on new academic research on the plunging percentage of corporate revenues that are devoted to R&D. The paper that is the basis for this article is by Ashish Arora, Sharon Belenzon, Andrea Patacconi.

In the early 20th century, universities weren’t doing as much cutting-edge research themselves (though they were producing a flood of PhDs). So firms like DuPont began investing heavily in scientific capacity. Later, when companies like AT&T and IBM had monopolies in their respective fields, they could afford to continue funding huge scientific research labs.

But while all this corporate research was hugely beneficial to society, it didn’t always produce huge returns for shareholders. Many companies simply failed to commercialize their own discoveries. Xerox’s PARC famously invented the graphical user interface — only to see Apple and Microsoft got rich off of it.

Arora, Belenzon, and Patacconi document that the percentage of revenues devoted to corporate R&D has fallen since 1980. However, they don’t consider the most obvious explanation for this decline: the rise since 1976 of the pernicious ideology of shareholder value. The money that should be going into corporate R&D is being wasted on stock buybacks and other expenditures driven by the fixation on shareholder value.

The Chicago-trained academics who convinced a generation of MBA students that the sole responsibility of a CEO is to increase the share price have a great deal to answer for. Thank god not all CEOs believed that idea: if they had, we never would have had the iPad or continuous price cuts for the Model T. Steve Jobs and Henry Ford both challenged shareholder value ideology and made the world a better place for it. For Jobs, see here, for Ford’s famous fight with shareholders, see here.

The fixation of shareholder value is dangerous, as Roger L. Martin and others have documented. The solution, however, is not for more government regulation but for entrepreneurs and company executives to push back against this idea with both words and deeds.

Personally, I think that the paper by Arora, Belenzon, and Patacconi could benefit from more engagement with the literature by business historians on the evolution and impact of the ideology of shareholder value.  They could start with:

Lazonick, William, and Mary O’Sullivan. “Maximizing shareholder value: a new ideology for corporate governance.” Economy and Society 29, no. 1 (2000): 13-35.

P.S. I’m working on a paper with Kevin Tennent (York Management School) that deals with shareholder value ideology. It is called “Stock Markets, Corporate Governance, and Financial Capitalism”





The Buzz About Citizen Coke

4 02 2015

I’m going to be co-editing a special issue of the journal Business History with my frequent research collaborator Kirsten Greer. The theme of the special issue is the intersection of business and environmental history: all of the papers in the SI will look at the historical relationship between business and the natural environment.

Because of my work on the special issue, I’ve been encouraged by the fact that Bartow Elmore’s new environmental history of the Coca-Cola company has generated extensive media attention. The degree of attention that has been paid to Citizen Coke is unusual for an academic book, especially one that is the author’s first major publication.

Here is the book’s blurb:

How did Coca-Cola build a global empire by selling a low-price concoction of mostly sugar, water, and caffeine? The easy answer is advertising, but the real formula to Coke’s success was its strategy, from the start, to offload costs and risks onto suppliers, franchisees, and the government. For most of its history the company owned no bottling plants, water sources, cane- or cornfields. A lean operation, it benefited from public goods like cheap municipal water and curbside recycling programs. Its huge appetite for ingredients gave it outsized influence on suppliers and congressional committees. This was Coca-Cola capitalism.

Elmore

Positive reviews of the book have appeared in the Wall Street Journal, the New York Times, and the Business Standard. [The Business Standard review faults the book on stylistic rather than for content]. A more critical but nevertheless thoughtful review appeared in  Columbia Daily Tribune. The review published in the WSJ is favourable, which is impressive given that Elmore’s book is hardly compatible with the ideological agenda of that newspaper.  The book has also been described in media sources ranging from the Daily Mail, a middlebrow UK newspaper to the Huffington Post to Bloomberg Radio. The book has also been cited in the debates about whether to levy special taxes on sugary foods.

You can listen to Elmore talk about his research here. You can watch him here.

Anyway, the interest that Elmore’s book has generated has convinced us that our Special Issue on Business/Environmental History will be of use to a wide variety of academics.





CFP: BHC/EBHA Workshop Historical Approaches to Entrepreneurship Theory & Research

2 02 2015
 
BHC/EBHA Workshop
Historical Approaches to Entrepreneurship Theory & Research

Wednesday, June 24, 2015, Noon-5pm
Hyatt Regency Miami, 400 SE Second Avenue, Miami, Florida
Deadline: March 1, 2015 for abstracts

In recent years, both business historians and entrepreneurship scholars have grown increasingly interested in the promise of using historical sources, methods and reasoning in entrepreneurship research. History, it has been argued, can be valuable in addressing a number of limitations in traditional approaches to studying entrepreneurship, including in accounting for contexts and institutions, in understanding the relationship between entrepreneurship and economic change, in providing multi-level perspectives on the entrepreneurial process and in situating entrepreneurial behavior and cognition within the flow of time. Support for historical research on entrepreneurship has grown, with both leading entrepreneurship researchers calling for the use of historical perspectives and with Strategic Entrepreneurship Journal announcing a call for papers for a special issue devoted to history and entrepreneurship.
 
The purpose of this workshop is to provide scholars with developmental feedback on work-in-progress related to historical approaches to entrepreneurship and strategy, broadly construed. Our aim is support the development of historical research on entrepreneurship for publication in leading journals, including for the special issue of Strategic Entrepreneurship Journal. In addition to providing feedback and suggestions for specific topics, the workshop will address the commonly faced challenges of writing for a double-audience of historians and entrepreneurship/management scholars, engaging entrepreneurship theory and constructs, and identifying the most valuable historical sources and methods in studying entrepreneurial phenomena. We welcome work-in-progress at all stages of development. Interested scholars may submit two types of submissions for discussion: full research papers (8,000 to 12,000 words) or paper ideas (1,000 to 3,000 words).
 
If you have questions or are interested in participating, please submit an initial abstract of max. 300 words and a one-page CV before March 1, 2015 to Christina Lubinski (cl.mpp@cbs.dk) and Dan Wadhwani (dwadhwani@pacific.edu). Invitations to the PDW will be sent out before March 20, 2015. Full paper (8,000 to 12,000 words) and paper idea (1,000 to 3,000 words) submissions will be expected by May 15, 2015. Please feel free to contact the organizers with your paper ideas if you are interested in early feedback or want to inquire about the fit of your idea with this PDW.







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