Posts Tagged ‘economics

you no exchange with us? slither home, body snatcher

Off-list, Howard Aldrich penned Brayden and me a heartfelt lament about the one-sided exchange between sociology and economics. He described a recently published article in which an economist urges fellow economists to conduct research on how organizational identity motivates workers to work hard because (surprise!) monetary incentives aren’t sufficient.

With Aldrich’s permission (but without naming the offending article and author), I am excerpting his thoughts here:

“What is heartbreaking is that there’s no sign in this article that the author has any clue that sociology and management & organization theory have been concerned with such questions for decades, or that there is a rich and robust literature on organizational culture, social identity, and so forth. Although the author mentions the social psychology of identity at one point (Ed. Note: plus 2 mentions of March and Simon’s work as “seminal”), all but a handful of the 60+ references are to the literature in economics.

Several years ago, I had a similar experience when I read a special issue of an entrepreneurship journal that was devoted to entrepreneurial teams. It contained an economist’s algorithmically driven analysis of why and how entrepreneurial teams should form. Plenty of other economists were cited, but he seemed clueless to the fact that, five years previously, a couple of sociologists (namely, Martin Ruef and me, together with a business administration scholar) had written an empirical paper, based on a nationally representative sample, addressing precisely some of the idle speculation he’d written up in his paper. I was so irritated that I called up the special issue editor, who apologized profusely but offered no explanation.

So, for economics, all that matters is what other economists have done. I’m sure this simplifies the literature search process, but one can imagine that some insights might be sparked if economists were occasionally to dip into the literature of other fields. For example, what came to mind immediately upon reading the first article was Bill Ouchi‘s rather famous – - at least to me – - book from 1981, Theory Z, which was one of the first books to ride the wave of the “organizational culture” phenomena in organization and management studies.”

In a follow-up email, Aldrich opined the desire for economists either to share or return home:

“I just want them to either go back to their own village or else begin engaging in a more fair exchange….The problem is that I doubt very much whether we can ever create a truly equitable exchange with economists – - I’ve seen the same pattern for years, and indeed Chick Perrow actually talked about something like “invasion of the body snatchers” in talking about when economists came into our field.”*

Since economists are supposedly prone to practicing what they preach, could it be that the discipline of economics is ill-suited to contributing to a knowledge commons?

Don't close your eyes, sociologists and organizational researchers

Don’t close your eyes, sociologists and organizational researchers

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Written by katherinechen

August 29, 2013 at 11:02 pm

systemic risks: too big, too complicated or too central?

Duncan Watts had an article in the Boston Globe last week (hattip: Karl Bakeman) looking at how the network structure of the banking industry might have amplified the financial crisis.  Watts comments:

Traditionally, banks and other financial institutions have succeeded by managing risk, not avoiding it. But as the world has become increasingly connected, their task has become exponentially more difficult. To see why, it’s helpful to think about power grids again: engineers can reliably assess the risk that any single power line or generator will fail under some given set of conditions; but once a cascade starts, it’s difficult to know what those conditions will be – because they can change suddenly and dramatically depending on what else happens in the system. Correspondingly, in financial systems, risk managers are able to assess their own institutions’ exposure, but only on the assumption that the rest of the world obeys certain conditions. In a crisis, it is precisely these conditions that change in unpredictable ways.

He suggests that regulators assess a company’s network position and take action to ensure systemic viability:

On a routine basis, regulators could review the largest and most connected firms in each industry, and ask themselves essentially the same question that crisis situations already force them to answer: “Would the sudden failure of this company generate intolerable knock-on effects for the wider economy?” If the answer is “yes,” the firm could be required to downsize, or shed business lines in an orderly manner until regulators are satisfied that it no longer poses a serious systemic risk. Correspondingly, proposed mergers and acquisitions could be reviewed for their potential to create an entity that could not then be permitted to fail.

This is a very interesting idea.  But it also raises a number of intriguing questions worth fleshing out in a little more detail:

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what can performativity do for you?

Hello Orgtheorists! I am new to blogging but I have been enjoying this blog for a while so I am really excited at the idea of joining your conversations. Thanks to Teppo, Brayden, Kieran, Fabio and Omar for letting me blog here.

I was not planning to start with a long post on the pro and cons of performativity, self-fulfilling prophecies, etc…but after Teppo’s recent post, I couldn’t resist…so here is my 2 cents on this debate.  Going through the comments that followed Teppo’s posting on performativity, and similar debates on orgtheory (here, here, and here), socializing finance, organizations and markets, and old- fashioned journal articles (AJS, AMR, OrgScience), I was struck by the number of different conversations/debates/questions we manage to weave around this one perspective (notice I don’t use the t word). I started listing them and I counted at least eleven major debates:

  1. Realism and Constructionism
  2. Positivism and Interpretivism
  3. Nature and nurture
  4. Materialism and Idealism
  5. Voluntarism and Structuralism
  6. Rationality debate
  7. The debate on economics (and economists): How did economics become the dominant social science? Is economics wrong? Is it evil? Are economists self-interested? Are B-Schools spreading dangerous (economic) theories?
  8. Is the crisis ultimately the failure of Chicago-style economics?  Are economists describing the economy or designing it? Or both?
  9. The Materiality debate: What is the role of technology (and other material artifacts) in the functioning of markets (and organizations)? What is the role of models, formula, in shaping the functioning of markets (and organizations)? Did a formula kill Wall St.?
  10. Do financial incentives in organizations work? When? What are their limits?
  11. Is performativity a theory? How is performativity different from traditional self-fulfilling prophecies? How is it different from institutional theory? Commensuration? Is performativity the future of economic sociology?

I am sure I am missing some of the key debates, and I hope readers will jump in and add to the list of debates and questions that the performativity debate has touched. It feels like performativity has become a sort of Rorschach test for organization theorists, economic sociologists, (few) economists and other social scientists who project on it their worldviews, their knowledge, their biases and enter heated intellectual duels without clear winners. Taken individually, these questions are all interesting and could be treated scientifically but all together they become a hairy mess of (ideological) assumptions, ontological and epistemological positions, methodological preferences, and ultimately the debates generate a déjà-vu feeling that might actually only reinforce our original positions (a classic example of Lee Ross’ biased assimilation).

I wonder if we are not asking too much from performativity?

Debates one through six  have been discussed for centuries and will never be “resolved,” and I personally hope they will never be resolved, because the creative tension between these positions drives theoretical imagination, and, in my opinion, generates more interesting social science (see Abbott’s Chaos of Discipline for a wonderful discussion of this process). Also, why should we expect performativity to provide “the” answer to these debates? Also, why should we expect “one” answer? For instance, among scholars in the performativity arena, I bet that you will find both hard core constructionists-interpretivists, and scholars who would tend more towards a realists-positivists approach (for instace, I don’t consider myself a pure constructionist, but I know Teppo and Nicolai label me as such…), so which one is the “performativity” position?

Critics will point out that the root of these problems is that performativity has not clarified its theoretical mechanisms, defined its scope conditions well enough, and of course, provided enough empirical evidence, so it is easy to poke holes into it. My AMR paper with Jeff Pfeffer and Bob Sutton was, among other things, an attempt to tease out the mechanisms and define the scope conditions of self-fulfilling prophecies. Much of the debate that followed was focused on the polemical qualities of the paper, on whether we like or economists or not (not a very interesting question: of course we do! of course we admire their work! And btw, last night I had dinner with three academic economists, all Princeton PhDs!), rather than its modest attempt to systematize some of the performativity ideas.  Furthermore, not enough good quality empirical work has been published to better articulate the theoretical ideas and test them. The good news is that there is much development on both fronts, and I am optimistic about the future development of these ideas (many orgtheory readers are working on these problems, and this is already a key sign that something is moving!)

At the same time, I don’t think we are ever going to solve many of the debates listed above, and definitely it is not productive to address all of them together. So my suggestion will be to narrow down the scope of the discussions around performativitiy, and to do that,  in my postings here, I will start from a different set of questions from the one Teppo asks. Rather than asking whether performativity is the future of economic sociology, or whether performativity is a good theory (or a theory at all), I would rather ask:

  • Has performativity research been useful in my understanding of organizations and markets?
  • How can perfomativity research inform my own work on organizations and markets?

I believe that these questions might help us identify whether and how performativity is helping us do better social science. I will address these questions in future posts  but for now I would like to get your answers:  What has performativity done for you?

Written by Fabrizio Ferraro

June 4, 2009 at 2:09 pm

national health care and american competitiveness

Greg Mankiw points toward a recent CBO report arguing that a national health care system would not improve American companies’ competitiveness. His case essentially rests on the following sentence in the report:

…cash wages and other forms of compensation would have to rise by roughly the amount of the reduction in health benefits for firms to be able to attract the same number and types of workers.

The upshot: national health care would turn out to be a zero sum game as far as competitiveness is concerned because employers would end up having to pay more to attract employees.

Mankiw focuses in on a very narrow definition of ‘competitiveness’: for him, it all seems to come down to labor costs.  The thing is, competitiveness can be defined in a few ways.  One is increasing the long term endogenous growth potential of the economy relative to other advanced economies. Another is increasing the productivity of American workers vis-à-vis others countries’ workers.  Mankiw is likely right that health care reform would not improve competitiveness if you restrict it only to mean labor costs.  But in either of the alternative senses, health care reform would plausibly contribute to American competitiveness.

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Written by seansafford

May 27, 2009 at 5:05 pm


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