orgtheory.net

what makes a classic?

Brayden

Teppo made the provocative comment (in his last post):

Russ Coff's (1999) classic (yes, you saw it here first) piece on rent appropriation gets a measly 28 citations – half of those from Russ himself!

There are two definitions of classic scholarly work that are straining against each other here. The first, probably most common, definition is that an article reaches classic status when it is widely cited. It's classic because of its overall impact on the field. A second definition of classic is more inherent to the article itself. Something is classic because it postulates something so completely innovative and groundbreaking that it shifts the debate in new directions.

Is Russ Coff's 1999 Organization Science article, "When competitive advantage doesn't lead to performance: The resource-based view and stakeholder bargaining power" classic in either of these senses? Clearly, because of its low citation count, it is not classic according to the first definition. So, perhaps Teppo meant it was classic in the latter sense – it's inherently classic. While I really like Coff's article, I'm not sure about that one (but I'm open to the idea).

Basically, Coff is trying to explain why a firm that appears to have mediocre financial performance – as measured by return to shareholder value – may still have a competitive advantage. His argument is that a firm has a competitive advantage when some stakeholder group within the firm appropriates rents from created value. Most of the created value is simply not observable, however, because it is appropriated by employees or management rather than by stakeholders. (BTW, stakeholders appropriate rents when their compensation exceeds the amount needed to secure their participation in the face of opportunity costs.)

The paper is innovative because it brings together insights from agency theory and the resource-based view of the firm. Coff also, more implicitly, draws on insights from resource dependence theory (see Pfeffer or Burt – although the latter is not cited) to explain why some groups are able to appropriate rents and others are not. Basically, the more bargaining power you have (e.g. you control vital information), the better positioned you are to appropriate rents.

Interesting? YES. Groundbreaking? Not sure. I wholly commend Russ Coff for writing a paper that offers interesting challenges to the way we conceptualize and operationalize competitive advantage. Theoretically, I'm not sure he actually builds new theory. But, he brings together pieces of existing theories and ties them together to produce what I see as his main insight – the question is not whether a firm has a competitive advantage; instead we should ask, who is advantaged?

The problem is that not enough people have really latched onto this idea to make it classic in the first sense. And while I like the paper a lot, I'm not sure it's inherently classic either. But I'm sure Teppo would argue otherwise…

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Written by brayden king

April 28, 2006 at 4:07 pm

Posted in brayden, strategy

6 Responses

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  1. Greetings. Teppo brought your discussion to my attention. First of all, thanks for all of the cites to my paper (perhaps it will be classic yet ;-).

    I would argue (self-servingly) that a true breakthrough signals a substantial change in the direction of the literature. It often takes researchers time to re-tool/re-focus to exploit such a change. Accordingly, strong incremental articles get cited more quickly while more substantial articles may lag initially while folks consider what to do about the issues raised. I know I have struggled to figure out what to do next…

    Having said that, I absolutely agree with Brayden that my article brings together existing points from different literatures rather than creating a new theory from scratch. Who knows if it will ultimately be all that impactful? Time will tell…

    Where I would agree with Teppo is that it, and other papers along these lines (Castanias & Helfat, Felin & Hesterly, MacDonald & Ryall, Lippman & Rumelt, …), reveal a disconnect between existing theories of rent generation and the many measures of organizational outcomes that we rely upon. I think that the measures are important in the real world and we need tighter theory to actually predict them reliably — there’s big money in pumping up the R-squared (if we can do so meaningfully). This will be an issue that the field must address regardless of who gets cited for it…

    Cheers!

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    Russ Coff

    April 28, 2006 at 6:55 pm

  2. Hi Russ – Thanks for coming to our little blog to comment. It's nice to know that someone reads my rants besides Teppo.

    I mentioned in the post that I thought your ideas resonated a lot with the resource dependence people, but especially with the research of Ron Burt (who recently published a book about brokerage). Perhaps one future research area is to examine the variation in brokerage power (as a function of network connectedness) possessed by various stakeholder groups that allows them to appropriate rents.

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    brayden

    April 28, 2006 at 9:17 pm

  3. You made an excellent point that my 1999 piece ignored social networks as a source of bargaining power — a really important piece of the puzzle. Actually, I have an SMJ article that addresses this very issue in the context of dynamic capabilities:

    Coff, R. and Blyler, M. 2003. Dynamic Capabilities, Social Capital, & Rent Appropriation: Ties that Split Pies. Strategic Management Journal. 24: 677-686.

    This article does two things. First, it highlights the role of social networks in the management of a firm’s resources (e.g., acquisition, integration, recombination, and releasing resources). Strangely enough, while networks would seem to be at the very heart of dynamic capabilities, this has not been brought out in the literature at all (maybe its too obvious?). Then the article goes on to explore how these same social networks might be conduits for rent appropriation. As you surmise, Burt’s work is central there…

    I’m not sure how to post live links here but, if you are interested, you can find the paper at: http://www.bus.emory.edu/rcoff/Research.html

    Take care.

    –Russ

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    Russ coff

    May 1, 2006 at 1:46 pm

  4. […] impressive year. In 1977, some of the field’s most influential works were published. Based on our definition of “classic” as a piece of literature that not only is innovative and groundbreaking but also heavily influences […]

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  5. […] 1. Brayden says eloquently that classics shift the debate in new directions. 2. Pittsburgh Tribune Review ponders the question – what makes a […]

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  6. […] of organizational strategy, e.g., rent appropriation — we’ve already labeled his work classic a few years ago. (For more details on his research, see his web page.)  Look for some engaging […]

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