Market frictions as building blocks of an organizational economics approach to strategic management

This paper shows that market frictions are fundamental building blocks for an organizational economics approach to strategic management. Various organizational economic approaches (transaction costs, property rights, real options, and resource‐based) have distinctive focal problems and emphasize different combinations of market frictions. A wider recognition of the role of market frictions is useful for three main objectives. First, it helps identify an evolving market‐frictions paradigm in strategic management. Second, it shows how two primary questions in strategy of why firms exist and why some firms outperform others and the three primary strategic goals of cost minimization, value creation, and value capture can be better joined and evaluated. Third, different combinations of market frictions can generate new research questions and advance theory development in the strategic management field. Copyright © 2013 John Wiley & Sons, Ltd.     

STRATEGIC MANAGEMENT AND DETERMINISM: SUSTAINING THE CONVERSATION*

This article suggests that strategy research should concern itself with continuing the conversation of the field rather than insisting upon a place for universal methodological criteria within that conversation. It attempts to sustain the dialogue begun by Bourgeois, Bowman, Jemison, Huff, and others, who recommend the pragmatic approach of methodological and theoretical pluralism as the best way forward in increasing empirical content. the article draws heavily on the philosophical writings of Dewey, Kaplan, and Rorty and the methodological essays of economists such as Boland, Caldwell, and McCloskey in an effort to persuade others in the strategy field that ‘good science is good conversation’. … once or twice she had peeped into the book her sister was reading, but it had no pictures or conversation in it, ‘and what is the use of a book,’thought Alice, ‘without pictures or conversation?’ Lewis Carroll (1865, p. 5)     

Edith Penrose's (1959) Contributions to the Resource-based View of Strategic Management

ABSTRACT We argue that Rugman and Verbeke (2002 ) underestimate the importance of Penrose's (1959 ) contributions to the modern resource‐based view of the firm. In particular, we take issue with Rugman and Verbeke's (2002 ) arguments concerning Penrose's (1959 ) contributions to our knowledge of: (1) the creation of competitive advantage, (2) sustaining competitive advantage, (3) isolating mechanisms, and (4) competitive advantage and economic rents. In our response, we show that Penrose (1959 ) has both directly and indirectly influenced the modern resource‐based view of strategic management.     

Mechanisms,Bayesianism, and process tracing

ABSTRACT

This essay examines the role of mechanisms and Bayesian inference in process tracing. With respect to mechanisms, I argue that the core of process tracing with causal inference is the identification of mechanisms understood as intervening events. Events are different from standard intervening variables when used with process tracing, because events are treated as sets in which cases can have membership. With respect to Bayesian analysis, I concur with recent writings that suggest Bayesian inference is at the heart of process tracing. The Bayesian nature of process tracing explains why it is inappropriate to view qualitative research as suffering from a small-N problem and certain standard causal identification problems. More generally, the paper shows how the power of process tracing as a qualitative methodology depends on and grows from its set-theoretic underpinnings.     

CALCULATION OF THE UNIFORM CASH FLOW WHICH IS EQUIVALENT TO A CUBICALLY VARYING CASH FLOW

Finding the uniform annual cash flow which is equivalent to a given irregular cash flow is an elementary but frequently arduous calculation. A closed form result is developed from which the uniform annual cash flow may be calculated provided that the actual cash flow varies with time according to a polynomial whose degree does not exceed three. An example which concerns finding the equivalent annual energy dissipation cost in electric system distribution transformers is included.     

Why a Multinational Firm Chooses Expatriates: Integrating Resource‐Based,Agency and Transaction Costs Perspectives*

abstract This paper develops an integrative organizational economics framework explaining and predicting multinational firms' managerial resource deployments based on resource‐based, agency, and transaction costs theories. Our empirical findings suggest that the governance decision for managerial services of multinational firms is influenced not only by the comparative capabilities of managers, but also by the economic costs to the firm of influencing the behaviours of managers through managerial contracting.