(with Kirsten Foss, Peter G. Klein, and Sandra Klein) “Heterogenous Capital and the Organization of Entrepreneurship,” Journal of Management Studies 44: 1165-1186.
Here we outline an Austrian approach to economic organization based on the entrepreneur and the Austrian idea of capital as heterogeneous and time-dimensioned, two themes associated closely with Kirzner’s (1966, 1973, 1997) contributions. Our unit of analysis is the capital asset. We start with the Austrian concept of heterogeneous capital and provide an economic interpretation of such heterogeneity. In our view, capital assets are heterogeneous to the extent that they possess various attributes, many of which may be unknown to the owners of these assets. Moreover, many attributes are costly to measure. These facts help explain a host of traditional and neglected issues in the theory of economic organization. In other words, the theory of the firm has much to gain from embracing Kirznerian ideas on entrepreneurship and capital heterogeneity
(with Kirsten Foss and Peter G Klein) “Original and Derived Judgment: an Entrepreneurial Theory of Economic Organization,” Organization Studies 28: 1893-1912.
Recent work links entrepreneurship to the economic theory of the firm, using the concept of entrepreneurship as judgment introduced by Frank Knight. When judgment is complementary to other assets, it makes sense for entrepreneurs to hire labour and to own assets. The entrepreneur's role, then, is to arrange or organize the human and capital assets under his or her control. We extend this Knightian concept of the firm by developing a theory of delegation under Knightian uncetainty. What we call original judgment belongs exclusively to owners, but owners may delegate a wide range of decision rights to subordinates, who exercise derived judgment. We call these employees `proxy-entrepreneurs', and ask how the firm's organizational structure — its formal and informal systems of rewards and punishments, rules for settling disputes and renegotiating agreements, means of evaluating performance and so on — can be designed to encourage forms of proxy entrepreneurship that increase firm value while discouraging actions that destroy value. Building on key ideas from the entrepreneurship literature, Austrian economics and the economic theory of the firm, we develop a framework for analysing the trade-off between productive and destructive proxy entrepreneurship. We link this analysis to the employment relation and ownership structure, providing new insights into these and related issues in the economic theory of the firm.
(with Ibuki Ishikawa) “Toward a Dynamic Resource-based View,” Organization Studies 28: 749-772.
Over the last two decades, the resource-based view (RBV) has become dominant in the strategic management field. It has often been observed that the RBV is lacking in the dynamic dimension. For example, processes of building competitive advantages by means of combining existing complementary resources in novel ways are not inquired into. We argue that the RBV may profitably draw on insights in entrepreneurship and capital theory, drawn from Austrian economists as well as Frank Knight, in order to strengthen its dynamic dimension. We link the RBV and Austrian ideas in the context of the theory of complex systems pioneered by Herbert Simon. We draw a number of implications for strategic management from this synthesis, notably into resource value and sustainability of competitive advantage.
“Strategic Belief Management,” Strategic Organization 5: 249-258.
While (managerial) beliefs are central to many aspects of strategic organization, interactive beliefs have been rather neglected. In an increasingly connected and networked economy, firms confront coordination problems that arise because of network effects. The capability to manage beliefs will increasingly be a strategic one, a key source of wealth creation, and a key research area for strategic organization scholars
“The Knowledge Governance Approach,” Organization 14: 29-52.
An attempt is made to characterize a "knowledge governance approach" as a distinctive, emerging field that cuts across the fields of knowledge management, organisation studies, strategy and human resource management. Knowledge governance is taken up with how the deployment of administrative apparatus influences knowledge processes, such as sharing, retaining and creating knowledge. It insists on clear behavioural foundations, adopts an economizing perspective and examines efficient alignment between knowledge transactions with diverse characteristics and governance structures and mechanisms with diverse capabilities of handling these transactions. Various open research issues that a knowledge governance approach may illuminate are sketched. Although knowledge governance draws clear inspiration from organizational economics and "rational" organization theory, it recognizes that knowledge represents various challenges to more "closed" social science disciplines, notably economics.
(with Giampaolo Gazzarelli) “Institutions as Knowledge: Ludwig Lachmann’s Institutional Economics,” Cambridge Journal of Economics 31: 789-804.
This article revisits the socioeconomic theory of the Austrian School economist Ludwig M. Lachmann. By showing that the common claim that Lachmann's idiosyncratic (i.e., eclectic and multidisciplinary) approach to economics entails nihilism is unfounded, it reaches the following conclusions. (1) Lachmann held a sophisticated institutional position vis-à-vis economics that anticipated developments in contemporary new institutional economics. (2) Lachmann's sociological and economic reading of institutions offers insights for the problem of coordination.
“Economic Governance in a Dynamic Global Context: The Center for Strategic Management at the Copenhagen Business School,” European Management Review 4: 183-191.
This paper tells the story of the emergence of distinct research around the theory of the firm at Copenhagen Business School (CBS) within the last two decades, focussing on elements of continuity in the thinking of key CBS persons in the period. It discusses the current research agenda of the Center for Strategic Management and Globalization, a research agenda that may be described as multi-level research in international strategy, based on the economic theory of the firm and strategic management theory, and with a strong emphasis on micro-foundations and knowledge governance. The paper relates the narrative to organizational learning theory.
“Awards as Compensation: Comment on Frey,” European Management Review 4: 21-23.
(no abstract available)
(with Normann Sheehan) “Advancing the Resource-based View Through Porterian Activity Analysis.” Management Decision 45, (issue 3): 450-461.
Almost since the inception of the resource-based view (RBV), critics have complained that the view is weak in the prescriptive dimension. A recent statement of this critique is by Priem and Butler, who argue that the RBV does not address value creation. One aspect of this is that the link between resources and value creation is black-boxed. The paper aims to argue that a Porterian activity analysis with a focus on activity drivers can remedy this weakness, and how it brings into focus important implementation issues that are neglected in the RBV.
“Scientific progress in strategic management: the case of the resource-based view,” International Journal of Learning and Intellectual Capital 4: 29-46
Does the Resource-Based View (RBV) represent a case of scientific progress? And has it emerged as the dominant approach to the understanding of competitive advantage for this reason? Conventional criteria for scientific progress, notably those of the growth of knowledge literature, are not particularly helpful for understanding this. Instead, it is argued that in order to understand why the RBV is an instance of scientific progress, we should begin from the notion that reduction is at the heart of progress in science, and that many scientists implicitly or explicitly hold this view. The RBV is a case of scientific progress because it identified theoretical mechanisms at levels lower than those that were usually investigated in strategy research prior to the RBV. Unfortunately, the micro-emphasis of the RBV gave way during the 1990s to more aggregative modes of theorising (i.e., the capabilities approach). Thus, the RBV represents an 'unfinished revolution' as there is still considerable potential to dig deeper in the deep structure of competitive advantage.