where do markets come from production markets have two sides producers are a fully connected clique transacting with buyers as a separate but aggregated clique each producer is a distinctive firm with a distinctive product each side continually monitors reactions of the other through the medium of a joint social construction the schedule of terms of trade each producer is guided in choice of volume by the tangible outcomes of other producers not by speculation on hypothetical reactions of buyers to its actions each producer acts purely on self interest based on observed actions of all others summarized through a feedback process the summary is the terms of trade schedule which reduces to constant price only in limiting cases the market emerges as a structure of roles with a differentiated niche for each firm explicit formulae both for firms and for market aggregates are obtained by comparative statics methods for one family of assumptions about cost structures and about buyers evaluations of differentiated products not just any set of firms can sustain terms of trade with any set of buyers there prove to be three main kinds of markets and three sorts of market failure within a parameter space that is specified in detail one sort of market paradox has a madison avenue flavor another is more conventional grind and a third crowded is a new form not included in any existing theory of markets current american industrial markets are drawn on for 20 illustrations of which three are presented in some detail inequality in firms market shares measured by gini coefficients is discussed

competition and social influence the diffusion of the sixth generation processor in the global computer industry1 when is a social actor most strongly influenced by its peers this article addresses this question by clarifying when computer firms were most strongly affected by the choices of their structurally equivalent rivals to adopt a well known technology intel s sixth generation processor the core hypothesis is that the effect of adoptions by structurally equivalent firms increases with the competitive pressure that a focal firm faces in its market position the results show that a chosen firm is most strongly influenced by comparable others when it faces scale based competition and is diversified the implications of this study are twofold a social actor s sensitivity to the conduct of others may depend not only on its place in a hierarchy but also on the nature of its ties to an external audience and a contingent theory of social influence may be necessary to characterize diffusion processes correctly particularly when external and time varying nonnetwork factors have significant effects

mutual fund performance an analysis of quarterly portfolio holdings this article employs the 1975 84 quarterly holdings of a sample of mutual funds to construct an estimate of their gross returns this sample which is not subject to survivorship bias is used in conjunction with a sample that contains the actual net returns of the mutual funds in addition to allowing the authors to estimate the bias in measured performance that is due to the survival requirement and to estimate total transaction costs the sample is used to test for the existence of abnormal performance the tests indicate that the risk adjusted gross returns of some funds were significantly positive copyright 1989 by the university of chicago

the social structure of a national securities market in this article a national securities market the stock options market is characterized as a social structure represented by the networks of actors who traded options on the floor of a major securities exchange trading among actors exhibited distinct social structural patterns that dramatically affected the direction and magnitude of option price volatility the argument that this market is socially structured is constructed in four parts behavioral assumptions about the nature of economic actors models of micronetworks models of macronetworks and price consequences in the ideal typical model of the market actors are assumed to be hyperrational and never to act opportunistically with these behavioral assumptions the micronetworks of actors should be expansive a condition which would result in undifferentiated and homogeneous macronetworks such macronetworks would tend to reduce the volatility of option prices but in the empirical market studied here actors are subject to bounded rationality a

rival unionism and membership growth in the united states 1900 to 2005 a special case of inter organizational competition this article uses time series data from 1900 to 2005 to explore the effects of rivalry between labor unions as a special case of inter organizational competition holding constant economic and political factors that typically account for changes in union density we investigate how competition from rival labor federations and from independent unions affect both union density and a measure for the density of the dominant federation afl afl cio adjusted for membership changes from mergers and splits we measure competition by the number of unions and the size of rivals while much existing literature measures state regulation with categorical coding for specific periods we measure the effect of state enforcement directly with counts of pro labor and pro management unfair labor practice cases adjudicated by the national labor relations board we assess the effect of left wing political culture using the popular vote for socialist and communist candidates in presidential elections both the number of memb

hidden survivorship in hedge fund returns this study identifies a previously unreported bias in the tass database owing to a merger with the tremont database 60 percent of the funds added to the tass database between april 1999 and november 2001 are likely to be survivors i e funds that were selected only from funds that were live as of 31 march 1999 the resulting survivorship bias is substantial averaging more than 5 percent a year what would normally be termed the backfill period actually represents hidden survivorship a sorting algorithm to exclude these fund histories is proposed

intraindustry structure and the ease of strategic change there has been considerable recent work in industrial organization emphasizing the importance of group stratification within industries the thrust of this literature is that in empirical work and in particular in investigating public policy problems differences across firms within an industry may be crucial this paper is intended as a contribution to the empirical literature of group structures in this paper i examine patterns of strategic group membership in a number of industries and analyze changes in the strategies used by firms in particular i provide a series of rather simple exploratory tests of the importance of intraindustry strategic differences in a number of industries

assessing organizational fitness on a dynamic landscape an empirical test of the relative inertia thesis this paper proposes an empirical framework for evaluating the relative structural inertia hypothesis a central assumption of organizational ecology theories in stark contrast to the tenets of strategic management the relative inertia thesis claims that organizations are typically unable to match structural changes to their competitive environments in a timely fashion the hypothesis is tested for the hospital industry in california during the 1980 90 time frame strategic movements in a competition landscape are tracked using a variant of the jaccard similarity coefficient which has been applied in numerous studies of biological competition findings indicate that few hospitals are able to overcome inertial forces in adapting their service portfolios furthermore the ability of hospitals to strategically reposition themselves decreases markedly with provider density analyses also investigate the relation between organizational attributes e g age size mission and portfolio scope and adaptability implications for both ecological and strategic theory are pursued 1997 john wiley sons ltd

the spread of the multidivisional form among large firms 1919 1979 the multidivisional form is the favored form of organization for the large firms that dominate the american economy this study takes up the causes of the dissemination of that form among large firms from 1919 to 1979 five theories are initially proposed as possible explanations for the changes observed and these theories are operationalized and tested the model that seems most consistent with the data emphasizes the ability of key actors to alter structure under three circumstances when the firm has a product related or unrelated strategy which is consistent with chandler s 1962 theorizing when the corporate presidents have a background in sales or finance and when other firms in the industry alter their structures the implications of these results for theories of organizational change are discussed with special reference to the importance of conceiving how actors operate with varying rationalities in this process

between markets and politics organizational responses to reform in china in china s economic transition firms diversify assets through investments in the rapidly expanding service sector in response to organizational uncertainty using data from a random sample of firms in shanghai the author shows that there are two situations that cause this uncertainty economic instability where weak firms struggle to survive in the rapidly changing market system and administrative instability where large firms that were the most protected are now being forced to handle the responsibilities that were previously handled by the state the result is that both types of firm seek stability by spreading out risk through investment in low risk fast return markets revealing much about the economic reforms the overall strategy of a firm reflects at any given point in time important organizational facts any decision to fundamentally alter the deployment of internal resources represents a major structural change these kinds of changes do not occur often when they do they provide us wit

the collapse of purchasing power parities during the 1970 s one of the striking facts concerning the relationship beiveen prices and exchange rates during the 1970 s has been the dismal performance of the predictions of the simple versions of the purchasing power parity doctrine ppp that doctrine in its absolute version states that the equilibrium exchange rate between domestic and foreign currencies equals the ratio of domestic to foreign price levels the relative version of the doctrine relates equilibrium changes in exchange rates to changes in the ratio of domestic to foreign prices during the 1970 s short run changes in exchange rates bore little relationship to short run differentials in national inflation rates and frequently divergences from purchasing power parities have been cumulative this paper reviews and analyzes the empirical record of exchange rates and prices during the 1970 s and the analysis is based on the experience of the dollar pound the dollar frecch franc and the dollar dm exchange rates section 2 presents the evidence on ppp during the 1970 s and contrasts it with the evidence from the 1920 s a period during which the doctrine held up reasonably well this analysis is relevant for assessing whether the flexible exchange rate system was successful in providing national economies with an added degree of insulation from foreign shocks and whether it provided policymakers with an added instrument for the conduct of macroeconomic policy the evidence regarding devia tions from purchasing power parities is also relevant for determining whether there is a case for managed float section 3 attempts to explain what went wrong with

resistance to change in the corporate elite female directors appointments onto nordic boards in this empirical study we investigate the variation in firms response to institutional pressure for gender balanced boards focusing specifically on the preservation of prevailing practices of director selection and its impact on the representation of women on the board of directors using 8 years of data from publicly listed nordic corporations we show societal pressure to be one of the determinants of female directorship moreover in some corporations the director selection process may work to maintain a traditional type of board in such boards demographic diversity among male members appears to be associated with a lower share of female directors although we cannot establish wether this reflects discrimination or a desire to maintain critical competencies with this paper we add to the theoretical understanding of the factors underlying female board appointments by adopting an institutional theory lens to study female board representation viewing the demands for gender balanced boards in terms of societal pressure for the de institutionalization of the prevailing norms and practices we highlight preferences for maintaining established practices as a potentially important barrier to institutional change on these grounds we conjecture on the relationship between the gender diversity of boards and other diversity dimensions we suggest that a board room gender quota if implemented is supplemented by policies to ensure the transparency of board changes in order to prevent the crowding out of other diversity dimensions

unit roots and the real exchange rate before world war i the case of britain and the usa abstract unit root and cointegration tests indicate that the dollar pound real exchange rate was stationary during the us greenback and gold standard periods purchasing powwer parity ppp performed about equally well in the two periods and better than in recent years deviations from ppp were corrected by changes in british prices and us gold dollar prices greenback prices did not adjust the similarity of the adjustment parameters in the two periods suggests that expectations of a return to gold were embedded in the greenback price of gold

the choice between joint venture and wholly owned subsidiary an institutional perspective the study of foreign entry mode choice has been based almost exclusively on transaction cost theory this theory focuses mainly on the impacts of firm and industry specific factors on the choice of entry mode taking the effects of country specific contextual factors as constant or less important in contrast the institutional perspective emphasizes the importance of the influence of both institutional forces embedded in national environments and decision makers cognitive constraints on the founding conditions of new ventures still this theoretical perspective has yet to provide insights into how institutional factors influence the choice of foreign entry mode the primary goal of the present study is to provide a unifying theoretical framework to examine this relationship we synthesize transaction cost and institutional perspectives to analyze a sample of 364 japanese overseas subsidiaries our results support the notion that institutional theory provides incremental explanatory power of foreign entry mode choice in addition to transaction cost theory in particular we found that multinational enterprises tend to conform to the regulative settings of the host country environment the normative pressures imposed by the local people and the cognitive mindsets as bounded by counterparts and multinational enterprises own entry patterns when making foreign entry mode choices

does it pay to pay performance fees empirical evidence from dutch pension funds abstract we analyze the relation between investment returns and performance fees for 218 dutch occupational pension funds with an average total of 1090 billion euro in assets under management from 2012 to 2017 our dataset is free from self reporting biases and includes total return excess return and performance fees for six major asset classes we find no statistical evidence that the returns of pension funds that pay performance fees to asset managers for active investing are significantly higher or lower than the returns of pension funds that do not pay performance fees this is true for most asset classes and robust if we correct for risk we also document that large and more specialized pension funds pay less performance fees for a given level of excess return in alternative asset classes such as hedge funds and private equity this is possibly the result of better negotiation power due to their larger scale or higher level of expertise

the risk in hedge fund strategies theory and evidence from trend followers hedge fund strategies typically generate option like returns linear factor models using benchmark asset indices have difficulty explaining them following the suggestions in glosten and jagannathan 1994 this article shows how to model hedge fund returns by focusing on the popular trend following strategy we use lookback straddles to model trend following strategies and show that they can explain trend following funds returns better than standard asset indices though standard straddles lead to similar empirical results lookback straddles are theoretically closer to the concept of trend following our model should be useful in the design of performance benchmarks for trend following funds

young and no money never mind the material impact of social resources on new venture growth although growth is a desirable outcome for new ventures due to the many advantages of large size most new firms fail to grow largely because of their limited resources and adaptability this paper addresses the question of how new ventures grow despite their limited financial resources i explore the effect of two specific nonfinancial social resources legitimacy and status on new venture growth i propose that new firms can acquire legitimacy by mimicking the structures and ceremonial activities of established firms in their industry and can acquire status by affiliating with high status entities using a unique panel data set on a cohort of advertising agencies founded in new york and chicago between 1977 and 1985 i show that legitimacy and status have favorable impacts on new firms growth in revenues and number of employees the paper makes important contributions to social embeddedness and institutional research by examining the strategic implications of firm level social resources and to the literature on entrepreneurship in general and new venture growth in particular

density dependence of entrepreneurial dynamics competition opportunity cost or minimum efficient scale this paper reports on a new examination of the well established negative effect of localized density on survival in established industries we attempt to discriminate between three competing but not necessarily mutually exclusive explanations resource competition variations in the opportunity costs of entrepreneurship and geographic variations in minimum efficient scale mes we construct a model of firm growth and survival in which each of these potential causes of density dependence has a transparent parametric effect and we derive six predictions that collectively allow for discriminating empirical tests empirical results using confidential geocoded data from the national longitudinal survey of youth consistently favor the opportunity cost mechanism this paper was accepted by toby stuart entrepreneurship and innovation

the founding of specialist firms in a global fragmenting industry the study examines what drives the founding of specialist firms two theoretical explanations are tested for the founding of specialists density dependence and resource partitioning the study finds that specialists foundings are dependent on the population s density at the global level but not at the united states level the evidence from a fragmented industry does not support the resource partitioning hypothesis either at the global level or the united states national level the study shows how multi level analyses can suggest if an industry is multi domestic or globally integrated

real and nominal shocks in a two country price setting world abstract this paper develops a two country model in which the law of one price does not hold in the short run and which is consistent with the stylized fact that exchange rates respond more quickly to news than prices this is done by assuming that firms face lumpy information costs in determining what price to charge both domestic and imported goods prices are therefore sticky with respect to news and deviations from the law of one price ppp are due to exchange rate surprises the model is used to analyze the domestic and international impact of real and nominal disturbances

a critical exploration of sponsorship infrastructure and new organizations this research focuses on the effects of public sponsorship and regional infrastructure on the emergence and survival of new organizations propositions are tested regarding the joint effects of sponsorship and infrastructure on industrial development in a randomly selected sample of fourteen regions the data include six measures of infrastructure sponsorship as measured by the total dollars spent for economic development and their individual and joint effects on the number of firms and employees in high technology industries for the years 1965 1970 1975 1980 and 1984 this preliminary analysis suggests that variation in the infrastructure and level of sponsorship within a region is related to the birth and survival of new organizations

defense against recession u s business mobilization 1950 19701 the unexpected investment decisions of companies during recessions often frustrate commentators and policy makers who view the economy from the top down companies may act against immediate market signals during recessions because of uncertainties about strategy and the future direction of the economy a mesolevel sociological model of how firms interpret and respond to economic conditions in uncertain times improves understanding of firms variable responses to recessions which cumulatively shape macroeconomic trajectories examining firm level employment during four recessions from 1950 to 1970 the author generates results from dynamic panel models to show that firms set their employment levels against profits and market share and in alignment with peers and political affiliations firms manage uncertainty by imitating peers but also by endeavoring to construct their environment collectively through business associations this article s counterintuitive economic findings and the evidence of social and

here a chief there a chief the rise of the cfo in the american firm this article examines the rise of the chief financial officer cfo position among american firms during the period 1963 2000 building on event history models of cfo adoptions among a sample of some 400 large corporations this analysis documents two stages in the diffusion of the cfo model that occurred prior to its ultimate embodiment of the shareholder value ideal the cfo function originated as part of the conglomerate ideal to handle the funding of diversifying acquisitions in response to an ambiguous regulatory change in accounting rules in 1979 which threatened to reduce reported earnings further at a time when corporate earnings already were under great strain corporate leaders and finance professionals reconstructed the cfo as a solution the cfo s popularity quickly surged as a result and the role kept expanding in the following years to focus on managing shareholders and stock prices

the ecology of organizational mortality american labor unions 1836 1985 this research analyzes the disbanding rates of the full population of american national labor unions for the period 1836 1985 it tests the hypothesis drawn from population ecology theory that di

focusing firm evolution the impact of information infrastructure on market entry by u s telecommunications companies 1984 1998 organization structure acts as a lens on the environment gathering information and shaping its flow through a firm to inform managers choices this shaping of information flow happens through an organization s operating units which selectively process information from the environment and through the links between them which pass information between units we explore the relationship between this information infrastructure and firm strategy using structure and service information from the eight largest telephone service providers in the united states from 1984 to 1998 we find that firms with more units that scan areas of opportunity are more likely to enter a market while firms with more units that scan nonfocal areas are less likely to enter the market we also find that personnel links between units and the corporate level of the firm often constrain entry to new markets by dampening a unit s appetite for risk personnel links between operating units on the other hand can make a firm more likely to enter new markets particularly when the cooperating units combine different sets of information thus a firm s information infrastructure plays a dual role in shaping firm evolution leading toward some paths and away from others

the conditioning effect of time on firm survival an industry life cycle approach in an effort to reconcile theoretical blind spots we integrated research in technology management organizational ecology and evolutionary economics the central premise underlying the resultan

sustainable competitive advantage combining institutional and resource based views this article suggests that the context and process of resource selection have an important influence on firm heterogeneity and sustainable competitive advantage it is argued that a firm s sustainable advantage depends on its ability to manage the institutional context of its resource decisions a firm s institutional context includes its internal culture as well as broader influences from the state society and interfirm relations that define socially acceptable economic behavior a process model of firm heterogeneity is proposed that combines the insights of a resource based view with the institutional perspective from organization theory normative rationality institutional isolating mechanisms and institutional sources of firm homogeneity are proposed as determinants of rent potential that complement and extend resource based explanations of firm variation and sustainable competitive advantage the article suggests that both resource capital and institutional capital are indispensable to sustainable competitive advantage 1997 john wiley sons ltd

hedge funds risk and return from a database that is relatively free of bias this article provides measures of the returns of hedge funds and of the distinctly nonnormal characteristics of the data the results include risk adjusted measures of performance and tests of the degree to which hedge funds live up to their claim of market neutrality the substantial attrition of hedge funds is examined the determinants of hedge fund demise are analyzed and results of tests of return persistence are presented the conclusion is that hedge funds are riskier and provide lower returns than is commonly supposed

effects of ancestral populations on entrepreneurial founding and failure private liquor stores in alberta 1994 2003 until 1993 all liquor stores in the canadian province of alberta were government owned and run in the fall of 1993 the provincial government exited liquor retailing all government stores were shut down and entrepreneurs were allowed to open private liquor stores in this article we take advantage of this abrupt regulatory change in the alberta liquor retailing industry to address two related issues that have received little empirical attention first we investigate how an ancestral population affects processes of legitimation and competition while density dependence theory predicts that legitimation effects outweigh competitive effects at low levels of density will this be the case when a new population replaces a similar ancestral one second beyond density dependence we investigate how ancestral populations affect the locations of new entrepreneurial ventures will entrepreneurs follow ancestral location patterns and will these ancestral locations confer survival advantages to answer these questions we map all private liquor stores on the street map of calgary alberta s largest city from 1994 to 2003 and analyze store founding and failure we use our results to draw implications for theories of density dependence entrepreneurial behavior and industry spatial structure copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

when the market misleads stock prices firm behavior and industry evolution this paper augments learning and institutional theories of firm behavior with an explicit focus on the idiosyncratic characteristics of learning from financial markets various streams of literature implicitly assume that financial markets influence firm strategies yet the specifics of these interactions are not well specified motivated by a case study of the retail brokerage industry this study proposes three particular characteristics of learning from financial markets first there is vicarious learning from outcomes e g stock valuations yet this has characteristics that are more similar to institutional forms of mimetic isomorphism second the forward looking and complex nature of financial valuations incites a paradoxically simplified type of crude heuristic learning third there is a mutual and simultaneous learning process in that firms learn from financial markets which in turn are themselves in a process of social construction this combination of special characteristics suggests a number of learning pathologies that center around an increasing likelihood compared with other types of learning and adaptation of falling prey to misleading signals a computer simulation based on a model in which cournot duopolists play a multistage game involving investment and cost reduction explores the implications of these characteristics and pathologies in a systematic way

higher risk lower returns what hedge fund investors really earn abstract the returns of hedge fund investors depend not only on the returns of the funds they hold but also on the timing and magnitude of their capital flows in and out of these funds we use dollar weighted returns a form of internal rate of return irr to assess the properties of actual investor returns on hedge funds and compare them to buy and hold fund returns our main finding is that annualized dollar weighted returns are on the magnitude of 3 to 7 lower than corresponding buy and hold fund returns using factor models of risk and the estimated dollar weighted performance gap we find that the real alpha of hedge fund investors is close to zero in absolute terms dollar weighted returns are reliably lower than the return on the standard poor s s p 500 index and are only marginally higher than the risk free rate as of the end of 2008 the combined impression from these results is that the return experience of hedge fund investors is much worse than previously thought

in search of excellence fads success stories and adaptive emulation1 the faddishness of the business community is often noted and lamented but not well understood by standard models of innovation and diffusion we combine arguments about organizational cognition and institutional mimicry to develop a model of adaptive emulation where firms respond to perceived failure by imitating their most successful peers computational experiments show that this process generates empirically plausible cascades of adoption even if innovations are entirely worthless faddish cycles are most robust across alternative treatments of managerial decision making where innovations have modest positive effects on outcomes these results have broad implications for the faddishness of a business community increasingly marked by media driven accounts of success and for the properties of organizational practices that are hot one day and cold the next

fees eat diversification s lunch although diversification is often spoken of as the only free lunch in investing the authors show that it is not free and that it must be considered in light of its costs they also show that fees on diversifying asset classes are high relative to their risk adjusted diversification benefit with the more exotic asset classes carrying higher price tags because there is meaningful cross sectional variation fees need to be considered when making strategic asset allocation decisions

understanding the theoretical and empirical content of critiques of u s job creation research although the hypothesis that small firms create the majority of net new jobs is widely believed a number of researchers have attacked this using empirical data since these attacks have been presented as corrections of past methodological errors their authors may influence policy makers this paper argues that the substance of these attacks is a difference in theoretical perspectives even though the researchers claim to focus on methodological differences this paper explains the two underlying economic theories and then reviews the job creation research to demonstrate the relationship between theory and methodology

hedge fund benchmarks information content and biases we discuss the information content and potential measurement biases in hedge fund benchmarks hedge fund indexes built from databases of individual hedge funds inherit the measurement biases in the databases in addition broad based indexes mask the diversity of individual hedge fund return characteristics consequently these indexes provide incomplete information to investors seeking diversification from traditional asset classes through the use of hedge funds the approach to constructing hedge fund benchmarks we propose is based on the simple idea that the most direct way to measure hedge fund performance is to observe the investment experience of hedge fund investors themselves the funds of hedge funds fofs in terms of measurement biases returns of fofs can deliver a cleaner estimate of the investment experience of hedge fund investors than the traditional approach in terms of risk characteristics indexes of fofs are more indicative of the demand side dynamics driven by hedge fund investors p

explaining the swollen middle why most transactions are a mix of market and hierarchy why are firms sometimes more efficient than markets at organizing transactions why are most transactions arrayed neither at the pure market nor at the pure hierarchy end of the continuum but rather in the swollen middle incorporating features of both market and hierarchy why don t firms make greater use of price incentives this paper addresses these three questions by developing a model of the choice of institution one key building block is the distinction between organizing methods hierarchy and the price system and institutions firms and markets hierarchy and the price system are two distinct methods for organizing transactions each with particular costs and benefits markets and firms are institutions which use one or both of these methods although markets predominantly use prices and firms rely principally on hierarchy there is not a one to one correspondence between prices and markets or between hierarchy and firms indeed the paper argues that it is generally more efficient to use a mix of both methods than to specialize in either the paper focuses on the enforcement properties of prices and hierarchy hierarchy controls individuals directly by constraining their behavior by imposing behavior constraints while prices do it indirectly by measuring their outputs through price constraints under hierarchy individuals receive a salary to do as told while self employed individuals governed by the price system are rewarded on the basis of their output each system has its own biases using prices maximizes effort minimizes shirking but incites individuals to inflate the price and or reduce the quality of their output it encourages cheating relying on hierarchy results in the opposite bias under hierarchy individuals are not paid in function of their output but instead are rewarded for following directives they have thus strong incentives to minimize effort to shirk unless properly supervised but being paid a fixed sum to follow orders they have few incentives to cheat hence the price system experiences low shirking but potentially high cheating costs while hierarchy faces low cheating but high shirking costs organizing costs are the sum of shirking and cheating costs any given transaction will be organized by the mix of price and hierarchy i e by the mix of price and behavior constraints that minimizes organizing costs a transaction will be organized within a firm if the reduction in cheating costs achieved by replacing price constraints by behavior constraints exceeds the resulting increase in shirking costs and by the market in the opposite case the paper shows that cheating and shirking costs increase more than proportionately as one concentrates in either pure price or behavior constraints hence using a mix of both methods generally minimizes the sum of cheating and shirking costs this explains why most transactions exhibit features of both markets and hierarchy the paper shows clearly the tradeoff involved between price and behavior constraints it explains the costs and benefits of using two types of price incentives in firms piecework and profit centers and predicts when they will be used

personal versus market logics of control a historically contingent theory of the risk of acquisition this paper develops and tests a theory of the historical contingency of the risk of acquisition using data from the higher education publishing market from 1958 1990 interviews and historical analyses are combined to identify two forms of capitalism personal and market and in particular to publishing to identify the institutional logics identified with each form of capitalism an editorial and a market logic hazard rate models are used to test for differences in the effects of these two logics on the organization and market determinants of acquisition publishers with relational network forms of organization in production and distribution were at a higher risk of acquisition in the market period but not in the editorial period competition in the product market increased the risk of acquisition in the market period but not the editorial period the covariates explaining the risk of acquisition change as a consequence of the evolution of capitalism and as a result of a firm s strategic and structural conformity with the institutional logic of the prevailing form of capitalism

a time to grow and a time to die growth and mortality of credit unions in new york city 1914 1990 one vision of organizational evolution suggests that old and large organizations become increasingly dominant over their environment a second suggests that as organizations age they become less able to respond to new challenges in this article the authors investigate which of these visions best characterizes the evolution of state chartered credit unions in new york city from 1914 through 1990 by analyzing the effects of organizational age size and population density on rates of organizational failure and growth the authors find evidence that old and small institutions are more likely to fail while young and small organizations have the highest growth rates

intra and inter organizational imitative behavior institutional influences on japanese firms entry mode choice this paper compares the predictions of transaction cost and institutional theories in an empirical study of the entry mode choice for 1 194 japanese foreign subsidiaries the findings indicate the institutional model adds significant explanatory power over and above the predictions of the transaction cost model using the concepts of frequency based trait based and outcome based imitation i find support for institutional isomorphism as later entrants tended to follow the entry mode patterns established by earlier entrants isomorphic behavior was also present within a firm as firms exhibited consistency in entry mode choices across time further a firm s investment experience moderated institutional influences on entry mode choice

exchange rate dynamics an empirical investigation this paper estimates a reduced form exchange rate equation whose estimates are used to address questions on exchange rate overshooting intermediate run exchange rate dynamics and long run proportionality relationships between relative money supplies and exchange rates based on swiss u s data from the period 1973 79 the major findings are that following a monetary shock there is short run exchange rate overshooting by a factor of about two and that subsequent exchange rate adjustments to a new long run equilibrium take longer than 2 years and exhibit nonmonotonic patterns

density dependence in the evolution of populations of newspaper organizations a model of density dependence is proposed to explain regularities in the growth and decline of organizational populations density the number of organizations is assumed to be a function of the social processes of legitimation and competition at low density the model predicts that the legitimation process will dominate and will lead to high organizational founding rates and low organizational mortality rates at high levels of density competition will dominate and consequently founding rates will decline and mortality rates will rise the model is tested with hazard function models using data from nine newspaper populations spanning the 19th and 20th centuries and covering over 5200 newspapers analysis offounding rates provides strong empirical support for the model analysis of mortality rates reveals that the model holds for large populations

the population ecology of gucci gulch or the natural regulation of interest group numbers in the american states theory the theory of population ecology in contrast to economic theories of groups is used to predict the number of interest groups in the united states hypotheses interest group density is a function of potential constituents potential government goods and services the stability of the political system government age and government size methods regression analysis of u s state data for interest groups in construction agriculture manufacturing welfare the environment and local governments results interest group density conforms to the predictions based on population ecology constituents government goods and services and political stability but not those based on economic theories of group mobilization

sticky prices and purchasing power parity deviations empirical implications abstract this note tests one implication of the hypothesis that purchasing power parity ppp deviations are partly caused by different pricing behavior in goods and asset markets cross country regressions of the variance of ppp deviations on the variance of money supply innovations support the hypothesis

things change dynamic resource constraints and system dependent selection in the evolution of organizational populations an extensive empirical literature has demonstrated the existence of density dependent selection in organizational vital rates this research has also shown that historical trajectories followed by organizational populations only partly conform to the predictions of the original model inconsistencies with the model s predictions prompt a series of questions why do organizational populations suddenly collapse after reaching a peak why do organizational populations oscillate after collapsing what causes extinction of organizational forms to address these questions scholars have proposed a variety of modifications to the original model of density dependence all have merit but none is completely satisfying the main objective of this study is to narrow the gap between theories models and observed historical trajectories by identifying a unitary analytical framework that can account for the variety of empirical trajectories typically followed by mature organizational populations the model that we present is based on the hypothesis of system dependent selection according to which patterns of resource availability are produced by processes that are partly endogenous to organizational populations the main analytical insight of the study is that under conditions of dynamic resource constraints introduced by system dependent selection the presence of population level inertia leads to a rich variety of historical trajectories during population maturity we show that this result holds in the absence of any particular assumption about the microstructure of organizational populations possible trajectories include sustained oscillations resurgence and extinction

uncovering the influence of social venture creation on commercial venture creation a population ecology perspective abstract this study takes a population ecology perspective to uncover the influence that social venture creation exerts on commercial venture creation data from 88 ohio counties during 2003 2007 uncovered a negative relationship suggesting that social ventures compete for resources with commercial ventures at the time of founding additionally we found that income levels in the county affected the inter population dynamics between social and commercial ventures specifically lower income levels exacerbated the competitive relationship between social and commercial ventures low levels of government spending on welfare were found to suppress commercial start up rates

ownership size and the formal structure of organizations evidence from us public and private firms 1992 2002 this study considers the effects of i ownership structure ii prior size dynamics of growth and decline and iii organizational size on changes in the formal structure of organizations using a broad sample of almost 70 000 us public and private firms i test the arguments by estimating conditional logistic regressions using as dependent variables two dimensions of organizational structural differentiation the number of formal subunits and hierarchical levels the findings show that public firms are more likely to elaborate structurally but less likely to simplify their structural differentiation as organizations grow decline in size they apparently tend to increase decrease their degree of structural differentiation however for a given change in size the level of structural differentiation is less likely to increase during growth than it is to decrease during decline indicating an asymmetric pattern i also find that organizational size can serve as a facilitator or inhibitor for structural change depending on the direction of change finally i find that the asymmetric pattern of growth and decline works differently for large and small firms the same proportional increase in size is more likely to generate structural differentiation for larger firms than for smaller firms but the same proportional decrease in size has a smaller likelihood of causing structural de differentiation for larger firms than for smaller firms copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the dynamics of rapid industrial growth evidence from sweden s information technology industry 1990 2004 sweden s information technology it industry expanded through an inflow of new entrants during the 1990s its evolution was analyzed using ecological models of organizational founding and disbanding controlling for the effects of economic conditions this study analyzed the effects of density dependence age imprinting rate dependence and the origin of new entrants on the industry the results indicate that the inflow was comprised of start ups that proved to be relatively short lived in contrast new entrants that originated as part of incumbent firms that were diversifying in it stabilized the industry by depressing its disbanding rate and facilitating the entry of new firms in explaining the dynamics of the industry the analysis supports the established models of density dependence age dependence imprinting and organizational origin copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

performance characteristics of hedge funds and commodity funds natural vs spurious biases it is well known that the pro forma performance of a sample of investment funds contains biases these biases are documented in brown goetzmann ibbotson and ross 1992 using mutual funds as subjects the organization structure of hedge funds as private and often offshore vehicles makes data collection a much more onerous task amplifying the impact of performance measurement biases theis paper reviews these biases in hedge funds we also propose using funds of hedge funds to measure aggregate hedge fund performance based on the idea that the investment experience of hedge fund investors can be used to estimate the performance of hedge funds

coming forward the effects of social and regulatory forces on the voluntary restatement of earnings subsequent to wrongdoing we investigate the effects of social and regulatory forces on a firm s decision to disclose past wrongdoing by voluntarily restating its earnings with an eight year sample of more than 2 500 public firms including 170 voluntary restaters we find that firms are more likely to voluntarily restate their earnings in response to informal social pressures from other firms in their industry and less likely to do so in response to formal regulatory sanctions we also show that the impact of these forces varies with firm status we contribute to corporate governance and public policy research that examines the effectiveness of hard versus soft deterrence measures on firm compliance

technological platforms and diversification as the invention of fundamental new sciences spawns subsequent research discovery and commercialization core technologies branch into new applications and markets some of them evolve over time into many derived technologies whereas others are essentially dead ends the pattern of evolution and branching is called a technological trajectory an intriguing question is whether some firms can ride the trajectory by developing proprietary experience in a platform technology because the knowledge is proprietary firms that originate in industrial fields based on a platform technology acquire the technological skills to diversify and to mimic the branching of the underlying technological trajectory the ability to compete in hypercompetitive markets depends on the acquisition of know how that is applicable to a wide set of market opportunities such capabilities serve as platforms into quickly evolving markets to respond rapidly to market changes a firm must have already acquired fundamental compet

the structure of competition how competition between one s rivals influences imitative market entry this paper investigates how the pattern of encounters between a firm s competitors affects the firm s inclination to follow its competitors into a new market we theorize that direct encounters between a firm s rivals lead to a herding effect making imitative market entry more likely past mutual forbearance between a firm s competitors resulting from asymmetric multimarket competition further strengthens this herding effect by enhancing the firm s expectations of market attractiveness in contrast aggressive past rivalry between the competitors resulting from symmetric multimarket contact dampens these expectations producing a competition effect that makes herding less probable we test our idea in two distinct contexts the chinese pharmaceutical industry and the taiwanese computer hardware industry and find consistent support in both settings we discuss how our analysis of what we call the structure of competition can be extended to research on other forms of firm behavior

competition in a multimarket environment the case of market exit studies of competition typically have two underlying assumptions that competition occurs within the boundaries of industries or markets and that all firms in a market or industry are affected equally by competitive pressures the concept of multipoint competition challenges both assumptions multipoint theory addresses how different levels of contact between firms across multiple markets affect competition in individual markets its main argument is that high levels of contact between firms across markets will induce mutual forbearance causing multipoint competitors to refrain from aggressively attacking each other the restraint stems from the fact that high levels of intermarket contact enable a firm to respond to an aggressive action by a multipoint rival in markets other than the one in which the action takes place that possibility raises the potential costs of aggressive moves and serves as a credible deterrent especially if a firm can respond in several markets in addition multipoint competiti

as the left foot follows the right the dynamics of strategic and structural change this study empirically tested the contingency relationship between strategy and structure proposed by chandler and others with hypotheses linking the probability timing and magnitude of changes i

the order and size of entry into international markets abstract when entering markets managers must decide when to enter as well as how many resources to commit to the entry the study finds that larger initial resource commitments do not result in higher market share and market survival in international markets instead to improve performance in international markets managers should strive to be first entrants further first entrants typically commit fewer resources suggesting that this strategy can be pursued by firms with limited resources

social network effects on the extent of innovation diffusion a computer simulation of innovation diffusion no longer focus exclusively on explaining the rate at which innovations diffuse or the sequence in which they are adopted they also focus on explaining why certain innovations diffuse extensively be coming de facto standards whereas others do so partially or not at all many of these theories specify a bandwagon process a positive feedback loop in which increases in the number of adopters create stronger bandwagon pressures and stronger bandwagon pressures in turn cause increases in the number of adopters factors affecting if and how many times this feedback loop cycles explain if and how many potential adopters jump on a bandwagon we argue that one important factor has not yet been incorporated into theories explaining bandwagons extent the structure of social net works through which potential adopters of innovations find out information about these innovations which can cause them to adopt these innovations we advance a theory of how the structure of social networks affects bandwagons extent we propose that both the number of network links as well as small seemingly insignificant idiosyncracies of their structures can have very large effects on the extent of an innovation s diffusion among members of a social network

analyzing unexpected density dependence effects on organizational births in new york s life insurance industry 1842 1904 organizational ecologists argue that numbers of firms density dependence significantly affect industrial development rising numbers of firms are thought to legitimize a young industry leading persons to launch new firms in the industry but in a more crowded older industry increasing numbers of companies are expected to intensify competition producing a decline in organizational births since this argument dominates ecological theory results that challenge it must be explained i identify six reasons for such results only a few of these explanations have been evaluated empirically and the ideas rarely have been assessed with respect to organizational births therefore i address these explanations in order to resolve unexpected density dependence effects on foundings in new york s life insurance industry from 1842 to 1904 measuring numbers of life insurance operators at both the state new york and national u s levels of analysis resolves the unexpected density dynamics in this study and produces a coherent pattern of density findings further numbers of mutual savings banks and numbers of small life insurers in new york created competitive pressures in the life insurance business leading persons to abandon carrier entrepreneurship entrepreneurship also suffered when the life insurance industry was dominated by a few large sellers more generally the evidence shows that new york was divided into two insurance submarkets and that carrier organizers reacted to legitimation and competition trends in the submarket occupied by domestic insurers i conclude that once we consider the reasons for unexpected density dynamics the core model of density dependence offers a cogent explanation for industrial evolution

after minimalism transformations of state bar associations from market dependence to state reliance 1918 to 1950 compared to conventional approaches we conceptualize transformations in populations of organizations in terms of shifts in their relative embeddedness in markets and states as organizations expand beyond minimalist conditions of existence states and markets offer alternative solutions to the core problems of persistence obtaining resources managing competition and constructing legitimacy by analyzing the movers and stayers in a population of state bar associations that split into two co existing forms of organization one primarily reliant on the market and the other primarily dependent on the state we demonstrate that a two stage transition to a new form can be explained by the complementary interplay of resource dependency and neo institutional theories organizations are more likely to move from reliance on the market to reliance on the state if 1 their market performance has been unsuccessful 2 states are willing and able to solve organizational problems 3 organizations are younger and less established and 4 compelling alternative models have been propagated by moral entrepreneurs and adopted by influential states

the abcs of hedge funds alphas betas and costs the authors decomposed their estimated pre fee 1995 2009 hedge fund return of 11 13 percent into fees 3 43 percent an alpha 3 00 percent and a beta 4 70 percent the year by year results show that alphas were positive during every year of the past decade even during the recent financial crisis

product demography of de novo and de alio firms in the optical disk drive industry 1983 1999 little theory and research addresses the ways organizational context affects the demography of products we examine this question here by focusing on an organization s mode of market entry specifically we explore differences between firms entering a market de novo start up and those entering de alio diversification from another market we analyze all products ever shipped in the worldwide optical disk drive odd industry 1983 1999 we find an almost paradoxical empirical pattern whereby de novo firms typically introduce products with widely agreed upon better that is universally more appealing technological characteristics yet these products generally stay on the market for a shorter time than those of de alio firms whose products generally display less appealing technological features

employing identities in organizational ecology this paper argues for greater attention to employment based organizational identities in ecological theory and research i define and explore three dimensions of particular relevance to labor market identities sharpness resonance focus and authenticity the paper offers some speculations regarding i when labor market identities are most decisive for organizations ii how product market and labor market identities interact iii how employment based organizational identities might be operationalized and iv how greater attention to such identities would illuminate key issues in organizational ecology copyright 2004 oxford university press

an ecological analysis of competition among us communities we apply the ecological concept of the organization s niche pioneered by john freeman and mike hannan to the study of geographic communities we define a community s market niche by the ties linking a community to the industries on which it depends for growth we then hypothesize that the extent to which a community s market niche is occupied by other communities is a source of constraint and opportunity depending on the geographical locations of the communities that occupy the same market niche geographically distant communities occupying similar market niches are hypothesized to experience primarily constraint arising from competition for opportunities of exchange geographically proximate communities occupying similar market niches are hypothesized to face constraint arising from competition for exchange opportunities as well as opportunity arising from access to valuable resources associated with the existence of similar others empirical analyses of firm foundings and exits across us communities support these hypotheses implications of our findings for ecological research on the niche and for the literature on communities are discussed copyright 2012 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

crystallization a hidden dimension of cta fees the authors investigated the impact on fee load of variations in the frequency with which commodity trading advisers update their high water mark they documented crystallization frequencies used in practice analyzed the effect on fee load and found that the crystallization frequency set by the manager significantly affects fee load and should thus be a relevant consideration for investors

when fashion is fleeting transitory collective beliefs and the dynamics of tqm consulting we analyze changes over time in the types of consulting firms offering total quality management services when tqm was a booming management fashion consultants tended to be generalists with weak links to the technical foundations of the practice after the fashion went bust tqm consulting was increasingly populated by specialists with quality control expertise these results suggest that fashionable practices can return to their technical roots after the hype is over reversing the usual institutional trajectory they also help explain why fashion booms are so fragile and how management practices can be sustained once a boom is over

why and how innovations get adopted a tale of four models scholars studying innovation have proposed several different models of the adoption process this essay identifies two broad dimensions which differentiate the principal models the strength of the evidence regarding an innovation s efficacy and the extent of increasing returns in this essay we propose that differences across these dimensions map to four models of the adoption diffusion process prominent in the literature we then analyze the diffusion patterns of six well studied innovations in terms these variables and discuss which models seems to fit them best

industry competition and firm human capital this paper argues that objective and subjective human capital may have substantial impact upon organizational performance in a competitive context objective human capital pertains to such features as education and experience whereas subjective human capital relates to personality characteristics the argument is illustrated by presenting the results of two empirical studies 1 a cross section 1990 1991 analysis of about 50 incumbents in the flemish furniture industry concentrating on the impact of subjective human capital particularly the chief executive officer s ceo s locus of control personality on financial performance and 2 a longitudinal 1970 1992 analysis of a cohort of 100 entrants into the dutch audit industry focusing on the influence of objective human capital particularly education and experience on exit by merger and acquisition m a or diaspora both studies support the claim that objective and subjective human capital matters for example flemish furniture firms headed by a ceo with an internal locus of control trait reach higher levels of financial performance and dutch audit firms with a high proportion of personnel with business experience are more likely to exit the industry over the years as a result of diaspora finally the data of the flemish furniture and dutch audit industries are re analyzed so as to compare the impact of human capital variables on small firm performance in both industries this re analysis reveals that in both industries the impact of human capital variables is more pronounced in large firms compared to small businesses

new size measurements in population ecology in organizational ecology the analysis of the impact of competition between populations on vital ratios is relatively underdeveloped this paper addresses this issue by developing new competition measurements that focus on the importance of organizational size the application of these measurements in the case of competition between organizational subforms in a population and their impact on mortality rates demonstrate their usefulness for modelling competition specifically the results show how levels of competition between firms in a population can be more clearly analysed when the rival population mass or concentration indices are used

frequent incremental change organizational size and mortality in high technology competition while radical technological change is often characterized as hazardous particularly to incumbents incremental technological change has appeared to be immune from such risks little attention has been given to the possibility that under some circumstances incremental technological change can be quite risky this article argues that there may be tradeoffs to high rates of incremental technological change the costs are of two kinds the organizational disruptions associated with frequent technological change and overestimating the advantages and receptiveness of the technological improvement we argue that larger firms are better equipped than smaller firms to cope with these costs and will reap greater benefits from incremental changes using data on the population of worldwide floppy disk drive manufacturers we find that frequent incremental technical changes decrease organizational mortality for large firms but increase it for smaller firms we also find that large firms that frequently introduce incremental technological improvements are more potent competitors this study helps us understand how frequent incremental change affects mortality as organizations grow advice to managers to engage in continuous incremental innovation can therefore be misguided because unless firms are large they may incur costs that are so great that the firm actually fails by innovating frequently copyright 2010 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the normalization of deviant organizational practices wage arrears in russia 1991 98 we apply a normalization of deviance model to understand the prevalence of the illegal practice of wage arrears the delayed payment of wages in russia during the 1990s viewing organizational dev

experience imitation and the sequence of foreign entry wholly owned and joint venture manufacturing by south korean firms and business groups in china 1987 1995 the evolution of foreign entry in the form of joint ventures and wholly owned manufacturing operations is examined as a staged process shaped by experience and imitation dynamics at the firm group and industry levels of analysis the expansion of south korean firms into china between 1987 and 1995 lends support to the staged view of foreign entry over time technology intensive firms are more likely to abandon joint venture entry modes owing to contractual hazards firms in the same business group are found to imitate each other s choice of joint ventures and wholly owned plants firms in the same industry mimic each other s choice of wholly owned plants though not of joint ventures