bluuebunny/crossref_metadata_2025 huggingface dataset:
Capital Structure Decisions of a Public Company
Authors: Hart Oliver
Published: October 2003

In a public company, ownership is dispersed among numerous small shareholders. In this context, day‐to‐day control is delegated to managers, and individual shareholders have little or no incentives to monitor management (the free‐rider problem). The chapter uses two simple models to illustrate the role of debt and seniority in constraining the behaviour of management when there is a separation between ownership and control. The basic idea is that debt is associated with a hard budget constraint, which can compel (self‐interested) managers to give up unprofitable but power enhancing decisions in order to avoid bankruptcy. The agency approach presented in this chapter is contrasted with the empirical evidence and other theories of capital structure.
Bankruptcy Procedure
Authors: Hart Oliver
Published: October 2003

There are circumstances, arising perhaps from an unexpected shock, in which companies default on their debt. This chapter discusses the need for, and goals of, a formal bankruptcy procedure. A bankruptcy procedure should aim to achieve an ex‐post efficient outcome, preserve the bonding role of debt and the absolute priority of claims. The author describes the existing procedures in the West with particular emphasis in the US and the UK and point out some of their flaws. He presents the Aghion–Hart–Moore (AHM) bankruptcy procedure, in which debt claims are converted into equity (respecting absolute priority) and the decision about whether to liquidate or reorganize is then put to vote by the new shareholders. It is argued that AHM combines desirable features of existing procedures and at the same time overcomes some of the major shortcomings of these procedures.
The Structure of Voting Rights in a Public Company
Authors: Hart Oliver
Published: October 2003

In a public company, ownership is dispersed among small shareholders, causing a separation between ownership and control. This chapter discusses the role of takeovers and voting rights in limiting the ability of a management team to pursue its own goals rather than maximizing the company's public value. Using a general model of the effects of security‐voting structure on control transactions, it is shown that, under a reasonable set of assumptions, the optimal structure is a single class of shares with votes attached (‘one share‐one vote’). The author also discusses situations in which departures from ‘one share‐one vote’ may be optimal and relates the results to the empirical evidence.
Visions of Innovation
Authors: Fransman Martin
Published: October 2003

Innovation is the most important force driving economic change. But what drives innovation? In this book, it is argued that the beliefs that shape the way in which people, correctly or incorrectly, ‘see’ their world––i.e. their ‘visions’ of the world––are an important determinant of the innovation process. Visions are particularly important in those cases in which the decision‐making context is ‘fuzzy’––referred to here as situations of interpretive ambiguity––so that the decision‐taker is not certain what to infer. The book begins with an acclaimed critical survey of theories of the firm by some of the most important economists, organization theorists, and business strategists, paying particular attention to the ways in which concepts of information and knowledge are used. The evolution of leading Japanese computer and communications companies––such as NEC, Fujitsu, Toshiba, and Hitachi––is then examined by applying the author's approach to the evolution of firms and industry. The next set of chapters is devoted to an analysis of some of the key decisions relating to innovation made in several of the world's most important firms, such as IBM, AT&T, BT, NTT, and NEC. Finally, attention is turned to Japan, where government policies in biotechnology and other high‐tech fields are designed to strengthen Japanese firms and institutions within the context of a globalizing world economy.
Introduction
Authors: Fransman Martin
Published: October 2003

Vision is the main theme of this book, and the introduction starts by discussing this concept, which is given a far more restricted meaning than that in general use: rather than using ‘vision’ to indicate creative foresight, which leads to getting things done correctly, the book conceptualizes it in terms of belief, which may lead to getting things done incorrectly (here referred to as vision failure). The further sections of the introduction discuss visions of the firm (addressed in Ch. 1), vision and the evolution of firms (addressed in Chs. 2–4), and vision and public policy‐making (addressed in Chs. 5–7). Within each section, an outline is given of the material covered in each chapter.
AT&T, BT, and NTT: A Comparison of Vision, Strategy, Competence, Path‐Dependency, and R&D
Authors: Fransman Martin
Published: October 2003

AT&T, BT, and NTT are the largest telecommunications service providers in the USA, UK, and Japan, respectively, and until the mid‐1980s, the three companies were monopoly suppliers of telecommunications services in their own national markets. But then all three companies were confronted by similar changes in their environments: more specifically, as a result of changing beliefs on the part of their governments and regulatory authorities, they all faced competition from vigorous new entrants. At the same time, their legal status was changed, with AT&T being divested of and separated from the regional Bell operating companies, and BT and NTT being partly privatized. Simultaneously, the companies had to deal with the maturation of the market for telephone services––the growing importance of new telecommunications services, and the rapid globalization of both service and equipment markets. This chapter looks at: how the three companies have responded to these similar changes in their environment; whether they have constructed similar visions in order to deal with the threats and opportunities resulting from the changes; what differences there are in the strategies developed and in their beliefs regarding the necessary in‐house competences to take advantage of their changing circumstances; and what role should be played by research and development (R&D), and how this should be organized within the company.
Visions of Corporate Organisation: From the Multidivisional to the Segmented Form of Organisation in AT&T, IBM, and NEC
Authors: Fransman Martin
Published: October 2003

The chapter begins by analysing the tendency for the modern large industrial corporation to decentralize by examining the transition from the unitary form of organization (or U‐Form) to the multidivisional form (or M‐Form). The discussion then moves on to consider the difficulties arising in IBM and AT&T (both US companies) that led to major reorganizations of both these companies around 1990; it is shown that in order to deal with these difficulties, IBM and AT&T have come to believe that their activities need to be further decentralized, and it is this vision of organization that led them to construct what is referred to in this chapter as a segmented form of organization (or S‐Form). The characteristics of the S‐Form are then analysed by comparing it with the U‐Form and the M‐Form. The case of NEC (Japan) is then examined, and it is shown that it was in 1965, when the company underwent its most significant organizational change since the war, that NEC adopted an S‐Form of organization; they then underwent further major reorganization in 1991–2. The final part of the chapter deals with the different ways in which AT&T, IBM, and NEC, in the light of their different visions of organization, have attempted to coordinate their activities in order to realize synergies and economies of scope within the context of their decentralized S‐Forms of organization; these modes of coordination are categorized and their strengths and weaknesses analysed.
A Vision of the Japanese Innovation System and How It Works
Authors: Fransman Martin
Published: October 2003

The chapter begins with a summary of the innovation process in Japanese companies, paying particular attention to several distinctive Japanese forms of organization, such as the lifetime employment system (referred to in the Japanese context as the assumption of no exit) and the importance of committed shareholders; the effects of these forms of organization on the innovation process are examined. The influence of the Japanese government on the innovation process is then analysed, and it is argued that while the ‘engine’ of innovation is located in Japanese companies, organs of the Japanese government have played an important supportive role in facilitating the innovation process. Attention is then turned to the part played by the Ministry of International Trade and Industry (MITI). While it has often been argued that MITI is the most important organ of the Japanese government in terms of impact on the process of industrial innovation, MITI's expenditure on research and development (R&D) is dwarfed by that of the Ministry of Education and the Science and Technology Agency; this paradox is explained in terms of MITI's location at the centre of a vast information processing network. Finally, attention is turned briefly to the role of universities in the Japanese Innovation System, and it is argued that although Japanese universities are often weaker than their leading counterparts in the other major industrialized countries (in terms of their contribution to frontier research), the Japanese university system nevertheless makes an important contribution to the innovation process.
Visions of Future Technologies: Government, Globalisation, and Universities in Japanese Biotechnology
Authors: Fransman Martin
Published: October 2003

An outline is first given of several influential views regarding the role of the Japanese government and universities in the area of biotechnology. The role of the Japanese Ministry of International Trade and Industry (MITI) in biotechnology is then examined in detail, focusing attention on some of the major cooperative research programmes initiated by MITI in the field of biotechnology and the outcomes of these programmes; some of the biotechnology projects undertaken under the auspices of the Science and Technology Agency (STA) are then analysed and evaluated. Questions of policy‐making and influences on this are tackled next through an examination of the relationships between business, bureaucrats, and politicians in Japan, and the role of some of the other Japanese ministries involved in biotechnology is then discussed, including conflicts between ministries that have arisen in this area. The role of Japanese universities in biotechnology is analysed, including evidence from a study on the importance of research in Japanese universities for some of the leading Japanese biotechnology companies, as well as a case study of a leading biotechnology research laboratory at Tokyo University. The next question examined, on the basis of a study of patents in biotechnology‐related pharmaceuticals, is how advanced research in biotechnology in Japan is distributed between company laboratories and universities, and whether this pattern of distribution differs from that in the major Western countries. The chapter ends with a summary of some of the main features of the Japanese system in biotechnology.
A Matter of Survival: Women's Right to Employment in India and Bangladesh
Authors: Chen Martha
Published: October 2003

Chen's paper focuses on women's right to work in rural Bangladesh and India to illustrate the symbolism of independence and the practical necessity for women in the developing world to break from the constraints of custom to forge their own way to economic security. Chen's fieldwork in Bangladesh shows that local traditions and local policies can change in response to the contingencies of human development, while her data in India supports the conclusion that local tradition varies across castes, regions, and time. Chen ends with a four‐dimensional analysis of women's right to gainful employment as a matter of (1) immediate survival for women and their dependents; (2) female mortality rates; (3) women's status; and (4) human justice.
Martha C. Nussbaum: Human Capabilities, Female Human Beings
Authors: Wolf Susan
Published: October 2003

Wolf endorses Martha Nussbaum's stance and offers constructive criticism of some of its ambiguities and complications. Wolf's caveats point out that (1) Nussbaum's discussion of ‘human beings’ (as opposed to ‘persons’) unnecessarily risks biology‐linked issues of speciesism and sexism; (2) Nussbaum's list of essential human capabilities needs clarification in its application to avoid misdirected objections; (3) Nussbaum's development ethic require further elaboration to meet questions of how to set priorities and make trade‐offs among people or goods; and (4) Nussbaum's one‐humanity‐fits‐all claim does not capture the historical and cultural contingency and inevitability of gender differentiation.
The Research Programme of Development Ethics
Authors: Glover Jonathan
Published: October 2003

Glover explores the salience and viability of the development of a shared framework for analysing and assessing cultural restraints of women's equality in developing countries by weighing contentions for and against the view that removing such restraints is a good thing. Glover concludes with his belief that some moral values are common and indispensable for all of humanity across all cultural boundaries.
Justice, Capabilities, and Vulnerabilities
Authors: O'Neill Onora
Published: October 2003

O’Neill investigates the relationship between capability and vulnerability in forms of dependence and victimization, arguing that the satisfaction of preferences ought not to be taken as a normative criterion in political economy. Defending the capabilities approach by connecting it to a strand of Kantianism, O’Neill contends that Kant's categorical imperative continues to be a valuable test in social policy and supplies a powerful safeguard against the exploitation of vulnerability.
Democracy and Rationality: A Dialogue With Hilary Putnam
Authors: Alcoff Linda
Published: October 2003

Alcoff, accepting Hilary Putnam's conclusion that rationality and democratic values are intrinsically connected, investigates the implications of his claim. Alcoff urges Putnam to devote more thought to the criticisms advanced against traditional conceptions of inquiry and to follow Foucault in recognizing the various ways in which power and desire may affect even the most apparently neutral and democratic procedure.
Cultural Complexity, Moral Interdependence, and the Global Dialogical Community
Authors: Benhabib Seyla
Published: October 2003

Benhabib reconsiders aspects of the cultural relativism–universalism debate via sociological hypotheses regarding the reproduction and interdependence of cultures. After taking issue with relativist views that have neglected the existence of debate and opposition within traditional cultures, Benhabib builds on Richard Rorty's ethnocentric liberalism to argue that cultural views are not radically incommensurable with one another and that there is sufficient common ground among cultures to create a global dialogical community that transcends ethnocentric particularism.
Why not a Feminist Theory of Justice?
Authors: Putnam Ruth Anna
Published: October 2003

Putnam first considers and critiques Rawls's theory of justice from a feminist perspective, then endeavours to address the problem of how to preserve the universality of justice without repressing the multiplicity of voices of distress by employing both a Rawlsian stance and a pragmatist approach. Finally, Putnam defends Rawls's conception of justice against Sen's concern regarding its limited scope and Glover's worry of its culturally imperialist appropriation in the Third World. Putnam's conclusion is that a universalist theory is necessary and that any such theory ought to draw from Rawls's work.
Gender, Caste, and Law
Authors: Sunstein Cass R.
Published: October 2003

Sunstein explores the issue of law and its impact on women's quality of life, scrutinizing how law sustains and supports discrimination against women and how it might embody a commitment to sex equality. Sunstein proposes what he coins an ‘anticaste principle’ which forbids law from turning a morally irrelevant characteristic such as sex into a systematic source of social disadvantage. Focusing on the situation in which women's sexual and reproductive capacities are turned into objects for the use and control of others, Sunstein critiques American sex discrimination law, makes proposals for national and international legal change, and comments on the limitations of market mechanisms in ending discrimination.
Emotions and Women's Capabilities
Authors: Nussbaum Martha C.
Published: October 2003

Nussbaum takes on the Western and non‐Western claim that women are too emotional to be fully rational, arguing that when an adequate conception of emotion is developed, the opposition between emotion and reason will be recognized as incoherent and emotions will be seen as Adam Smith saw them—as essential ingredients in rational ethical judgement. Nussbaum contends that emotions are best understood as forms of recognition of neediness and dependency regarding the most important things in life, and are therefore as appropriate and rational as are those recognitions and the beliefs that support them.
Martha C. Nussbaum: Emotions and Women's Capabilities
Authors: Lutz Catherine
Published: October 2003

Lutz, from an anthropological perspective, offers three points of discussion in Nussbaum's argument: (1) the role of individualism in Nussbaum's scheme of relationship between emotion, rationality, and gender; (2) emotionality as an ideological symptom of women's powerlessness, not a cause of their social position; and (3) extension of case studies from the field of development to the arena of public policy formation.
A Note on the Value of Gender‐Identification
Authors: Korsgaard Christine M.
Published: October 2003

Engaging with Susan Wolf's question of what role the concept of gender ought to play in an ideal world, Korsgaard argues that gender does not and should not be a deep fact about the identity of human beings. Presumption of shared attributes, shared history, and shared fate, according to Korsgaard, regards where we, as human beings, stand in history, not about our nature. While it is especially difficult to not identify as women and men in a time when feminism is a central part of recent history, Korsgaard believes that with the achievement of equality, human beings will move on and share in non‐gender‐identified tasks.
Recovering Igbo Traditions: A Case for Indigenous Women's Organizations in Development
Authors: Nzegwu Nkiru
Published: October 2003

Nzegwu examines the status of women in Igbo political structure to determine the reasons for the apathy of modern Igbo women to political activity. Nzegwu then describes the internal structure of one such organization and explores how the utilization of literacy as the criterion of cultural adulthood leads to designing ineffectual programmes for women. Finally, Nzegwu investigates the history of development in Nigeria and discusses the positive contributions that indigenous women's organizations can bring to development.
The Theory of the Growth of the Firm
Authors: Penrose Edith
Published: October 2003

This book discusses the development of a theory on the growth of the firm. It is shown that the resources with which a particular firm is accustomed to working will shape the productive services its management is capable of rendering. The experience of management will affect the productive services that all its other resources are capable of rendering. As management tries to make the best use of the resources available, a ‘dynamic’ interacting process occurs which encourages growth but limits the rate of growth.
Introduction
Authors: Penrose Edith
Published: October 2003

This introductory chapter discusses the development of a theory on the growth of the firm. The theory is first developed as a theory of internal growth, i.e. growth without merger and acquisition. The focus then shifts from the internal resources of the firm to the impact of particular types of external conditions as firms grow larger, and to the situation of small compared to large firms. This permits an analysis of changes in the rate of growth for firms as they grow. And finally leads to a discussion on the process of industrial concentration.
The Firm in Theory
Authors: Penrose Edith
Published: October 2003

This chapter discusses the nature of the ‘firm’ in the ‘theory of the firm’, to indicate why it provides an unsuitable framework for a theory of the growth of firms. It explores the firm as an administrative organisation, the firm as a collection of productive resources, and the motivations of the firm. The ‘firm’ in the theory of price and production is also considered.
‘Inherited’ Resources and the Direction of Expansion
Authors: Penrose Edith
Published: October 2003

This chapter examines the internal factors affecting the direction of expansion of firms. Internal obstacles arise when specialised services required for expansion in a particular direction are insufficient within the firm. Internal inducements arise from the existence of a pool of unused productive services, resources, and special knowledge. The reasons why there will always be unused productive services within a firm, and the significance of the existence of such services for ‘external’ opportunities for expansion are discussed.
The Economics of Diversification
Authors: Penrose Edith
Published: October 2003

This chapter examines the relation between diversification and competition. It begins with a discussion on the meaning of diversification and the opportunities that induce it. It then looks into specific opportunities for diversification, the role of acquisition, the role of competition, diversification as a solution to specific problems, vertical integration, and the firm as a pool of resources.
The Rate of Growth of a Firm through Time
Authors: Penrose Edith
Published: October 2003

This chapter examines the factors causing changes in the rate of growth of firms as they become larger. The firm reaches a point at which its rate of growth tends to decline, its absolute size continuous to increase, and there is no reason to believe that some increase in size will ever become impossible. The limit to size is set by the administrative criteria used to decide whether or not a given collection of economic activities constitutes a business firm instead of an investment holding company or financial ‘community of interest’.
The Position of Large and Small Firms in a Growing Economy
Authors: Penrose Edith
Published: October 2003

This chapter discusses the factors affecting the expansion of small and large firms. It covers access to capital, the continued existence of small firms, growth opportunities and economic growth. It highlights the competitive advantages of small and large firms.
Growing Firms in a Growing Economy: The Process of Industrial Concentration and The Pattern of Dominance
Authors: Penrose Edith
Published: October 2003

This chapter examines the relationship between the growth of firms of different sizes and the process of industrial concentration. It discusses restrictions on the ability of small firms to take advantage of the opportunities for profitable investment left open by larger firms. It presents a number of conclusions for the place of large and growing firms in the modern world.
North-South Trade, Employment and Inequality
Authors: Wood Adrian
Published: October 2003

Expansion of trade in manufactures between developed and developing countries has had a far greater effect on labour markets than earlier research suggested. In developing countries (the South), unskilled workers have benefited most from this trade, but in developed countries (the North) the gains have been concentrated on those with skills, while unskilled workers have suffered falling wages and rising unemployment, which has worsened income distribution and aggravated other social problems. The failure of Northern governments to recognize what is happening has fuelled the rise of protection—the worst possible response, which slows development in both regions. The best solution for the North in the longer term is more investment in education, but in the near term, other measures are needed to boost the demand for, and incomes of, unskilled workers.
Summary and Conclusions
Authors: Wood Adrian
Published: October 2003

Expansion of trade in manufactures between developed and developing countries has had a far greater effect on labour markets than earlier research suggested. In developing countries (the South),unskilled workers have benefited most from this trade, but in developed countries (the North) the gains have been concentrated on those with skills, while unskilled workers have suffered falling wages and rising unemployment, which has worsened income distribution and aggravated other social problems. The failure of Northern governments to recognize what is happening has fuelled the rise of protection—the worst possible response, which slows development in both regions. The best solution for the North in the longer term is more investment in education, but in the near term, other measures are needed to boost the demand for, and incomes of, unskilled workers.
Evidence from Previous Studies
Authors: Wood Adrian
Published: October 2003

This chapter reviews the findings of previous studies of North–South trade and labour market interactions, which use various methods. It looks at evidence in developing countries, developed countries, and both types of countries together. Most previous studies show that the main effect of North–South trade in manufactures on labour markets is to alter the relative demand for skilled and less‐skilled workers (and that this trade is not based on differences in the scarcity of physical capital). Previous studies also suggest that this impact on the relative demand for skill in the North is small. However, the methods used in these studies are biased towards understatement.
Factor Content of Noncompeting Trade
Authors: Wood Adrian
Published: October 2003

This chapter applies a modified version of the factor content method of estimating the impact of North–South trade in manufactures on the skill composition of the demand for labour in both country groups. Its objective is to obtain a more accurate measure of the size of this impact, which is understated by standard calculations because they do not allow for the fact that much North–South trade in manufactures is noncompeting. Allowing for noncompeting imports, for defensive labour‐saving innovation induced by trade, and for indirect effects in non‐manufacturing sectors, the impact of this trade on the composition of demand is estimated to be roughly 40 times as large as suggested by standard factor content of trade calculations.
Unemployment in the North
Authors: Wood Adrian
Published: October 2003

Unemployment rates in the North rose between the 1960s and the late 1980s. The hypothesis of this book is that the rise in unemployment was caused by expansion of trade with the South, in conjunction with rigidity of wage differentials. Alternative explanations such as oil shocks and hysteresis seem less convincing. The estimated size of the impact of trade on the relative demand for skilled and unskilled labour is consistent with the actual size of the increase in unemployment. The trade hypothesis is also able to explain variation in the size of this increase across Northern countries. Other forces, however, were also acting on unemployment rates during this period.
Past and Future
Authors: Wood Adrian
Published: October 2003

Whether past trends in North–South trade, and their effects on skilled and unskilled workers, continue in the future, or cease or change, depends on the future course of reductions in barriers to trade and the relative supply of skilled and unskilled labour in the North and in different parts of the South. Barriers to trade, both natural and artificial, will probably continue to decline, bringing an ever‐widening range of goods and services within the scope of the skill‐based North–South division of labour. More exports of labour‐intensive manufactures from low‐income countries will lower their world prices and widen wage differentials in middle‐income countries. Rising skill supplies in middle‐income countries will intensify competition in the least skill‐intensive traded sectors in the North and further widen skill differentials there.
India's Economic Reforms, 1991-2001
Authors: Joshi Vijay , Little I. M. D
Published: October 2003

This book is a follow‐up study to an earlier work tracing India's economy up to 1991. Here the focus is on the economic reforms introduced after the financial crisis of 1991. The authors examine the different areas of the economy and outline the successes and effects of reform measures. They utilize economic theory and knowledge to suggest ways to liberalize the economy and open up the market to revitalize the Indian economy alongside those reforms already implemented. They end with predictions of the future of economic reforms and what sectors should be seen as priorities for prospective development.
Financial Sector Reform
Authors: Joshi Vijay , Little I. M. D.
Published: October 2003

Examines the financial sector, with the major focus being on India's banking institution. It provides a brief overview of the poor state of the banks in 1991, with the financial system on the brink of collapse. This is followed by an analysis of how the sector was renewed by banks being recapitalized and by interest rate deregulation. It also analyses problems, such as non‐performing assets. It concludes with a brief analysis of other areas such as the capital market and insurance sectors.
The Social Sectors, Poverty, and Reform
Authors: Joshi Vijay , Little I. M. D.
Published: October 2003

The effect of industrial reform on the social sector is the main aspect of this chapter. It examines the different effects of reform on the level of poverty in India. The authors propose ways to reform the industrial sector and comment on the likely effects of these changes on poverty levels in the short and long terms. There is also a brief discussion on the education and health sector.
Liberalism, Constitutionalism, and Democracy
Authors: Hardin Russell
Published: October 2003

The central argument of this book is that liberalism, constitutionalism, and democracy, as well as, specifically, liberal constitutional democracy all work, when they do, because they serve the mutual advantage of the politically effective groups in the society through coordination of those groups on a political and, perhaps, economic order. These arguments are applied both to the early history of constitutional developments in the United States and to contemporary transitions from autocratic regimes to market democracies. A subsidiary claim is that constitutional political institutions and democratic procedures generally require not so much active support as merely acquiescence in order to survive and work. These are explanatory theses, not normative claims, but they have relevance for normative claims if one takes seriously some relative of Kant's dictum that ought implies can. If we are to insist that some form of government is normatively right for a particular society, we must be able to say that it would or could work for that society.

It is commonly argued that what makes democracy right is that it works by consent. If so, it is such a distressingly minimal form of consent—acquiescence—as to be normatively disqualified. If we rule out mere acquiescence as adequate for consent, it seems likely that no credible argument can be adduced to defend liberal constitutional democracy in any detail on grounds of consent or contractarianism. Hence, concern for workability, which should be central to any moral assessment of principles of social order, undercuts the entire consent school of political theory.
Mutual Advantage
Authors: Hardin Russell
Published: October 2003

Theories of liberalism, constitutionalism, and democracy are mutual advantage theories. Liberalism is about arranging institutions to allow all of us to prosper in our own individual ways. Political liberalism was partly invented in response to religious claims that some ways of believing should be suppressed, and economic liberalism grew and was eventually more or less institutionalized in government policy because it caused all to prosper through the prosperity of each. Constitutionalism works when and only when it serves to coordinate a population on some matters, such as social order, commerce, and national defense that are more important than the issues on which they might differ. Similarly, democracy works only when there are no deeply divisive issues that override the value of order and other very generally advantageous values. The pre‐eminent theorists of mutual advantage are Thomas Hobbes, David Hume, and Adam Smith, although there are many strands of mutual advantage arguments in virtually all of political theory and in the predominant school of economic theory of the past several centuries in Scotland and England, Western Europe, North America, and, recently, most of the world.
Liberalism: Political and Economic
Authors: Hardin Russell
Published: October 2003

Despite the singular term liberalism, there are two relatively distinct historical branches—political and economic liberalisms—and a collection of variously titled modern branches. Political liberalism arose in the seventeenth century to counter universalistic religious views whose proponents were so ardent as to wish to impose those views by force, and in a sense therefore it was an invention to resolve a then current, awful problem. There have been many comparable social inventions, many of which have failed, as communism, egalitarianism, and perhaps socialism have all failed to date. In contrast, by the time Bernard Mandeville, Adam Smith, and others came to analyse economic liberalism, they were analysing characteristics of their own society, some of which had been developing over many centuries. Insofar as the early economic liberals had programmes, these were for reforms of political practice to end elements of state‐sponsored monopoly and protection and of political theory to give a moral (welfarist) justification for the supposedly immoral greed that drives markets to greater production; as he put it, public virtue comes from private vice.
Liberalization and Its Discontents
Authors: Hardin Russell
Published: October 2003

As there are two liberalisms, so also there are two major liberalizing transitions that non‐liberal polities may make. They may become politically liberal and they may become economically liberal. It is possible that eventually a society must be both politically and economically liberal if it is to be either, although, despite many arguments in defence of this supposition, evidence suggests that, at least, politically illiberal societies can be relatively liberal in their economic management for decades and maybe longer and politically liberal societies can have very strong central control of their economies. Initial liberalization is a matter of essentially spontaneous recoordination from one form of government order to another. The main discontents in the liberalizations of the societies of the eastern nations are the difficulties involved in economic reform, the dispiriting rise of group conflict, including violent ethnic conflict, and the loss of the program and hope of egalitarianism.
Afterword: Whether Agreed to or not
Authors: Hardin Russell
Published: October 2003

Sociologically, as explanatory theories, liberalism, constitutionalism, and democracy may yield compelling accounts of the political order of many societies. This follows if they serve the mutual advantage of the politically most important groups in modern societies. But they typically do not serve the mutual advantage of everyone in any particular society. This fact raises the normative question of how we could morally justify a liberal, democratic, constitutional regime and its actions. Workability is a necessary part of the morally right order for society; it is merely not sufficient for moral justification.
Coase Revisited: Business Groups in the Modern Economy
Authors: Granovetter Mark
Published: October 2003

Ronald Coase's celebrated query as to why economic actors typically aggregate into entities called ‘firms’ rather than transacting as individuals in a market has engendered a vigorous stream of research. This paper asks a parallel question: why is it that in all modern economies, firms themselves aggregate into larger entities, often more stable than any literature predicts, which are here referred to as ‘business groups’? After establishing some working definitions, and discussing the curious conjunction of empirical importance and analytical invisibility of business groups, an attempt is made to establish the most significant dimensions along which such groups vary. The chapter ends with some speculations on the role of these groups in economic development. The six sections of the chapter are: Coase Encounters of the Second Kind; A Working Definition of Business Groups; The Invisible Problem of Business Groups; Background and Critique of the Existing Literature; Business Groups: the Empirical Patterns (axes of solidarity; ownership relations; authority structure; moral economy; finance, capital, and the role of banks; and relations with the state); and Discussion.
Technological Discontinuities, Organizational Capabilities, and Strategic Commitments
Authors: Rosenbloom Richard S. , Christensen Clayton M.
Published: October 2003

Innovations based on radically new technologies are believed to create advantages for entrants over incumbents in the relevant markets. This essay asks under what circumstances this is true, and to what extent do the disadvantages of incumbent firms stem from their failure to make timely commitments to new capabilities and new strategies as opposed to their inability to implement those commitments effectively. These questions are explored in relation to recent literature in economics and organization theory, and the concept of the ‘value network’ is introduced. Historical evidence suggests that entrants find greatest advantage when innovations disrupt established trajectories of technological progress, a circumstance that is associated with moves to new value networks. The incumbent's disadvantage, hence, seems to be associated with an inability to change strategies rather than technologies.
The Co‐Evolution of Technology, Industrial Structure, and Supporting Institutions
Authors: Nelson Richard R.
Published: October 2003

There is a large intellectual discrepancy between most formal growth models described by economists and descriptions of growth in economic history. This paper draws on an evolutionary theory of economic growth that brings together appreciative theorizing regarding growth and formal theorizing. It aims to piece together a relatively coherent appreciative theoretical account of economic development at a sectoral level by laying out a story of the growth, and development, of a manufacturing sector, from birth to maturity, and perhaps until death, that seems to fit many cases and which can serve as a target for formalization. The paper first describes and tries to link two broad bodies of appreciative evolutionary theoretic writing: one proposes that a new technology develops along a relatively standard track from the time it is born, to its maturity, and that firm and industry structure ‘co‐evolve’ with the technology; the other is concerned with the development of institutions in response to changing economic conditions, incentives, and pressures. The matter of ‘punctuated equilibrium’ is then considered, before concluding with a consideration of two economic developmental implications that appear to flow from the analysis: the first concerns the pattern of change of productivity, of capital intensity, and relative variables associated with economic growth, as a technology and industry structure develop; the second is concerned with implicitly cross‐country comparisons, and is focused on how ‘comparative advantage’ develops in a new industry.
Optimum Taxation, Differentiation, and Graduation
Authors: Atkinson A. B.
Published: October 2003

The basic income and flat‐tax proposal has a universal payment and a constant tax rate; most countries, instead, have a system of categorical payments (to pensioners, unemployed, etc.) financed by a graduated income tax. This chapter examines the equity and efficiency arguments involved in choosing between these two approaches.
Economics and Business
Authors: Kay John
Published: October 2003

This chapter explains why economics has had such a limited impact on business, and what should be done about it. The economics relevant to business is principally that which deals with markets and the interactions of firms, not the economics that deals with macroeconomic forecasting. Advances in the former have not been well documented, and most people are not aware of their existence. This chapter outlines their scope.
The Failures of Forecasting
Authors: Kay John
Published: October 2003

Using data on previous forecasts, this widely influential 1995 FT article criticizes the reliability and usefulness of economic forecasts. Contrary to the widespread belief that economists always disagree, it shows that economic forecasts typically fall into quite a narrow range, but that the range rarely includes the outcome.
Uses and Abuses of Economics
Authors: Kay John
Published: October 2003

The first part of this chapter explains why economics has enjoyed more success in answering microeconomic questions rather than macroeconomic ones. The second part responds to a number of attacks on economics, by clarifying that the foremost role of economics is to clarify our understanding and organize our thoughts rather than to help us make forecasts.
Can There Be a Science of Business?
Authors: Kay John
Published: October 2003

This chapter is concerned with whether there can be such a thing as a science of management. It explains some of the issues involved in turning management from a subject based on the assertions of gurus to one that reproduces the structure of concepts, hypothesis, and empirical tests, which is characteristic of natural sciences. The second part of the chapter provides evidence of how management theories that do not follow this structure are misleading.
Competitive Advantage
Authors: Kay John
Published: October 2003

Using the example of six British supermarket chains, competitive advantage is explained and quantified. When there is no explicit comparator, competitive advantage can be measured in relation to the marginal firm in the industry. In other words, the weakest firm that still finds it worthwhile to serve the market provides the baseline against which the competitive advantage of all other firms can be set. Architecture, innovation, and reputation are reviewed as the main sources of competitive advantage.
No Free Lunches
Authors: Kay John
Published: October 2003

Discussing the irrelevance of corporate finance to firm valuation, this chapter provides support for the assertion that the profitability of a business can only be the result of its underlying competitive advantage.
The Competitive Advantage of Nations
Authors: Kay John
Published: October 2003

This chapter explores how the resource‐base theory of strategy can be extended from the competitive advantage of firms to the competitive advantage of countries. A country's competitiveness will ultimately depend on three factors. The first is the strength of the competitive advantage of its individual firms. The second is the access to scarce resources that are available within a country. Most importantly, it will rely on the existence of supportive networks of firms and activities, which facilitate: speed, flexibility of response, and the construction of a base of tacit knowledge.
Relationships and Commitments
Authors: Kay John
Published: October 2003

This chapter was written around the theme of trust and commitment in business and personal relationships. The argument of the first part centres around the unsuccessful attempt to formalize trust relationships through a formal marriage contract. The latter discusses the idea that firms should not focus their efforts entirely on achieving return for their shareholders but rather try to achieve a multitude of objectives involving more than one group of stakeholders.
Contracts or Relationships
Authors: Kay John
Published: October 2003

“Architecture” is introduced as the basis of competitive advantage for many companies. It refers to a network of relationship contracts within, or around, the firm. It can be sub‐divided into internal architecture (relationships with employees), external architecture (relationships with their suppliers and customers) and networks (relationships among a group of firms engaged in related activities). It adds value by helping to create organizational knowledge and routines that enable the company to respond flexibly to changing circumstances and allow easy exchanges of information. Such capabilities can only add value in the context of a long‐term relationship, which penalizes opportunistic behaviour.
The Customer Corporation
Authors: Kay John
Published: October 2003

The stake‐holding view of the nature and purposes of corporations applies most forcefully to monopoly public utilities. This chapter analyses some of the problems of utility regulation and proposes a stake‐holding alternative. In this context, the purpose of a privatized utility should be to serve its customers, and its obligations to shareholders exist only to the extent necessary to ensure that the company can meet its primary purpose.
Inclusive Economies
Authors: Kay John
Published: October 2003

This chapter contrasts two alternative philosophies that can provide the context for capitalism to exist. On the one end, the New Right holds that the most important social institution is private property, self‐interest is the central human emotion and insecurity is the engine of progress. If there is room for nobler sentiments like altruism, sincerity, and confidence, it is in our family life and not in commerce. On the other end, inclusive economies believe that there is no incompatibility between the functioning of markets and the existence of shared values, collective activity, and broadly accepted concepts of fairness.
The Strategic Audit
Authors: Kay John
Published: October 2003

This chapter introduces the concept of the strategic audit. This begins with the identification of the company's distinctive capabilities and the subsequent selection of markets that can make the best use of them. Finally, it is recognized that for these distinctive capabilities to create true competitive advantage, they need to be both sustainable and their added value appropriable by the company.
The Media Revolution
Authors: Kay John
Published: October 2003

This chapter uses the framework developed in earlier sections to suggest how one of the most exciting and controversial of modern industries – audio‐visual media – is likely to evolve. It is argued that the services of origination, of publishing, and of delivery and dissemination, which have historically been integrated in electronic, but not other media, will break down into their component parts in electronic media also.
Firms and Industries
Authors: Kay John
Published: October 2003

This final chapter begins with surveys of two industries – once hugely successful, recently in serious decline – the Lloyd's insurance market and the British horse racing industry. It continues with a discussion of the decline of Saatchi and an examination of the retail financial services industry. It concludes by exploring two generic issues for all firms and all industries; namely what the core businesses are and when there is a need for consolidation.