Politicians like Mitt Romney tout their business experiences as a reason for election.  Al Gore sought to reinvent government to make it run more like a business.  And I think that regulators have increasingly adopted the language of business when they do their jobs - say, by promulgating "best practices" instead of rules.  My future colleague Cary Coglianese calls this management-based regulation.

I suspect that the increasing use of the language and methods of business in government regulation is one of the more notable changes in regulation in the current era (others might point to the ever increasing power of the presidency/OMB, or e-government, or perhaps the war on terror).  But am I right about this?  I wondered if the readers of this blog had any thoughts.  Do you have a favorite business buzzphrase that you're seeing generals, regulators, or heck, whoever, use?

I'm looking for interesting examples because I'm hoping to write a book called "From Good to Great [Bureaucracy]."  (I kid.)  But if it turns into a wiki, I promise to share the revenues equally with the readers of the Glom, as any good anarcho-syndicalist businessman might.

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My colleague Anne Miner in the UW Business School studies, among other things, how organizations learn vicariously from the failure of others. "Learning from failure" is novel in business schools and in some other quarters. For example, at Bob Lawless' recommendation, I picked up and started reading Scott Sandage's book, Born Losers: A History of Failure in America. So far, so good. But I had to chuckle at the Prologue, where Sandage argues for the novelty of his approach:

Deadbeats tell no tales, it seems. Distinguished libraries saved the papers of history makers, but where might one look for scraps from the fallen -- the dead letter office?

Actually, as Sandage recognizes, law reporters are a good place to start. They are full of failures, cover to cover. So much so that in law schools we struggle to stave off cynicism in ourselves and our students.

Usually without success.

(Joke intended)

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Brayden King is mulling over some thoughts about identity and organizational decision making.

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The much anticipated day is here. Contracts as Organizations -- my paper with Brayden King -- is now available on SSRN. We have submitted the paper to law reviews, but we welcome further comments. Here is the abstract:

Empirical studies of contracts have become more common over the past decade, but the range of questions addressed by these studies is narrow, inspired primarily by economic theories that focus on the role of contracts in mitigating ex post opportunism. We contend that these economic theories do not adequately explain many commonly observed features of contracts, and we offer four organizational theories to supplement – and in some instances, perhaps, challenge – the dominant economic accounts. The purpose of this Article is threefold: first, to describe how theoretical perspectives on contracting have motivated empirical work on contracts; second, to highlight the dominant role of economic theories in framing empirical work on contracts; and third, to enrich the empirical study of contracts through application of four organizational theories: resource theory, learning theory, identity theory, and institutional theory.

Outside the economics literature, empirical studies of contracts are rare. Even management scholars and sociologists, who generated the four organizational theories just mentioned, largely ignore contracts, both in theoretical and empirical analysis. Nevertheless, we assert that these organizational theories provide new lenses through which to view contracts. While economic theories of contracting focus primarily on one purpose of contracts – mitigating ex post opportunism – the four organizational theories help us understand the multiple purposes of contracts.

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In addition to AALS this past weekend, the American Economics Association held its own annual meeting in Chicago.   Over at the Organizations and Markets blog, Peter Klein has posted links to noteworthy AEA papers on organizations.  These include a paper on Firm Boundaries in the New Economy:  Theory and Evidence, by Krishnamurthy Subramanian.  "Subbu," a co-author of mine on a couple of projects, is a new, up-and-coming finance professor at the B-school here at Emory (Goizueta).  Here's what his paper is about:

The theory in this paper highlights the trade-offs that knowledge intensive firms confront when deciding among mergers/acquisitions, joint ventures, alliances, and arm’s length contracts.  I define a knowledge intensive firm as a collection of the knowledge assets that it owns and the agents who have full access to such assets. Therefore, boundary decisions between two firms are modeled using access to knowledge and ownership of knowledge. Modeling boundary choices using ownership cannot provide optimal incentives since ownership affects incentives asymmetrically, and ownership can encourage over-investment. In contrast, modeling the boundary choices using access and ownership can provide first best incentives since access and ownership complement each other in providing incentives: access affects incentives symmetrically while ownership affects them asymmetrically. The theory explains why some mergers/ acquisitions in knowledge intensive industries are successful while others fail and in what situations an alliance or a joint venture dominates a merger/ acquisition and vice-versa. Using a sample of alliances and joint ventures in the high technology industries, I provide empirical evidence to support the theory.

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Resonding to an email that I sent earlier this semester, Teppo has created a short list of "must reads" in organizational theory, with a link to a much longer list of readings from a Ph.D. Seminar in Macro-Organization Behavior at the Carlson School of Management, University of Minnesota. The comments on Teppo's post are helpful, too.

Over the past couple of years, I have been wading into the organizations literature, and more recently I have decided to make the dive, so these lists are very helpful in getting oriented to the field, which is vast. Law professors have been so slow to embrace the organizations literature, other than transaction cost economics, but I am finding much useful learning there.

Thanks, Teppo!

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