For example, have a look at the Akerlof and Kranton paper on the economics of identity, which incorporates social identity to agent-principal models to investigate the consequences of when employees consider themselves insiders or outsiders. A simple yet beautiful economic model with implications for a HRM, entrepreneurship, feminism and other important topics. Citing Mahatma Ghandi and Jacob Mincer in the same paper is always nice

Ironically enough, the topic of my dissertation has attracted many questions from people in the recent months, given the sad state of the economy. A main finding in my research is that there is a rather weak, or more correctly speaking a non-linear relationship between economic profitability and entrepreneurial exit, with exit frequently occuring both among well-performning and poorly performing firms.

A practical conclusion of this is that while much effort and resources are spent by policy makers trying to the attractiveness of entrepreneurship as a career choice – for example by lowering the tax rate for new firms – there is comparatively little policy attention directed at the exit side of entrepreneurship.  One wonder why economic policy focus so little on stimulating the rapid exit of unprofitable firms and lowering the risk of (uneccessary) exit of profitable businesses due to (temporary) financial turmoil?

In the Swedish banking crisis during the early 1990s, many small businesses – even highly profitable ones – were forced to exit because of the sudden rigidity of credit terms which put a stranglehold on their liquidity. It is important for authorities not to let this happen again in times of financial turmoil.

The rigorous yet simple models in Harrisson and Carroll should be seen in the light that “Organizational culture” is often deemed a “mushy” area for organizational research and consulting work. In a summer issue of Sweden’s chief business tabloid Dagens Industry (June 21st), the CEO of the merging Swedish and Danish postal services dismissed the need for “cultural integration” of the two former monopolies with the comments “We have the right experiences and competencies on both side”. From an organizational demographic perspective, this statement could not be more misstaken: it is not the formal competencies among organizational members, nor their nationality as in Hofstedes’ work on national culture, but precisely their systematic differences in experiences that are explanations for the divergent organizational cultures between two distinct organizations such as those of the Swedish and Danish postal services. Yet, Olsson is probably right in his conclusions: deep-rooted systematic differences in experiences are unlikely to be bridged by consulting-type workshops or training sessions.

A constrasting case was given to me by a friend working for a massive public organization that has decreased numerically and geographically during latter years: the Swedish Armed Forces. Today, this organization employees the equivalent of 17,000 middle managers (senior officers) but only 2000 low-level managers (junior officers). It is often depicted as an organization in crisis. In addition, the military training systems with its recruitment of young officers after graduation from conscription ensures strong pressures for socialization . And since officers commonly socialize with each other off-duty, the internal networks and trust fostered during their training (intended, indeed, to maintain order and save lives during times of crisis) turns increasingly to what the social network literature characterize as “closed” networks with strong intra-organizational ties and “full closure” .  In such an organization, it is easy to understand that external pressure for increases in efficency and decreases in personell makes organizational members wary of outsiders and resistent to change. Adding to this picture of a conservative and very internally oriented organizational culture in the armed forces, from an demographic perspective the Swedish tenure-based employment system makes average age in organizations high, increasingly so during times of personnel cutbacks when the strict labor laws strongly favors keeping long-tenured employees and prohibits the sacking of excess personnel instead of rotating them from one part of the organization to another. The officers’ union is one of the strongest labor unions in Sweden, meaning that if a division is suspended, senior officers will almost always be transferred to some other duties at the military headquarters in Stockholm, regardless of the value that the organization puts on their skills and experience.

The goverment new strategy ro rewamp this infested system is to simply disband the current legal unit that comprise the armed forces and setting up a new one, necessitating military personnel to apply for new positions in a quasi-new organization. This would ensure that applicants can be selected based on merits rather than tenure. I wonder how the union will respond to that one?

In stark contrast is the story Sweden’s “super-telecom-company” Ericsson, internationally a quite ordinary blue-chip tech firm but historically the home to a multitude of innovations and parent of numerous spin-off firms. After its near-bankruptcy and turnaround in 2002 Ericsson shrank in size from about 110,000 employees world-wide to less than 60,000. A hiring freeze in 2001-2003, dismissal of consultants and many of the younger employees (due to the  tenure-based employment system) meant that the mean age and company tenure of employees in the surviving organization was very high. It was apparent that the firm needed to reinvent itself to continue to develop innovativions and to attract talented employees.

What happened is pretty straightforward from an HRM perspective but quite remarkably compared to the prior case of the military forces: Ericsson issued a generous retirement scheme that allowed all employees above the age of 40 (!) to retire with 12-18 months of salary and benefits. The firm thereby reinvented themselves by loosing many 50+ and hiring young graduates after prior years of severe financial cutbacks.

It is interesting that among all of these 3 organizational events, a cross-country merger of two recently deregulated public monopolies (the postal services of Sweden-Denmark), an increasingly aging and resource-stripped organization (the military forces), and a rapidly changing high-tech corporation operating globally, the demographic composition and types of internal socialization seems like a key strategic issue for their future sucess. This lends credibility to the book by Carroll and Harrisson. Highly recommended reading.

In the meanwhile I offer some summer temptations:

1. Why research has been wrong about the reasons for Entrepreneurs to sell their firms – all explained here in our new paper awarded the best paper prize from the Entrepreneurship Division at the Academy of Management Meeting in Anaheim, California. Slides on the talk are aom-exit.

2. The best places to live in the world from Monocle.com. No-one could be surprised to see Scandinavia on top and unfortuntately neither is it a surprise to see Stockholm is constantly lagging behind Copenhagen due to Xenophobia. Portland and Minneapolis (!) are the first US city ever to make the list (not counting Honolulu), but is anyone surprised Germany as the rising star with 3 cities in the top compared to obvious top-notch places such as Canada, Australia and Japan? Yes, nerdy, and of course extremely subjective. But the ranking of cities is a multi-billion dollar business – and an increasingly accepted area of research.

…and finally this email (in Swedish) that I recently submitted to the IT department:

From: Karl Wennberg

Sent: den 30 juli 2008 11:42

To: IT Support

Subject: byte ned till office XP?

Hej IT Support!

Jag är supertacksam för datorn ni räddade åt mig men även om jag lärt mig leva i någon form av respektfullt krigsstillestånd med Vista (något kärleksförhållande blir det aldrig) så har jag beslutat mig för att jag måste separera från Office XP. Vi bråkar hela tiden, och dom är ju flera stycken mot mig som ensam användare (Word, Powerpoint…) så det är en ojämn kamp…

“anyone who doesn’t believe in Max U as a full-feature description of economic agents and as the only method by which the study of humankind in the ordinary business of life may be pursued is being discriminated against, losing heart, wondering if it’s all worth it, depressed, confused. ‘Is this really science?’ In this sense the blessed Adam Smith, John Stuart Mill, Edwin Cannan, J. M. Keynes, Friedrich Hayek, Ronald Coase, and Amartya Sen, represents a wisely feminine sort of male economist.”

“As a young man, Cromwell had himself almost joined his Puritan brethren in their voyage to Massachusetts; the idea of founding a new and pure land had always had great appeal for him. Hispaniola was something of a second change. ‘Set up your banners in the name of Christ’”.

“Cromwell asked Thomas Gabe the preacher to write up a paper detailing how the Spanish empire in the Americas could be attacked and overthrown. Cromwell had no intelligence service, no spies, to rely on: Gage was it. [---] Gage predicted that an invasion of Hispaniola, followed by Cuba, would result in the toppling of Spain’s Central American kingdom”

“Twenty-nine year since he first sailed to the Americas [Gabe---] was again on a religious mission: to exterminate Catholics from the new world and to claim it for Protestantism [---] but he little realized that the war he was relishing would take a far different shape: It would be a confrontation not between two traditional faiths but between two radically different visions of men and society. Cromwell’s ‘Banner of Christ; had been folded up and put away; in their place would come the flag of the pirates, whose way of life was utterly foreign to both Catholics and Protestants. Port Royal would not mark the beginning of Spain’s replacement with another theocratic empire. The town and its pirates would follow another path, once focused more intensely on the individual than on the kingdom of belief”

Indeed, the life and workings of pirates and buccaneers remained characterized by highly individualized decision-making, quite an achievement given that the pirates also managed to organize themselves into very efficient criminal warfare ventures. This organizing is discussed in a recent issue of Journal of Political Economy by Peter Leeson. Leeson’s explanation is that pirate organizations were indeed highly individualized and used both political checks- and balances and democratic constitutions to balance the need for autocratic power for ships captains’ efficient managing of the plundering campaigns on the one hand, while minimize the risk of internal predation and conflict on the other. Leeson portrays his paper as a case study in functioning anarchy, but an interesting sociological point of his paper is the ethnic diversity of pirate organizations, according to Leeson’s historical records the racial composition of ships varied between 13 and 98 percent black. Further, there seem to have been quite some class diversity as well (especially among the buccaneers) with also highly educated persons joining pirate crews. Thus, both the organizing and the demographic structure of pirate groups differed radically from their organizations – from what I remember of my little industrial sociology it took far into the 20th century until organizations became ethnically mixed. The diversity of pirate ventures can be seen in the comparative light of the homophilic structure of modern entrepreneurial ventures, most of which are very homogenous in terms of ethnicity, education and gender (see e.g. the work by Howard Aldrich, Martin Ruef, and Karin Hellerstedt). This begs some interesting questions: to what extent were 16th century pirates more equal in their organizations than other criminal organizations throughout history? And did their egalitarian decision-making structure contribute to their success in warfare against the vast more resourceful fleets of Spain and Enland?

There might be historical studies tending to these questions but I have yet to see an example of contemporary organization operating at par with the historical pirate ventures in maintaining democratic decision-making together with high efficiency. However, an interesting recent paper address the organizing efforts of what some consider the “modern” pirate – hackers and coders. The study, written by Linus Dahlander and Siobhán O’Mahony shows how coders created a virtual community where everyone could contribute code to a project. As the community grew, the need to formalize organization became apparent since it was impossible to “freeze” the development of a project and thus launch it as a completed product. The community therefore elected a governing board whose decision could overrule those of ordinary member, much like ordinary corporations. Dahlander and O’Mahony show how evolving political processes affect the ways in which, first, coders became accepted as members, and subsequently, which members became elected to the board. Using network analysis, they find that individuals that frequently contribute code are more likely to be elected to the board, but contributing code has no effect on the probability of becoming a board member. Rather, being an early member in the growing network, “socializing” by being active on the electronic discussion boards, and last but not least, being male led members to become elected to the board. And is it not ironic that the coders of these seemingly “anarchistic” modern network organizations quickly adapt to formal decision structures and gender discrimination – much like the organizations they so vehemently criticized?

Maybe we haven’t come so far since the pirate ages. Comments welcome.

Despite the coolness I am feeling somewhat nervous, my wife is in Europe on a job interview and I just HAVE to get back to Palo Alto in time, two different babysitters are lined up – one to tend to my daughter and another one to pick my son up from schools. The kids are usually very cool on these occassions. But last time I taught in SF we had to evacuate the building since there was a ‘anniversary anti-War march’ about to surround. What if this happens again?

I am of course talking about the controversies surrounding the Olympic Torch that you might have seen in new coverage across the globe. San Fransisco is the only North American town to host the Torch and the city’s combination of a pro-Tibetan activitism and one of the largest Chinese communities in North America, we are bound to see a lot of people taking to their pens, megaphones, and to the streets.

The Chronicle has been covering this issue for quite some time with a remarkably in-depth (starting with the cultural bases of Tibetan and Han Chinese culture and the historical development between the regions) and balanced coverage of the issue.  Did you know that by far the largest Tibetan diaspora on the North American continent lives in Toronto (3,300) while only 1,100 first- or second-generation  refugess from Tibet lives in Northern California?

Nevertheless, I just have to get home in time tomorrow not to risk the wrath of the babysitter(s). Despite my pathos for the Tibetan cause, I rather read the kids bed time stories than get bogged down in a demonstration…

I regrettfully missed last year’s conference which included highlights such as Shon Hiatt and Wesley Sine’s paper on entrepreneurship in dangeous places (Colombia) and Martin Ruef’s investigation of why the post-Civil War American South suppressed entrepreneurship.

For anyone interested in diplomacy, history, or international politics this book is a must: it provides in-depth and intriguing insights into the actual stories and life worlds of what was to define the emerging field of diplomacy. Metternich’s importance can be gauged by the fact that he is still a controversial figure who for long, especially by the liberal democrats of late 19th and early 20th century - was depicted as a reactionary oppressor. For others he is seen as a forebearer of modern diplomacy – especially in regards to him leveraging Montesquieu’s balance of powers to an international framework. Apparently, Henry Kissinger (also a controversial figure these days) wrote his Harvard PhD on Metternich.