Bruce Kogut

Columbia University | CU

The globalization of financial markets and the concomitant restructuring decisions of firms challenge the historical legacy of national systems of governance. German corporate ownership patterns and restructuring events in the 1990's are examined here in this light. The results show that ownership links among German firms constitute a “small world”...

Research summary: The documented discount on globally diversified firms is often cited, but a correlation is not per se evidence that global diversification destroys firm value. Firms choose to globally diversify based on their firm attributes, some of which may be unobservable. Given these exogenous firm attributes, the decision to diversify globa...

The documented discount on globally diversified firms is often cited, but a correlation is not per se evidence that global diversification destroys firm value. Firms choose to globally diversify based on their firm attributes, some of which may be unobservable. Given these exogenous firm attributes, the decision to diversify globally is endogenous...

Income gains in the top 1 percent are the primary cause for the rapid growth in U.S. inequality since the late 1970s. Managers and executives of firms account for a large proportion of these top earners. Chief executive officers (CEOs), in particular, have seen their compensation increase faster than the growth in firm size. We propose that changes...

We propose a concept of structural equality as a compromise between competing policy preferences of equality and individual liberty to address a stunning property of the governance of corporations, namely, the paucity of female directors on corporate boards. An argument for imposing a quota for women directors on boards is the need to disrupt struc...

Many organizational theories are not sanguine over the chances of organizations to adapt and evolve, even if they should learn from the past through memory. Innovative search in the adaptive biology tradition leads quickly to dead ends. However, memory is useful for rendering innovative search more efficient. The concept from evolutionary biology o...

The documented discount on globally diversified firms is often cited, but a correlation is not per se evidence that global diversification destroys firm value. Firms choose to globally diversify based on their firm attributes, some of which may be unobservable. Given these exogenous firm attributes, the decision to diversify globally is endogenous...

One of the most important questions for public policy that arose from the financial crisis that began in the United States in 2007 is the effect of executive pay on risk taking. The regulatory implications of this claim have been significant. Federal Reserve Chairman Ben Bernanke described the Fed's efforts to develop rules that will “ask or tell b...

An empirically rich study of the influence of social networks on corporate governance across countries and the emergence of a new transnational community. The financial crisis of 2008 laid bare the hidden network of relationships in corporate governance: who owes what to whom, who will stand by whom in times of crisis, what governs the provision of...

An empirically rich study of the influence of social networks on corporate governance across countries and the emergence of a new transnational community. The financial crisis of 2008 laid bare the hidden network of relationships in corporate governance: who owes what to whom, who will stand by whom in times of crisis, what governs the provision of...

An empirically rich study of the influence of social networks on corporate governance across countries and the emergence of a new transnational community. The financial crisis of 2008 laid bare the hidden network of relationships in corporate governance: who owes what to whom, who will stand by whom in times of crisis, what governs the provision of...

The income gains in the top 1 percent are the primary cause for the rapid growth in U.S. inequality since the late 1970s. Managers and executives of firms account for a large proportion of these top earners. Chief executive officers (CEOs) in particular have seen their compensation increase faster than the growth in firm size. We propose that chang...

Economic policies are innovations that have important effects on countries and their social welfare. Far from being simply technical in nature, such policies are often ideological innovations. This paper examines three economic policy innovations (privatization, central bank independence, and pension reform) and shows how the diffusion of these pol...

Models of Management: Work, Authority, and Organization in a Comparative Perspective. ByGuillénMauro F. · Chicago: University of Chicago Press, 1994. xiii + 424 pp. Tables, charts, appendix, index, and bibliography. Cloth, $57.50, ISBN 0-226-31035-3; paper, $18.95, ISBN 0-226-31036-1. - Volume 69 Issue 2 - Bruce Kogut

Knowledge is frequently defined as separate from information and as existing only in the heads of people. To the contrary, information is critical to a pragmatic approach to knowledge consistent with epistemic game theory. Such information is frequently protected by intellectual property claims, re-inforcing their importance as knowledge assets in...

Privatizing Pensions: The Transnational Campaign for Social Security Reform. OrensteinMitchell. Princeton University Press, 2008, ISBN 978-0-69113-697-4, 218 pages. - Volume 9 Issue 3 - Bruce Kogut

The financial crisis of 2008 has many causes, with the role of executive compensation in creating excessive risk taking being frequently cited in the press and by policy makers as a leading candidate. The evidence for or against is scarce. This paper assembles panel data on 117 financial firms from 1995 through 2008, using the financial crisis as a...

Introduction: Privatization is the distribution of state-owned assets to private owners. This distribution can happen by permitting spontaneous privatization, as frequently witnessed in Central and Eastern Europe; by giving or selling vouchers to the population to be redeemed for shares; or by sales through stock markets, private placements, or man...

The recorded transactions of venture capital investments permit a direct examination of the Braudel hypothesis that regional markets evolve dynamically and interdependently in reference to a global system. This hypothesis contradicts the popular belief that regional financial development is anchored in dense clusters. Using methods of complex graph...

Categories reflect particular theories about the world in the form of causal and performative claims. Unlike attributes that are the mainstay of statistical analysis, these discrete entities consist of the contradiction of being easy to understand and yet hard to analyze. An important obstacle to the exploration of causal claims about categories (e...

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The History of Foreign Investment in the United States, 1914–1945. By Mira Wilkins. Cambridge, MA: Harvard University Press, 2004. Pp. xxvi, 980. $95. - - Volume 65 Issue 1 - BRUCE KOGUT

Strategies often are stylized on the basis of particular prototypes (e.g. differentiate or low cost) whose efficacy is uncertain often due to uncertainty of complex interactions among its elements. Because of the difficulty in assigning causal credit to a given element for an outcome, the adoption of better practices that constitute strategies is f...

provided comments on the earlier draft for which we express our thanks.

participants of the 2003 Strategic Research Forum for comments on previous drafts.

There is a fundamental conflict in the formation of a network. On the one hand, there are powerful forces toward the reproduction of dense regions of relationships. Reproduction is powerful because it is based upon the accumulation of social capital that requires the maintenance of and reinvestment in the structure of prevailing relationships. Yet,...

Well over a trillion dollars worth of state-owned firms have been privatized since 1980. The traditional argument is that governments choose to privatize in response to fiscal pressures. In this study, the authors examine the impact of IFI conditionality on privatization and find that IMF conditionality, in particular, has an important indirect eco...

As options models move from financial markets to corporate decision making, it is fitting to question the simple domain extension of option pricing theory by consider- ing behavioral decision-making biases. We suggest, however, that, given the nega- tive evolutionary consequences of ignoring optionlike investments, organizations invent heuristic ru...

We would like to acknowledge financial support of INSEAD and the University of Texas and the comments of Frank Dobbin and other members of the working group on the International Diffusion of Democracy and Markets. Andrew Spicer has been an important inspiration for The diffusion of economic ideas is often attributed to a homogenization of world cul...

This volume is a timely and insightful exploration into the issues of corporate governance and the impact of corporate governance practices on investments in developing countries. Sponsored by the World Economic Forum, INSEAD, and Wharton, this book collects original essays from senior researchers at the worlds top academic institutions as well as...

his study looks at the United States biotechnology industry as a community of prac- tice caught between two evolutionary logics by which valuable scientific knowledge and valuable innovations are selected. We analyze the publications and patents of 116 biotech- nology firms during the period 1988-1995. In models that link scientific capabilities to...

The production of the 1993 article awarded the JIBS Decade Award was written during a time when ideas regarding knowledge and the international expansion of the firm confronted a hostile audience. The sources of these ideas were directly related in Winter's and Roger's prior work, but also to a broader literature on ‘category errors’ and technology...

Firms are social communities that specialize in the creation and internal transfer of knowledge. The multinational corporation arises not out of the failure of markets for the buying and selling of knowledge, but out of its superior efficiency as an organizational vehicle by which to transfer this knowledge across borders. We test the claim that fi...

The term corporate governance has come to mean many things to many people. One important reason is that views continue differ as to the fundamental question of the role the firm. While some believe that corporations can contribute best to society if they do what they do best, namely to provide high quality goods and services to the marketplace, for...

Preface In lieu of writing an introduction that runs the risk of adding more smoke than fire, the guest editors elected to engage in a dialogue with one another. Its purpose is to give readers a sense of the thinking behind the special issue, of the debates that ensued, and of the possible di-rections for further work. We met for lunch in a café-ba...

A fundamental theme in comparative crosscountry research is the convergence of organizational forms in diverse national settings. In this paper we examine a special instance of this theme: the pattern of diversification across industries. A common argument is that technical and market forces compel firms to adopt “coherent” strategies of diversific...

The growth of a global infrastructure has enabled the spatial dispersion of work activities. The software industry permits the study of the potential and limits of new ways of organizing work over borders to exploit globally the opportunities opened by the digitalization of production and products. Based on field observations of companies in four c...

The introduction of mass privatization policies in Russia and the Czech Republic depended on the creation of impersonal capital markets to finance the needs of privatized companies and to provide a secondary market for the trading of securities. Yet, mass privatization created the contradictory conditions of generating millions of poorly informed s...

Individuals and social systems are often portrayed as risk averse and resistant to change. Such propensities are characteristically attributed to individual, organizational, and cultural traits such as risk aversion, uncertainty-avoidance, discounting, ...

The globalization of financial markets and the concomitant restructuring decisions of firms challenge the historical legacy of national systems of governance. German corporate ownership patterns and restructuring events in the 1990's are examined here in this light. The results show that ownership links among German firms constitute a "small world"...

The introduction of mass privatization policies in Russia and the Czech Republic depended on the crea-tion of impersonal capital markets to finance the needs of privatized companies and to provide a secon-dary market for the trading of securities. Yet, mass privatization created the contradictory conditions of generating millions of poorly informed...

Open-source software development is a production model that exploits the distributed intelligence of participants in Internet communities. This model is efficient because of two related reasons: it avoids the inefficiencies of a strong intellectual property regime and it implements concurrently design and testing of software modules. The hazard of...

We would like to thank Carliss Baldwin for many helpful comments, and managers of Lucent for a reality check on some ideas.

What is the best set of privatization policies to release entrepreneurial endeavors in transition economies? Policies of mass privatization in Central Europe were predicated on the belief that private ownership through securitization of property rights would provide powerful incentives for efficient restructuring. In retrospect, the more radical pr...

The imputation problem is how to account for the sources of the value of the firm. I propose that part of the value of the firm derives from its participation in a network that emerges from the operation of generative rules that instruct the decision to cooperate. Whereas the value of firm-level capabilities is coincidental with the firm as the uni...

University of Pennsylvania and École PolytThe book by Luc Boltanski and Eve Chiapello on the new spirit of capitalism returns to the question that puzzled the social thinkers of an earlier time: How does capitalism manufacture the ideological foundations of social peace, despite its hollow spiritual core and its creation of inequities? Their argume...

Around the world, states big and small go out of their way to attract foreign investment; indeed, it has become a main prerequisite for prosperity. But what makes a firm decide to invest in another country? Among multinational corporations, profit is not always the bottom line.

Knowledge, once generated, spills only imperfectly among firms and nations. We posit that since institutions and labor networks vary by region, there should be regional variations in the localization of spillovers. We investigate the relationship between the mobility of major patent holders and the localization of technological knowledge through th...

Strategy research consists of a balance between positive and normative theory. Normative theories suggest particular heuristics, or cognitive representations, to find appropriate solutions. Heuristics permit faster solutions to real-time problems; they also suffer from the potential of negative transfer to inappropriate applications. The theory of...

Two Carl Zeiss companies provide a natural experiment for analyzing the effects of socialist versus market systems on innovation. By analyzing patent records from 1950 to 1990, we trace the technological contributions of Zeiss Jena in the German Democratic Republic and Zeiss Oberkochen in the Federal Republic of Germany. We show that Zeiss Jena gra...

There are many factors which bias managers towards a myopic view of the world: pressures from financial markets, strategy techniques, and incomplete rules of financial evaluation. A major casualty of myopic rules is the underinvestment in new capabilities, such as increasing the speed to the market, or the quality delivery of product and services....

The multidivisional structure represents one of the most studied and important organizational innovations. Chandler's historical account stresses the imitation effects of industry adoption, and of firm efficiency, as influenced by such characteristics as size and diversification, on the diffusion of the divisional structure. Recent statistical work...

Strategic management has been increasingly characterized by an emphasis on core competences. Firms are advised to divest unrelated businesses and return to core business. Moreover, competitive advantage is now increasingly seen as a matter of efficiently deploying scarce knowledge resources to product markets. Much of this change in emphasis has oc...

Studies on foreign direct investment (FDI) have concentrated on sectoral effects, but rarely on country patterns, In this paper, we use U.S. Department of Commerce data to identify the largest country shares of new FDI entries into the U.S. and the technological motivations for their investments. Based on the technological intensities of major inve...

The formation of a network is determined by the opposition of two forces. The first is the reproduction of network structure as a general social resource for network members. The second is the alteration of network structure by entrepreneurs for their own benefit. The idea of reproduction is a conventional one in organizational sociology but has ta...

This paper examines the innovative ability of small firms in the semiconductor industry regarding their exploration of technological diversity and their integration within local knowledge networks. Through the analysis of patent data, we compare the innovative activity of start-up firms and larger firms. We find that small firms explore new technol...

Firms are organizations that represent social knowledge of coordination and learning. But why should their boundaries demarcate quantitative shifts in the knowledge and capability of their members? Should not knowledge reside also in a network of interacting firms? This line of questioning presents the challenge to state an alternative view to the...

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....

This study examines the effects of previous entry on the subsequent decisions of Japanese electronics companies to invest in the United States. By gathering data at the firm level, the empirical analysis provides a fine-grain sorting out of firm and industry effects on foreign direct investment decisions. The findings show that investment behavior...

Recent papers by Dixit and others have put forth the argument that real exchange shocks generate a condition of hysteresis in the export entry and exit prices, and that this wedge in prices explains the persistence in the U.S. current account deficit. This article shows that the critical hysteresis bounds for exports are altered dramatically by the...

The capabilities of a firm, or any organization, lie primarily in the organizing principles by which individual and functional expertise is structured, coordinated, and communicated. Firms are social communities which use their relational structure and shared coding schemes to enhance the transfer and communication of new skills and capabilities. T...

This paper investigates how the structure of cooperation in an industry influences the dynamics of entry by start-up firms. Competition over technological dominance induces the entry of start-up firms into new subfields as incumbent firms seek to expand the consumer base using their technology. By cooperating, incumbent firms succeed to varying deg...

The multinational corporation is a network of activities located in different countries. The value of this network derives from the opportunity to benefit from uncertainty through the coordination of subsidiaries which are geographically dispersed. We model this coordination as the operating flexibility to shift production between two manufacturing...

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Firms are social communities that specialize in the creation and internal transfer of knowledge. The multinational corporation arises not out of the failure of markets for the buying and selling of knowledge, but out of its superior efficiency as an organizational vehicle by which to transfer this knowledge across borders. We test the claim that fi...

This paper examines the association between interfirm cooperation and the innovation output of startup firms in the biotechnology industry. A reciprocal association is hypothesized. The results, however, show only that cooperation affects innovation. Several control variables are related to cooperation and innovation, especially the startup's posit...

How should we understand why firms exist? A prevailing view has been that they serve to keep in check the transaction costs arising from the self-interested motivations of individuals. We develop in this article the argument that what firms do better than markets is the sharing and transfer of the knowledge of individuals and groups within an organ...

Did American development of the largest corporations in the world drive its dominance of world markets in the first three-quarters of this century? The evolution of the large diversified firm and the internationalization of the firm across national borders clearly rank as two of the most important economic developments in the twentieth century. To...

The history of international competition shows long cycles in country leadership. This paper argues that these cycles can be explained by differences in country capabilities, in terms of both technologies and organizing principles, which diffuse more slowly across than within national and regional borders. The country that innovates in best practic...

This article examines the effect of relative technological capabilities on Japanese direct investment into the United States by looking simultaneously at industry conditions in the two markets. A negative binomial regression model is specified to estimate the effects of R & D capability and industry structure on a count measure of Japanese entries...

This article develops the perspective that joint ventures are created as real options to expand in response to future technological and market developments. The exercise of the option is accompanied by an acquisition of the venture. It is hypothesized that the timing of the acquisition should be triggered by a product market signal indicating an in...

This article augments, as well as takes issue with, the recent review by Ghoshal on international competition. The central question is what changes strategically when a firm moves from domestic to overseas competition. In analyzing this question, it is shown that there exists a neglected line of relevant research by two schools of thought: the Camb...

The focus of the following empirical analysis is the influence of reciprocity and long-term relationships on the stability of joint ventures. These cooperative incentives are offset by industry structural conditions, which may promote competitive rivalry among the partners. To separate these effects on joint venture survival, the hypothesized relat...