Richard LangloisUniversity of Connecticut | UConn · Department of Economics
Richard Langlois
Ph.D.
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Introduction
Skills and Expertise
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September 1980 - July 1983
Publications
Publications (146)
The framework of modular systems articulated in Design Rules can be applied in the larger setting of social institutions. The principles of encapsulation and information hiding operate in society as mechanisms to internalize externalities. This essay focuses on intangible externalities, or “moralisms,” that involve the transmission across module bo...
The framework of modular systems articulated in Design Rules can be applied in the larger setting of social institutions. The principles of encapsulation and information hiding operate in society as mechanisms to internalize externalities. This essay focuses on intangible externalities, or “moralisms,” that involve the transmission across module bo...
Oliver E. Williamson, who died on May 21, 2020 at the age of 87, was one of the most influential social scientists of modern times. In 2009, he was co-recipient of the Nobel Prize in Economics. As of mid-October 2021, he had been cited an astonishing 317,838 times according to Google Scholar. His measured influence outdistances that of even his fel...
This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and economic history – the life and times, if you will – of American business in the twentieth century. This excerpt examines the era of industrial deregulation of the late twentieth century. As had...
This paper is an excerpt from a larger book project called The Corporation and the Twentieth Century, which chronicles and interprets the institutional and economic history-the life and times, if you will-of American business in the twentieth century. This excerpt details the history of the personal computer industry and the Internet. It highlights...
Why do states become theocracies? Johnson and Koyama (2019) analyzed the transition from a conditional-toleration equilibrium, in which feeble state capacity allows distinct religious groups to co-exist under a system of religion-based identity rules, to a religious-toleration equilibrium, in which a strong state applies secular general rules witho...
In 1919, General Motors acquired a non-controlling equity interest in the Fisher Body Company and signed a ten-year contract stipulating the terms under which Fisher would be the exclusive supplier of car bodies to GM. In 1926, GM acquired the remaining equity in Fisher Body. In 1978, Benjamin Klein, Robert Crawford, and Armen Alchian used the GM a...
Voices along the whole of the political spectrum are calling for heightened scrutiny of American information-technology companies, especially the Big Five of Amazon, Apple, Facebook, Google, and Microsoft. One of the principal themes of this uprising is that present-day antitrust policy, forged in the rusty era of steel, oil, and cars, is now obsol...
Does innovation proceed from the top down or the bottom up? This is a crucial question for those who think about the sources of economic growth and especially for those who think about policies and institutions to promote innovation. The answer lies in part with the structure of the existing system of production and the array of assets that an inno...
The transistor was an American invention, and American firms led the world in semiconductor production and innovation for the first three decades of that industry's existence. In the 1980s, however, Japanese producers began to challenge American dominance. Shrill cries arose from the literature of public policy, warning that the American semiconduc...
This essay examines the historiography of two episodes in history—the scattering of plots in the open fields in the Middle Ages and the transition to the factory system in the Industrial Revolution—to shed light on the uses of institutional economics in economic history. In both of these episodes, economic “just-so” stories advanced our understandi...
In ‘Max U versus Humanomics: a Critique of Neoinstitutionalism’, Deirdre McCloskey tells us that culture matters – maybe more than do institutions – in explaining the Great Enrichment that some parts of the world have enjoyed over the past 200 years. But it is entrepreneurship, not culture or institutions, that is the proximate cause of economic gr...
This review essay discusses and appraises Douglas Allen’s The Institutional Revolution (2011) as a way of reflecting on the uses of the New Institutional Economics (NIE) in economic history. It praises and defends Allen’s method of asking “what economic problem were these institutions solving?” But it insists that such comparative-institutional ana...
The essays in this volume probe the impact the digital revolution has had, or sometimes failed to have, on global business. Has digital technology, the authors ask, led to structural changes and greater efficiency and innovation? While most of the essays support the idea that the information age has increased productivity in global business, the ev...
Recent revisionist accounts of corporate governance in both business history and finance are challenging the tradition narrative, associated with Berle and Means (1932) and Alfred Chandler (1977), in which the American model of diffuse ownership and coherent diversification is both an inevitable outcome of economic development and perhaps a normati...
IBM's 360 and Early 370 Systems. ByPughEmerson W., JohnsonLyle R., and PalmerJohn H.. Cambridge, Mass.: MIT Press, 1991. xx + 810 pp. Charts, illustrations, appendixes, notes, references, and index. $37.50. - Volume 65 Issue 4 - Richard N. Langlois
The mainstream conception of economic action as rational maximizing has been under attack at least since Veblen. What has
been lacking, however, is an alternative—or at least partly alternative—account that remedies many of the faults to which
critics point without at the same time obliterating the many tangible benefits of the mainstream approach....
Business groups in all of their manifestations are informational mechanisms for coordinating complementary activities -- for "gap filling." This is well known in the literature on business groups outside the Anglo-American sphere. Especially in developing economies, where markets are thin and institutions (including both political institutions and...
The recent article in Capitalism and Society by Dosi et al., as well as the accompanying discussion by William Lazonick, misunderstand and mischaracterize the argument of my 2003 paper "The Vanishing Hand." More importantly, some of the central claims these articles make about the organization of the so-called New Economy do not withstand careful s...
Using the idea of modularity, we study the general phenomenon of open-source collaboration, which includes such things as collective invention and open science in addition to open-source software production. We argue that open-source collaboration coordinates the division of labor through the exchange of effort rather than of products: suppliers of...
According to the advocates of a "Generalized Darwinism" (GD), the three core Darwinian principles of variation, selection and retention (or inheritance) can be used as a general framework for the development of theories explaining evolutionary processes in the socioeconomic domain. Even though these are originally biological terms, GD argues that...
This paper's title is an echo of Alfred Chandler's (2001) chronicle of the electronics industry, Inventing the Electronic Century. The paper attempts (A) a general reinterpretation of the pattern of technological advance in (American) electronics over the twentieth century and (B) a somewhat revisionist account of the role of organization and insti...
This book explains the shift of the organizational landscape away from vertically integrated firms and towards more specialized entities connected by markets and networks. In doing so, it places in a larger theoretical framework the work of Joseph Schumpeter and Alfred Chandler, two of the twentieth century's most important analysts of the modern c...
The entrepreneurial theory of the firm argues that entrepreneurship, properly understood, is a crucial but neglected element in explaining the nature and boundaries of the firm. By contrast, the theory of the entrepreneurial firm presumably seeks not to understand the nature and boundaries of 'the firm' in general but rather to understand a particu...
This book was first published in 2006. Technological standards are a cornerstone of the modern information economy, affecting firm strategy, market performance and, by extension, economic growth. While there is general agreement that swift movement to superior technological standards is a worthwhile goal, there is much less agreement on the central...
Transaction costs, one often hears, are the economic equivalent of friction in physical systems. Like physicists, economists can sometimes neglect friction in formulating theories; but like engineers, they can never neglect friction in studying how the system actually does let alone should work. Interestingly, however, the present-day economics of...
The entrepreneurial theory of the firm argues that entrepreneurship, properly understood, is a crucial but neglected element in explaining the nature and boundaries of the firm. By contrast, the theory of the entrepreneurial firm presumably seeks not to understand the nature and boundaries of the firm in general but rather to understand a particula...
In 1977, when Alfred D. Chandler's pathbreaking book The Visible Hand appeared, the large, vertically integrated, “Chandlerian” corporation had dominated the organizational landscape for nearly a century. In some interpretations, possibly including Chandler's own, The Visible Hand and subsequent works constitute a triumphalist account of the rise o...
Few economists and theorists have thought about the choice of organizational form as a competitive weapon. Here, the author does so by examining the case of cluster tools, which are a type of equipment for manufacturing semiconductors. Within the US industry, competition for these devices is divided between a large vertically integrated firm, Appli...
My compliments to Glen Whitman on a carefully argued paper that makes an important point: methodological individualism is not what you think it is; and, contrary to what many have argued, methodological individualism is not in conflict with the notion of group selection in the theory of cultural evolution. Of course, part of the reason I like Whitm...
In 1977, when Alfred D. Chandler's pathbreaking book The Visible Hand appeared, the large, vertically integrated, “Chandlerian” corporation had dominated the organizational landscape for nearly a century. In some interpretations, possibly including Chandler's own, The Visible Hand and subsequent works constitute a triumphalist account of the rise o...
Clearly, strategy and economics differ along one critical dimension: strategy is concerned descriptively with firms and normatively with the tasks of managers, whereas economics is concerned descriptively with the entire economic system and normatively with the efficiency of that system. Nonetheless, the overlap is considerable, and both management...
Alfred Chandler's portrayal of the managerial revolution of the late nineteenth and early twentieth centuries does not extend well into the late twentieth century, when widespread vertical disintegration began replacing the classical multi-unit managerial enterprise. This paper attempts to explain the new economy in a manner consistent with Chandle...
In a marvelous but somewhat neglected paper, “The Corporation: Will It Be Managed by Machines?” Herbert Simon articulated from the perspective of 1960 his vision of what we now call the New Economy – the machine-aided system of production and management of the late 20th century. Simon’s analysis sprang from what I term the principle of cognitive co...
Alfred Chandler's portrayal of the managerial revolution of the late nineteenth and early twentieth centuries does not extend well into the late twentieth century, when widespread vertical disintegration began replacing the classical multi-unit managerial enterprise. This paper attempts to explain the new economy in a manner consistent with Chandle...
This paper argues that the well-known "two Schumpeters" thesis, as understood in the Anglo-American literature on technological change, is clearly wrong. Equally wrong is the idea that the fundamentals of Schumpeter's thought on entrepreneurship were influenced importantly by his observation of large firms in the United States after 1931. The obsol...
This paper is an attempt to raid both the literature on modular design and the literature on property rights to create the outlines of a modularity theory of the firm. Such a theory will look at firms, and other organizations, in terms of the partitioning of rights—understood as protected spheres of authority—among cooperating parties. And it will...
The paper argues that Israel Kirzner’s theory of entrepreneurship has been influential on a number of related “dynamic†theories of organization. Kirzner’s theory is animated by a dual concern – the process (rather than the result) of rentseeking behavior and the fundamental incompletness (rather than the mere asymmetric structure) of know...
At the end of the twentieth century, it became common to talk ofthdigital revolution,'' a historical phenomenon worthy of its place among the various industrial revolutions of the previous two centuries. Underlying the digi-tal revolution is the technology of the semicon-ductor, a device that emerged at the century's half-way point. Although the di...
In a series of classic works, most notably The Visible Hand (1977) and Scale and Scope (1990), Alfred Chandler focused the spotlight on the large, vertically integrated corporation, which emerged in the late nineteenth century to replace what had been a fragmented and localized structure of production and distribution. In Chandler's account, the dr...
We borrow Wittgenstein's concept of ``languagegames'' to create a theory of action. Thelanguage-games framework integrates theeconomic model of rational maximizing and thesociological model of rule following. Languagegames are subject to a process of naturalselection. Strong competition creates a``tight'' evolutionary filter. When it does,agents ar...
During the 1990s, US antitrust policy began to take greater account of economic theories that emphasize the critical role of innovation and change in the competitive process. Several high-profile antitrust cases have focused on dynamic innovation issues as much as or more than static economic efficiency. But does dynamic competition furnish a new r...
In neoclassical theory, knowledge generates increasing returns – and therefore growth – because it is a public good that
can be costlessly reused once created. In fact, however, much knowledge in the economy is actually tacit and not easily transmitted
–and thus not an obvious source of increasing returns. Several writers have responded to this ala...
Unlike most economists, the late F. A. Hayek ventured often into domains other than the strictly economic. As a result, his
work encompasses a number of social disciplines. Such intellectual trespassing might well have led to a diffuse and disconnected
body of work; but this is a danger Hayek understood and largely avoided. The unifying thread in h...
In neoclassical theory, knowledge generates increasing returns - and therefore growth - because it is a public good that can be costlessly reused once created. In fact, however, much knowledge in the economy is actually tacit and not easily transmitted -and thus not an obvious source of increasing returns. Several writers have responded to this ala...
The transistor was an American invention, and American firms led the world in semiconductor production and innovation for the first three decades of that industry's existence. In the 1980s, however, Japanese producers began to challenge American dominance. Shrill cries arose from the literature of public policy, warning that the American semiconduc...
We briefly review the rationale behind technological alliances and provide a snapshot of their role in global competition, especially insofar as it is based around intellectual capital. They nicely illustrate the increased importance of horizontal agreements and thus establish the relevance of the topic. We move on to discuss the organisation of in...
This book describes and analyzes how seven major high-tech industries evolved in the USA, Japan, and Western Europe. The industries covered are machine tools, organic chemical products, pharmaceuticals, medical devices, computers, semiconductors, and software. In each of these industries, firms located in one or a very few countries became the clea...
Modularity is a very general set of principles for managing complexity. By breaking up a complex system into discrete modules - which can then communicate with one another only through standardized interfaces within a standardized architecture - one can eliminate what would otherwise be an unmanageable spaghetti tangle of systemic interconnections....
This paper argues that, since Ronald H. Coase's seminal 1937 paper on 'The Nature of the Firm,' the economics of organization has focused too exclusively on issues of incentive alignment and has ignored issues of imperfect knowledge in production. However, there is now emerging an approach to economic organization--which the authors call 'the capab...
This paper argues that, since Coase's seminal 1937 paper on 'The Nature of the Firm', the economics of organization has focused too exclusively on issues of incentive alignment and has ignored issues of imperfect knowledge in production. However, there is now emerging an approach to economic organization - which we call 'the capabilities approach'...
Le diverse condizioni esistenti in ambito politico rispetto a quelle tipiche delle strutture di mercato legittimano il quesito se la stessa metodologia possa essere adottata per lo studio di ambedue le situazioni.
Questo scritto risponde affermativamente: gli strumenti della teoria economica sono, di fatto, applicabili alia politica alio stesso mod...
The author would like to thank Fred Carstensen, the late L谩szl贸 Csontos, and two anonymous referees for helpful comments. Parts of this paper draw on "Schumpeter and Personal Capitalism," which was presented at the sixth meeting of the International Joseph A. Schumpeter Society, June 1996, Stockholm, and will appear in the conference proceedings. T...
Most economic analyses of path creation and dependence are stories about how standards create network externalities - and thus potential "lock-in" - in technological systems like personal computers or high-definition television. This paper examines similar questions of path creation and dependence in the context of behavioral rather than technologi...
The capacity for technology businesses to grow and change with the times is linked to how they develop and market technological innovations. Despite the importance of technological changes for corporate vitality, there are documented instances of corporations failing to capitalize on technological opportunities. Innovation outcome is contingent upo...
This essay analyzes critically the idea of knowledge spillovers, especially as it enters the New Growth Theory. The conventional theory of spillovers, we argue, suffers from a thin and misleading account of the nature of productive knowledge. In this model, firms undersupply R&D, which impedes economic growth and calls for research subsidies. We ar...
In an earlier paper, I criticized Schumpeter's account of the obsolescence of the entrepreneur in Capitalism, Socialism, and Democracy. That account rests, I argued, on a confusion about the nature of scientific knowledge and its role in the competences of the firm. This paper is an attempt to take up the argument again, moving it away from the doc...
Almost a decade ago, Paul Milgrom and John Roberts (1988, p. 450), two of the leaders in the formalist branch of the New Institutional Economics, made the following observation. "The incentive based transaction costs theory has been made to carry too much of the weight of explanation in the theory of organizations. We expect competing and complemen...
What exactly does it mean for something to be an 'organization'? How do we know when something is organized? What exactly is organizational learning? We attempt to attack some of these questions by turning to cybernetics and the mathematical theory of information In the work of Atlan and von Foerster we find provocative attempts to describe the pro...
This paper provides explicit characteristics of those two-part tariffs which maximize profit and consumers' plus producer's surplus. The effect of consumption externalities (as in telecommunications systems) is then explored. The characterizations are in terms of elasticities of demand with respect to price, income, and the number of other customer...
The development of the US computer software industry has been powerfully influenced by federal government policy during the postwar period. Its importance for the demands of Cold War defense, especially strategic air defense during the 1950s, meant that the software industry received considerable support from federal R&D and procurement funding. Bu...
No abstract available.
A little more than 20 years ago, Ronald Coase (1972, p. 63) observed tartly that his 1937 essay “The Nature of the Firm” had been “much cited and little used.” The landscape of economic thought changed significantly in the years that followed, and a large body of literature quickly emerged that not only “used” but in many ways sprang from Coase’s p...
A central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and those of networks of small specialized producers on the other. This paper argues that neither institutional structure is the panacea its supporters claim. The menu of institutional alternatives is in fact quite large, and...
This essay is a reinterpretation of the debate over the origins of the factory system. In the end, it argues, the explanation for the rise of the factory system lies in the realm of organization, but not in the qualities of organization envisaged by either the "radical" view or the transaction-cost view. Drawing on the recent explanations of Clark...
Using new data on explosions, deaths, and steamboat traffic, we examine econometrically the causes of increased safety in steamboats on the Western Rivers of the United States in the nineteenth century. Our conclusion is that, although the safety act of 1852 did have a dramatic initial effect in reducing explosions, that reduction came against the...
This essay seeks to locate the ideas of G. B. Richardson within the present-day discussion of the theory of the boundaries of the firm. Richardson differs from the mainstream of transaction-cost economics in that, like Coase and Knight before him, he sees the problem of market contracting as a matter of difficult coordination rather than as a probl...
This paper is an interpretive history of federal support for the American software industry from its beginnings through the 1980s. As in other high-technology cases, federal _ especially defense-related _ support for software was crucial early in the technology's development, but the flow of spillovers quickly began to reverse as military needs div...
The late F. A. Hayek is remembered for the argument that the decentralized price system has enormous advantages over planned systems in the critical areas of information transmission and the use of knowledge. In many minds, the recent fall of the Soviet-style economies in Eastern Europe has decisively made that case. But not all are persuaded. The...
Despite the enormous literature devoted to the subject, there remains little consensus about the organizational sources of innovativeness and inertia. On the one hand, the evolutionary or "capabilities" view of the firm leads us naturally to expect organizational inertia as a natural by- product of competitive success, especially in complex, highly...
This paper presents a detailed case study of the cluster-tool segment of the American semiconductor-equipment industry. That industry has embarked upon a technological trajectory in which cluster-tool components (or modules) conform to a set of common interface standards. Cluster tools are thus becoming a modular system in the manner of an IBM-comp...
All evolution is concerned with the growth of knowledge, a proposition no less true in economic systems (and society in general)
than in biological ones. As the philosopher Elliott Sober (1984) notes, evolutionary theory is a theory of forces, that is, a theory of the causes of change, of the processes that produce
a certain sequence of events and...
According to the advocates of a "Generalized Darwinism" (GD), the three core Darwinian principles of variation, selection and retention (or inheritance) can be used as a general framework for the development of theories explaining evolutionary processes in the socioeconomic domain. Even though these are originally biological terms, GD argues that...
There is a tradition in the literature of transaction-cost economics that seeks to explain the existence of firms in terms of the inherent superiority of firms as an organizational form in some circumstances. The problem with these arguments is that they tend to contrast real firms with an idealized -- and extremely narrow -- picture of the market....
The authors attempt to interpret Frank Knight by taking him on his own terms. Among their conclusions are the following: (1) Knight's distinction between risk and uncertainty is not solely a distinction between insurable and uninsurable risk; (2) Knight's explanation for the existence of firms does not reduce to a moral-hazard theory, except perhap...
That the Austrian school of economics is and has been fundamentally concerned with the theory of social institutions is a
proposition gaining wide acceptance today by critics of this school as well as by its adherents. This is a rather striking
development. Not too many years ago, the prevailing wisdom was that the American Institutionalist school...
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In The Visible Hand, Alfred Chandler explained the rise of the large vertically integrated corporation in the United States mostly in terms of forces of technology and economic geography. Institutions, including government policy, played a quite minor role. In my own attempt to explain the decline of the vertically integrated form in the late twentieth century, I stayed true to Chandler’s largely institution-free approach. This book will be an exercise in bringing institutions back in. It will argue that institutions, notably various forms of non-market controls imposed by the federal government, are a critical piece of the explanation of the rise and decline of the multi-unit enterprise in the U.S. Indeed, non-market controls, including those imposed in response to the dramatic events of the century, account in significant measure for the dominance of the Chandlerian corporation in the middle of the twentieth century.
