intangibles, innovation, and answering Coase’s questions

JC Spender

EDEN Workshop 224-Sept-2013

EDEN Workshop 3

clarification

24-Sept-2013

increasing objectivity

• individual - collective• construct a discourse able to embrace phenomena of interest• theory - practice• determinism - agency• physical - intellectual

increasing subjectivity

EDEN Workshop 4

historical context

• disappearance of monopoly

• value-creation

• Bohm-Bawerk - ‘roundabout methods’

• ownership / control

• financialization

24-Sept-2013

EDEN Workshop 5

intuitions behind ‘intangibles’

① investor, tax - intangible = accountancy failure - firm not properly valued (q, Stéfano)

② resource - intangible = identify, locate, apply - under-utilized - not properly managed (Skandia)

should these solutions converge ?

24-Sept-2013

EDEN Workshop 6

intangible asset - possibility 1

• collapse intangible into classical notion of asset - make available to conventional accounting and resource allocation decision-making

• capital

• human, structural, relational capital - Edvinsson/Malone, Svieby

• proper accounting and proper management converge

• saving the mainstream theory

• deny divergence of interest

• principal-agent theory

• managers & employees

• idiosyncrasy & comparability

• new theory24-Sept-2013

EDEN Workshop 7

intangibles possibility 2- something not asset-like that is ‘added’ to assets -

• ‘conceptual company’

• Penrose - asset values to the firm are not general

• intangibles = what cannot be priced until value realized

• TC + IC

• TC*IC

24-Sept-2013

EDEN Workshop 8

IC might be:

• firm driven

• market driven

• EIF

• but what is the firm ?

24-Sept-2013

EDEN Workshop 9

what is the firm?

• seller & buyer

• employer & employee

• differences

• bringing together to create economic value that did not exist previously

• not a rationally designed apparatus of interacting assets

• process of capturing new economic value by resolving uncertainties about the relationship of TC and IC in practice

24-Sept-2013

EDEN Workshop 10

practice

• data

• meaning

• practice

24-Sept-2013

indexical

EDEN Workshop 11

indexicality

• uncertainty

• innovation - something produced through uncertainty-resolving practice

• ‘appropriation’ = valuation

• how to judge result value ex-ante

• estimate cost - or market valuation

• management’s judgments - Kozminski matrix (management narrative)

24-Sept-2013

EDEN Workshop 12

Coase’s questions

• why are there firms ?

• why are their boundaries where they are ?

• why are their internal arrangements as they are ?

• why is their performance so varied ?

• indexical intangibles of tacit knowledge and entrepreneurial judgment and

• answers to Coase’s questions

24-Sept-2013

EDEN Workshop

theories of the firm ?

• OT: bureaucracy, political theory, culture, systems theory, emergent, org routines, etc.

• micro economic ToFs: bundle of resources, competences, TCE, PAT, property rights, nexus of contracts, etc.

• Knight’s intuition, uncertainty, judgment

• value-creation, ethics, humanizing

• managing as firm-making

• how does this work ?

24-Sept-2013 13 of 11

EDEN Workshop 14

intangibles as metaphor of ?

• unpriced asset ?

• unpriceable ‘asset’

• tacit knowledge

• practice

• knowledge-absence

• indexicality - goal & situation

24-Sept-2013

EDEN Workshop

knowledge-absences & constraint types

• ignorance

• indeterminacy

• incommensurability

• a-historical

24-Sept-2013 15 of 11

making this way of thinking work

EDEN Workshop 16

synthesizing theorizing with practice

opportunity

constraints / darts

• regulations

• technology

• norms

• competition

24-Sept-2013

EDEN Workshop

constraints

• judgment

• constructivist

• post-practice knowledge

• what we can imagine but cannot do

24-Sept-2013 17 of 11

EDEN Workshop 18

where are we ?

• innovation, imagination & practice are indexical

• what can be said?

• constraints can be generalized ?

• place of theory

• opportunity is unique

• occupy with practice - that generates innovation

• the firm as an apparatus for doing this

24-Sept-2013

EDEN Workshop 19

harnessing others’ judgment

• imagination

• constraints

• judgment

• division of judging labor

• persuasion versus instruction

24-Sept-2013

EDEN Workshop

language

• persuasion / rhetoric

• logos, pathos, ethos

• leveraging other’s judgment into firm’s value-creating process

• TMF as set of judgments

24-Sept-2013 20 of 11

EDEN Workshop

history of the modern firm

• division of labor, skill

• 1580s labor migration, wages, farming, gibbing

• mode of subordination

• Reformation/Enlightenment

• secular

• literacy

• rhetoric / social clubs

24-Sept-2013 21 of 11

EDEN Workshop 2224-Sept-2013

EDEN Workshop 23

innovation

• Knightian uncertainty

• opportunity space

• exercise of judgment

• exploratory practice

• guiding not determining practice

• indexicality

24-Sept-2013

EDEN Workshop 24

markets and money

prices and values

24-Sept-2013

EDEN Workshop 25

knowledge

• self-referencing term

• knowing something presumes not-knowing

• knowledge-absence

• impeding your agency

• action under uncertainty

• new theory about the firm

• TMF - theory of the managed firm

24-Sept-2013

EDEN Workshop

empirical research topics

• language

• business model, practice

• ethics

• time, history

• markets - generalize the particular

• integrated reporting

• Schumpeter, Austrian economics

• democratic capitalism, Precariat

• business education

24-Sept-2013 11 of 11

EDEN Workshop 2724-Sept-2013