Stanford University Faculty

"Core ideology provides the glue that holds an organization together as it grows, decentralizes, diversifies, expands globally, and develops workplace diversity. Think of it as analogous to the principles of Judaism that held the Jewish people together for centuries without a homeland, even as they spread throughout the Diaspora. Or think of the truths held to be self-evident in the Declaration of Independence, or the enduring ideals and principles of the scientific community that bond scientists from every nationality together in the common purpose of advancing human knowledge. Any effective vision must embody the core ideology of the organization, which in turn consists of two distinct parts: core values, a system of guiding principles and tenets; and core purpose, the organization’s most fundamental reason for existence."

"Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world. The dynamic of preserving the core while stimulating progress is the reason that companies such as Hewlett-Packard, 3M, Johnson & Johnson, Procter & Gamble, Merck, Sony, Motorola, and Nordstrom became elite institutions able to renew themselves and achieve superior long-term performance."

"Moving further away from realist models, we come to some core ideas of modern sociological institutionalism (see DiMaggio & Powell, 1983; Powell & DiMaggio, 1991; Scott, 2001; Jepperson, 2002; Hasse & Kruecken, 2005). Here, actors are substantially empowered and controlled by institutional contexts, and these contexts go far beyond a few norms or network structures. Further, these contexts are by no means simply constructions built up by the contemporary actors themselves, but rather are likely to have prior and exogenous historical origins."

"Many formal organizational structures arise as reflections of rationalized institutional rules. The elaboration of such rules in modern states and societies accounts in part for the expansion and increased complexity of formal organizational structures. Institutional rules function as myths which organizations incorporate, gaining legitimacy, resources, stability, and enhanced survival prospects. Organizations whose structures become isomorphic with the myths of the institutional environment-in contrast with those primarily structured by the demands of technical production and exchange-decrease internal coordination and control in order to maintain legitimacy. Structures are decoupled from each other and from ongoing activities. In place of coordination, inspection, and evaluation, a logic of confidence and good faith is employed."

"The authors analyze the nation-state as a worldwide institution constructed by worldwide cultural and associational processes, developing four main topics:"

"Contemporary institutional theorizing in the field of organizations dates back thirty-odd years. This particularly describes what are called new or neo-institutionalisms. These terms evoke contrasts with earlier theories of the embeddedness of organizations in social and cultural contexts, now retrospectively called the ‘old institutionalism’ (Hirsch & Lounsbury, 1997; Stinchcombe, 1997). They went through a period of inattention, so that when institutional thinking came back in force after the 1960s, it seemed quite new. Institutional theories, as they emerged in the 1970s, received much attention in the field, along with other lines of thought emphasizing the dependence of modern organizations on their environments. Perhaps surprisingly, they continue to receive attention, and seem to retain substantial measures of vigor."

"Most institutional theories see local actors – whether individuals, organizations, or national states – as affected by institutions built up in much wider environments. Individuals and organizations are affected by societal institutions, and national-states by a world society."

"Some institutionalist lines of thought, arising particularly in economics and political science, retain very strong notions of society as made up of bounded, purposive, sovereign, and rational actors. In economics, these might be individuals or organizations, operating in market-like environments. In political science, they might be sovereign national-states operating in an almost anarchic environment. Institutionalism, in such schemes, involves the idea that some fundamental institutional principle must be in place before systems of such actors can effectively operate. The classic core principle required in economic versions is property rights (North & Thomas, 1973). In international relations theory it is the principle of nation-state sovereignty (Krasner, 1999)."

"Documents and records can seldom be taken for what they purport to be. They are not neutral and objective accounts of organizational purposes and activities but reflect the biases and interests of those who compile and use them. To take at face value reports of such complex and sensitive matters as costs, productivity, or hiring priorities is naive."

"Organizations play a leading role in our modern world. Their presence affects - some would insist that the proper term us infects - virtually every sector of contemporary social life. This book is about organizations – what they are and what they do, how they have changed, and how people have thought about them and studied them."

"Different subunits within an organization may confront different external demands. To cope with these various environments, organizations create specialized subunits with differing structural features. For example, some subunits may exhibit higher levels of formalization than others; some may be more centralized in decision making; some may be oriented to longer planning horizons. The more varied the types of environments confronted by an organization, the more differentiated its structure needs to be."

"Paul Lawrence and Jay Lorsch (1967), who coined the label “contingency theory,” argue that different environments place differing requirements on organizations: specifically, environments characterized by uncertainty and rapid rates of change in market conditions or technologies present different challenges—both constraints and opportunities—to organizations than do placid and stable environments"

"Institutions are social structures that have attained a high degree of resilience. [They] are composed of cultural-cognitive, normative, and regulative elements that, together with associated activities and resources, provide stability and meaning to social life. Institutions are transmitted by various types of carriers, including symbolic systems, relational systems, routines, and artifacts. Institutions operate at different levels of jurisdiction, from the world system to localized interpersonal relationships. Institutions by definition connote stability but are subject to change processes, both incremental and discontinuous."

"Institutions consist of cognitive, normative and regulative structures and activities that provide stability and meaning to social behaviour. Institutions are transported by various carriers – cultures, structures, and routines – and they operate at multiple levels of jurisdiction."

"Contingency theory is guided by the general orienting hypothesis that organizations whose internal features best match the demands of their environments will achieve the best adaptation."

"The armature of economic neo-liberalism ... cannot concede any space to the idea of counter-conduct; counter-conduct becomes inconceivable, since conduct as such is a concept fully integrated into a scientific-epistemological field. Regime of veridiction, homo oeconomicus, rational behavior, ethical and political neutralization – such is the scheme, for instance, of American neo-liberalism. In this setting, counter-conduct is nothing more than a form of irrationality, just as in the history of psychiatry, it is but a form of abnormality."

""Any graduate of the ___ Business School should be able to beat an index fund over the course of a market cycle." Statements such as these are made with alarming frequency by investment professionals. In some cases, subtle and sophisticated reasoning may be involved. More often (alas), the conclusions can only be justified by assuming that the laws of arithmetic have been suspended for the convenience of those who choose to pursue careers as active managers."

"The central question for positive financial economics is valuation – what is the value today of a set of future prospective cash flows? The central question for normative financial economics is the appropriate use of financial instruments in a world in which values are set wholly or partially in accord with the principles of positive financial economics."

"From a more theoretical viewpoint, one can focus on the nexus between the present and the future. A financial instrument typically represents a property right to receive future cash flows. Such cash flows will, of course, come in the future – hence the economics of time must be understood. In many cases the flows are uncertain, hence the need for an approach to the economics of uncertainty. In addition, cash flows in the far future may depend on actions taken (or not taken) in the near future. This gives rise to the need for a theory of the economics of options (broadly construed). Finally, one needs information to estimate likely future outcomes, hence the requirement for an understanding of the economics of information. I define financial economics so that it embraces all four of these important, difficult, and fascinating aspects of economics."

"[At Princeton Samuel Wilks...] was the major interest for me... I did have a contact with Oscar Morgenstern... Von Neumann was developing theory of games at the time... but I must say, I really didn't understand it very well when he lectured it."

"Early in 1943 I got full time war research work... My first project was to evaluate long term weather forecast. Longe range, in that time, meant three to four days."

"A time series is a sequence of observations, usually ordered in time, although in some cases the ordering may be according to another dimension. The feature of time series analysis which distinguishes it from other statistical analysis is the explicit recognition of the importance of the order in which the observations are made. While in many problems the observations are statistically independent, in time series successive observations may be dependent, and the dependence may depend on the positions in the sequence. The nature of a series and the structure of its generating process also may involve in other ways the sequence in which the observations are taken."

"Much of T. W. Anderson's work in statistical theory has had an important influence on econometrics. But it is his work on structural estimation that has had the greatest impact on subsequent developments in the subject."

"In mathematical statistics, as well as econometrics, Ted Anderson is a scholar of immense stature. The scope and diversity of his research in statistical theory is almost a phenomenon in itself. Sometimes it seems that wherever one turns the subject, Ted's mark and influence is already firmly established. His books on multivariate analysis and time series rapidly became accepted as major treatises and are now integral parts of the bookshelves of every statistician."

"The creation of Modern France through expansion goes back to the establishment of a small kingdom in the area around Paris in the late tenth century and was not completed until the incorporation of Nice and Savoy in 1860. The existing "hexagon" was the result of a long series of wars and conquests involving the triumph of French language and culture over what once were autonomous and culturally distinctive communities. The assimilation of Gascons, Savoyards, Occitans, Basques, and others helped to sustain the myth that French overseas expansionism in the nineteenth century, especially to North and West Africa, was a continuation of the same assimilationist project."

"It seems to me that the United States and France can learn from each other. French universalism, or its equivalent, is a powerful weapon against racism, which is based on the belief in innate unalterable differences among human groups. Stressing what rights all people have because of what they have in common remains at the heart of anti-racism. A stronger awareness of such human commonality may be needed in the United States at a time when a stress on diversity and ethnic particularism may deprive us of any compelling vision of the larger national community and impede cooperation in the pursuit of a free and just society. On the other hand the identification of such universalism with a particular national identity and with specific cultural traits that go beyond essential human rights can lead to an intolerance of the Other that approaches color-coded racism in its harmful effects."

"The dominant metaphor of conceptual relativism, that of differing points of view, seems to betray an underlying paradox. Different points of view make sense, but only if there is a common co-ordinate system on which to plot them; yet the existence of a common system belies the claim of dramatic incomparability."

"I conclude that there is no such thing as a language, not if a language is anything like what many philosophers and linguists have supposed. There is therefore no such thing to be learned, mastered, or born with. We must give up the idea of a clearly defined shared structure which language-users acquire and then apply to cases. And we should try again to say how convention in any important sense is involved in language; or, as I think, we should give up the attempt to illuminate how we communicate by appeal to conventions."

"I thought... that the fact that in characterizing truth for a language it is necessary to put words into relations with objects was enough to give some grip for the idea of correspondence; but this now seems to me a mistake. The mistake is in a way only a misnomer, but terminological infelicities have a way of breeding conceptual confusion, and so it is here. Correspondence theories have always been conceived as providing an explanation or analysis of truth, and this, a Tarski-style theory of truth, certainly does not do."

"There are three basic problems: how a mind can know the world of nature, how it is possible for one mind to know another, and how it is possible to know the contents of our own minds without resort to observation or evidence. It is a mistake, I shall urge, to suppose that these questions can be collapsed into two, or taken into isolation."

"Within contemporary philosophy, Spinoza’s position is very similar to Donald Davidson’s. Davidson also rejects at least certain kinds of explanatory connections between the mental and the physical and, like Spinoza, employs the lack of these connections as part of the basis for the identity between mental things and physical things. Nonetheless, there are significant differences between Spinoza and Davidson: Davidson rejects any strict science of the psychological. For Davidson, there are strict laws governing the physical, but no strict laws governing the psychological. Thus for Davidson, the psychological is special, not governed by the same kinds of principles at work throughout nature. This would be a violation of naturalism, according to Spinoza, and thus Spinoza would insist, contra Davidson, on a science of the mental that is every bit as strict and fundamental as the science of the physical, even though there are no explanatory connections between the mental and the physical."

"I cannot see that this view of radical interpretation possesses the relevance for historians that some of Davidson’s more enthusiastic followers, such as Macdonald and Pettit, have supposed. Davidson is merely proposing a general strategy for using assertions to get at underlying beliefs, the strategy of beginning by assuming general agreement. It may well be that we need to start with some such assumption if we are to find another culture intelligible. If I am to identify the nature of Bodin’s beliefs about witches, or even to establish that they are beliefs about that particular subject-matter, it certainly seems plausible to assume that Bodin and I must share a considerable number of ancillary beliefs. It is arguable, however, that Davidson has overemphasised the significance of this consideration and too comfortably ridiculed the notion of radically different conceptual schemes."

"Donald Davidson has notoriously retorted that the resources of existing natural languages seem perfectly adequate for dealing with even the most dramatic cases of purported incommensurability reported by writers like Benjamin Whorf and Thomas Kuhn. But Davidson’s argument seems questionable in itself, relying as it does on such a strict application of the verification principle in order to rule out the idea of alternative conceptual schemes. Furthermore, Davidson’s scepticism is insufficient to undermine the sense in which I am defending anything resembling a thesis of incommensurability. I am merely contending that it will always be a mistake for an historian to assume that the task of explicating an alien concept can be reduced to that of finding a counterpart in his or her own language for the term that expresses it."

"The methodological advice to interpret in a way that optimizes agreement should not be conceived as resting on a charitable assumption about human intelligence that might turn out to be false. If we cannot find a way to interpret the utterances and other behaviour of a creature as revealing a set of beliefs largely consistent and true by our standards, we have no reason to count that creature as rational, as having beliefs, or as saying anything"

"In quotation not only does language turn on itself, but it does so word by word and expression by expression, and this reflexive twist is inseparable from the convenience and universal applicability of the device. Here we already have enough to draw the interest of the philosopher of language."

"As we begin to understand , we begin to understand that we’re part of an ever-changing, interlocking, non-linear, kaleidoscopic world."

"The Economist Brian Arthur (1994) noted that it is impossible for people to reason deductively in complex situations; there are just too many linkages of facts for anyone to keep them straight."

"Paul Krugman's attack on Brian Arthur ("The Legend of Arthur") requires a correction of its misrepresentations of fact. Arthur is a reputable and significant scholar whose work is indeed having influence in the field of industrial organization and in particular public policy toward antitrust policy in hightech industries. Krugman admits that he wrote the article because he was "just pissed off," not a very good state for a judicious statement of facts, as his column shows."

"Our deepest hope as humans lies in technology; but our deepest trust lies in nature. These forces are like tectonic plates grinding inexorably into each other in one, long, slow collision. This collision is not new, but more than anything else it is defining our era. Technology is steadily creating the dominant issues and upheavals of our time."

"More than anything else technology creates our world. It creates our wealth, our economy, our very way of being."

"Increasing-returns economics has roots that go back 70 years or more, but its application to the economy as a whole is largely new."

"In many parts of the economy, stabilizing forces appear not to operate. Instead, positive feedback magnifies the effects of small economic shifts; the economic models that describe such effects differ vastly from the conventional ones. Diminishing returns imply a single equilibrium point for the economy, but positive feedback – increasing returns – makes for many possible equilibrium points. There is no guarantee that the particular economic outcome selected from among the many alternatives will be the “best” one."

"Conventional economic theory is built is built on the assumption of diminishing returns. Economic actions engender a negative feedback that leads to a predictable equilibrium for prices and market shares. Such feedback tends to stabilize the economy because any major changes will be offset by the very reactions they generate. The high oil prices of the 1970s encouraged energy conservation and increased oil exploration, precipitating a predictable drop in prices by the early 1980s. According to conventional theory, the equilibrium marks the “best” outcome possible under the circumstances: the most efficient use and allocation of resources."

"The inductive-reasoning system I have described above consists of a multitude of “elements” in the form of belief-models or hypotheses that adapt to the aggregate environment they jointly create. Thus it qualifies as an adaptive complex system. After some initial learning time, the hypotheses or mental models in use are mutually co-adapted. Thus we can think of a consistent set of mental models as a set of hypotheses that work well with each other under some criterion—that have a high degree of mutual adaptedness. Sometimes there is a unique such set, it corresponds to a standard rational expectations equilibrium, and beliefs gravitate into it. More often there is a high, possibly very high, multiplicity of such sets. In this case we might expect inductive reasoning systems in the economy—whether in stock-market speculating, in negotiating, in poker games, in oligopoly pricing, in positioning products in the market—to cycle through or temporarily lock into psychological patterns that may be non-recurrent, path-dependent, and increasingly complicated. The possibilities are rich."

"The type of rationality we assume in economics — perfect, logical, deductive rationality — is extremely useful in generating solutions to theoretical problems. But it demands much of human behavior — much more in fact than it can usually deliver. If we were to imagine the vast collection of decision problems economic agents might conceivably deal with as a sea or an ocean, with the easier problems on top and more complicated ones at increasing depth, then deductive rationality would describe human behavior accurately only within a few feet of the surface. For example, the game Tic-Tac-Toe is simple, and we can readily find a perfectly rational, minimax solution to it. But we do not find rational “solutions” at the depth of Checkers; and certainly not at the still modest depths of Chess and Go."

"This paper has attempted to go beyond the usual static analysis of increasing-returns problems by examining the dynamical process that 'selects' an equilibrium from multiple candidates, by the interaction of economic forces and random 'historical events'. It shows how dynamically, increasing returns can cause the economy gradually to lock itself in to an outcome not necessarily superior to alternatives, not easily altered, and not entirely predictable in advance."

"Where we observe the predominance of one technology or one economic outcome over its competitors we should thus be cautious of any exercise that seeks the means by which the winner's innate 'superiority' came to be translated into adoption."

"[Market outcomes] depends on the cumulation of random events."

"A technology that by chance gains an early lead in adoption may eventually 'corner the market' of potential adopters, with the other technologies becoming locked out."

"Complexity theory is really a movement of the sciences. Standard sciences tend to see the world as mechanistic. That sort of science puts things under a finer and finer microscope. In biology the investigations go from classifying organisms to functions of organisms, then organs themselves, then cells, and then organelles, right down to protein and enzymes, metabolic pathways, and DNA. This is finer and finer reductionist thinking. The movement that started complexity looks in the other direction. It’s asking, how do things assemble themselves? How do patterns emerge from these interacting elements? Complexity is looking at interacting elements and asking how they form patterns and how the patterns unfold. It’s important to point out that the patterns may never be finished. They’re open-ended. In standard science this hit some things that most scientists have a negative reaction to. Science doesn’t like perpetual novelty."