Appropriability in Services

Services constitute a major part of the economy, and, contrary to popular believe, service firms do innovate. In this paper I take a closer look at one aspect of innovation in services: appropriability. I discuss the different elements that are possibly of importance for appropriability, and discuss one element in more detail. Reputation has been argued to be decisive when service firms try to appropriate the benefits of their innovative activity. In this paper, some suggestions are brought forward that will be useful in thinking systematically about reputationshaping mechanisms

Some Economics of Digital Content

The music industry is currently subject to changes influenced by ongoing digitalisation and informatization that are unprecedented. Other sectors can expect to undergo in the near future what the media industry is going through now – the movie industry being a prime suspect. Each day, some 600,000 copies of movies are exchanged via the Internet, most of these in violation of the copyright laws. The disruptive nature of technological development makes that the market for entertainment products and other content undergoes fundamental changes. Where ‘content’ used to be exchanged attached to a physical carrier, increasingly it has the features of an information product

The Process of New Service Development: issues of formilization and appropriability

Services form an important part of the economy today. Innovation for service firms is as important as for manufacturing, but the innovation process for service firms is comparatively little studied. In this paper, I review the literature there is on the innovation process for service firms, and make two suggestions for formalizing that process. The common thought that service firms do not innovate does not hold. Innovation is, however, often ad hoc for services, and it can therefore be difficult to measure firms’ innovation efforts. These points are all related to issues of appropriability of the benefits of innovation in services. The two issues primarily discussed in this paper – the possibilities of formalizing and appropriating in case of NSD – are central for issues for service firms. It is here that this paper offers some contributions to the existing literature; it does not so much present an overview thereof

Towards a Dynamic (Schumpeterian) Welfare Economics

For an economy where knowledge plays an increasingly important role in shaping its dynamics, economics needs a dynamic (Schumpeterian) welfare theory. This paper sketches the role of knowledge in an economy and argues that a static Paretian welfare economics is inadequate, or at least needs to be supplemented. As suggested by the work of Schumpeter, a dynamic welfare economics acknowledges the role of knowledge. In a dynamic welfare economics, I suggest, different costs of communication are central, indicating that knowledge may not be readily diffused or exchanged. Recent developments in Intellectual Property Right (IPR) law are evaluated to determine the extent to which they affect communication costs and thus future economic welfare

Accounting as Applied Ethics: Teaching a Discipline

In this article it is argued that there are notable parallels between all of the different strands within ethics on the one hand, and accountancy on the other that, in teaching, can be drawn upon to enhance students’ understanding of the latter. Accountancy, part of economics, draws on utilitarian ethics, but not solely so. Accounting, in addition, draws on deontological and communitarian strands in ethics. The article suggests that the teaching of accounting – especially to non-economists – would benefit substantially from highlighting and developing these parallels

Collective Consuming: Consumers as Subcontractors on Electronic Markets

In this article, contrary to popular belief, it is argued on the basis of Transaction Cost Economics that consumers will become dependent subcontractors on electronic markets. Consumers invest time and effort building up a relation with a producer or e-tailer; an investment that is idiosyncratic. The producer or e-tailer only needs to invest in generic assets that enable him to automate the process of collecting and processing customer information she needs to differentiate products and discriminate prices. As subcontractors consumers face high switching costs and are thus dependent on producers or e-tailers. Virtual communities of consumers that organize countervailing power will not mitigate this tendency

How To Be Better Prepared For A Paradigm Shift In Economic Theory, And Write Better Articles In The Meantime

The development of economic thought is not unlike the development of technological knowledge: paradigms can be discerned over time and across the field. Indeed, in its history economics has experienced paradigm shifts. There is no reason why it will not do so again in the future. In technology, as in economics, paradigms do not emerge from the blue, but build on precursors, possibly from fields other than our own discipline. Recognizing this draws our attention to other fields, preparing us for a possible paradigm shift. Understanding these other paradigms might best be done using historian Wight’s concepts of plot structure, myths, and cultural endowment. A better understanding of different paradigms allows us to combine ideas from other (sub-) fields with our own so that we are likely to come up with better ideas. In the meantime, as the parallel with the composition of music and the playing of chess shows, we compose better articles in the meantime because we are aware of the rules guiding our own compositions, yet. The history of our own field may be the first and best source for such inspiration

Bridging Structure and Agency: Processes of Institutional Change

The tension between (social) order and change, or, alternatively formulated, between structure and agency, has a long history in the social sciences (e.g. Verburg 1991). The discussion has substantial philosophical overtones. In this article we recount the history of the discussion. We both acknowledge the more recent admonition that the agent may have been given short shrift in previous eras (Davis 2003), but at the same time argue that one should not negate the reality of social structure or institutions (Hodgson 1999, 2004). In this article we argue, however, that these recent contributions, from the fields of economics, sociology, political science and management, do not provide a much needed account of how the tension between structure and agency may be resolved conceptually. Accounts seem to emphasize either structure or agency, and fail to capture their interrelationships. We submit that that the process of institutionalization does resolve the tension conceptually, focusing on the role of the agent in reproducing institutional setting, but also in instigating institutional change. We provide a theoretical account of the conditions under which institutions change, and the likely direction of such change. In doing so we emphasize the relation between socio-cultural v

Institutions, Institutional Change, Language, and Searle

This paper endeavours to contribute to the growing institutionalist literature on the conception of the institution. We draw from John Davis’ (2003) analysis of the individual in posing the questions: what differentiates institutions, and how can changing institutions be identified through time and space? Our analysis develops Searle’s (2005) argument that language is the fundamental institution. Searle’s argument is rather functionalist, however, and does not convey the ambiguity of language. Moreover, language and understanding, surely when related to most institutions in real life, delineate and circumscribe a community. A community cannot function without a common language, as Searle argued, but language also constitutes a community’s boundaries, and excludes unsavoury outsiders or alien topics for discussion. This is how institutions both constrain and enable. By drawing upon Luhmann’s (1995) systems analysis and notions of discourse, communication, and text we aim to augment the existing analytical role ascribe

Market and Society: How do they relate, and contribute to welfare?

This paper discusses how markets and society relate to each other. We present and discuss three views: markets as separate, markets as embedded, and markets as impure. One’s stance on the contribution of markets to welfare hinges on the conceptualization of market and other spheres in society. If, for instance, one perceives of the economy (the economic domain) as an all-encompassing sphere or as a sphere totally separate from others, then one would believe markets necessarily contribute to welfare. Markets are presumed to be ubiquitous in mainstream economics; the orthodox view is that of the ‘market as separate’. Indeed, Frank Hahn notably conceded that neoclassical economics does not describe markets, but ‘conjures’ them up. Mainstream conceptions of the market are functionalist – in the appropriate conditions the market is an efficiency conduit, and hence wealth and welfare generating. Creating these appropriate conditions then drives policy, such as the provision of health care, and tends to produce a one size fits all approach. This paper argues that this is an overly restrictive conceptualization of markets, and is an inadequate basis for conceptualizing the potential effects of markets. Conceptualizing the market as impure and embedded must be added. We contribute to this discussion by developing the concepts of ‘boundaries’ separating spheres. Such an approach broadens the notion of welfare and well-being beyond the monetized parameters of economic orthodoxy