intangibles, innovation, and answering Coase’s questions
JC Spender

24-Sept-2013 EDEN Workshop 1

clarification increasing objectivity increasing subjectivity
24-Sept-2013
• individual - collective
• construct a discourse able to embrace phenomena of interest
• theory - practice
• determinism - agency
• physical - intellectual
EDEN Workshop 2

24-Sept-2013
• disappearance of monopoly
• value-creation
• Bohm-Bawerk - ‘roundabout methods’
• ownership / control
• financialization
EDEN Workshop 3

24-Sept-2013 intuitions behind ‘intangibles’
① investor, tax - intangible = accountancy failure - firm not properly valued (q, Stéfano)
② resource - intangible = identify, locate, apply - underutilized - not properly managed (Skandia) should these solutions converge ?
EDEN Workshop 4

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
24-Sept-2013
• deny divergence of interest
• principal-agent theory
• managers & employees
• idiosyncrasy & comparability
• new theory
EDEN Workshop 5

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 6

IC might be:
• firm driven
• market driven
• EIF
• but what is the firm ?
24-Sept-2013 EDEN Workshop 7

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 8

24-Sept-2013 practice
• data
• meaning
• practice indexical
EDEN Workshop 9

24-Sept-2013 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)
EDEN Workshop 10

24-Sept-2013
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
EDEN Workshop 11

24-Sept-2013 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 ?
EDEN Workshop 12 of 11

24-Sept-2013 intangibles as metaphor of ?
• unpriced asset ?
• unpriceable ‘asset’
• tacit knowledge
• practice
• knowledge-absence
• indexicality - goal & situation
EDEN Workshop 13

24-Sept-2013 knowledge-absences
& constraint types
• ignorance
• indeterminacy
• incommensurability
• a-historical making this way of thinking work
EDEN Workshop 14 of 11

synthesizing theorizing with practice constraints / darts opportunity
• regulations
• technology
• norms
• competition
24-Sept-2013 EDEN Workshop 15

constraints
• judgment
• constructivist
• post-practice knowledge
• what we can imagine but cannot do
24-Sept-2013 EDEN Workshop 16 of 11

24-Sept-2013 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
EDEN Workshop 17

harnessing others’ judgment
• imagination
• constraints
• judgment
• division of judging labor
• persuasion versus instruction
24-Sept-2013 EDEN Workshop 18

language
• persuasion / rhetoric
• logos, pathos, ethos
• leveraging other’s judgment into firm’s value-creating process
• TMF as set of judgments
24-Sept-2013 EDEN Workshop 19 of 11

24-Sept-2013 history of the modern firm
• division of labor, skill
• 1580s labor migration, wages, farming, gibbing
• mode of subordination
• Reformation/Enlightenm ent
• secular
• literacy
• rhetoric / social clubs
EDEN Workshop 20 of 11

24-Sept-2013 EDEN Workshop 21

24-Sept-2013 innovation
• Knightian uncertainty
• opportunity space
• exercise of judgment
• exploratory practice
• guiding not determining practice
• indexicality
EDEN Workshop 22

markets and money
24-Sept-2013 EDEN Workshop prices and values
23

24-Sept-2013 knowledge
• s elf-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
EDEN Workshop 24

24-Sept-2013 empirical research topics
• language
• business model, practice
• ethics
• time, history
• markets - generalize the particular
• integrated reporting
• Schumpeter, Austrian economics
• democratic capitalism, Precariat
• business education
EDEN Workshop 11 of 11

24-Sept-2013 EDEN Workshop 26