A list for my doctor program in the next 3, 4, 5 years
Research Interests (content):
1. the economic institution of post-war Japanese economy (Economic History)
a) Japanese-style market/enterprise system (origin, forming, change, mechanism)
i) intro-firm relationship: life-time employment, personnel system, …
ii) inter-organization relationship: subcontracting system*, keiretsu or cross-shareholding, mainbank system, industrial policy, …
2. empirical study on organizational ecology (firms and industries in Japan as target)
a) firm’s life expectancy*
b) organizational obsolescence & organizational senescence
c) the impact of large firms on industry/market groups
d) the relationship with group density and organizational performance
Research interest (theory)
1. new institutional economics, transaction cost theory
2. contract theory (also involves some information theory and game theory)
3. organizational economics
* indicates main focus
Core questions that I am interested in:
1. Why firms exist? risk taking? lowering transaction costs (what specific costs)? incentive function? information sharing function?
(note that the reason why firms are established are somehow different from the above one. Firm may begin with irrational risk taking but given firm is almost the most successful organization in human society in last 200 years, in general it must take advantage of some general capability to exist in the market.)
2. How does inter/intro-organization coordination be established, developed, maintained, and destroyed?
=> Why asset specificity problem or other similar ones can be solved by long-term inter-firm relationship in some cases?
3. Why firms fail? Is it organizational obsolescence or senescence?
4. How do information costs affect choices searching, decision making, thus utility maximization and cost minimization on individual and organization?
=> people (either in the market or in the firm) find their choices sets and make decisions based on their specific and limited information sets, which includes both transient information and consistent one- knowledge. It takes costs (mostly time, or in other words, opportunity costs) to get these information, especially for the transient one as one would need them whenever making decision. That’s why they usually rely on knowledge (or in some condition would be called culture, norm or even instinct. the last is generally regarded as something not from learning, but that maybe not true as instinct surely comes from genetic learning and social learning), considering the risk of making wrong decision and the opportunity costs of searching for nothing, which economic historian would call path dependence. While new information involves, they change their decision (i.e. utility maximization) based on a adjustment on information set very similar to Bayesian probability.
The costs of information search itself is also depended on the individual’s specific information set, more specifically the knowledge about information searching skill and the distribution and possibility of outcome of information searching. Though Simon would call it bounded rationality with the classification of satisfy and suffice.
As any information sets are limited, perfect market do not exist even if every one is price-takers (and actually this is wrong. everyone can become price-maker. Advertisement is a case of price control by selling information). And we actually cannot imagine a world with zero information costs, thus also a world with zero transaction costs like what Demsetz argued. This also creates the question like short sights, or to be more specific, the different capability of calculating a present value or future value of utility maximization based on individual’s limited information set.
Consequently, the organization is not only a place for coordinating producing (they can do this by using market contracts), but also a place for information sharing (along with other functions like incentive function). For Knight, firm works like the entrepreneurs takes risks given their nature of risk neutral or risk seeking, who offering the risk-averse employees a promise of wage or share of profit. However, it also works like a information searching version division of work- entrepreneurs seek information and share it with employees – which is another way to see the order and hierarchy. (Rather than you find choices, decide and then execute, someone else do that for you.)
We can never get to the perfect market. Thus we always have the potential to do better.
5. What is incentive? How does it work?