Using Simulation Experiments to Test Historical Explanations

I wanted to test with a computer simulation the explanations I offered in my book Knowledge and Competitive Advantage: The Coevolution of Firms, Technology and National Institutions for why German firms overtook their French and British competitors in the Synthetic Dye Industry from 1857-1913. So I partnered with Thomas Brenner who has created a simulation model that can replicate the key stylistic facts we know about firm and industry growth patterns. Our paper is now published online the Journal of Evolutionary Economics.
Conducting Simulation Experiments to Test Historical Explanations: The Development of the German Dye Industry 1857-1913

Abstract: In a simulation experiment, building on the abductive simulation approach of Brenner and Werker (2007), we test historical explanations for why German firms came to surpass British and France firms and to dominate the global synthetic dye industry for three decades before World War 1 while the U.S. never achieved large market share despite large home demand. Murmann and Homburg (2001) and Murmann (2003) argued that German firms came to dominate the global industry because of (1) the high initial number of chemists in Germany at the start of the industry in 1857, (2) the high responsiveness of the German university system and (3) the late (1877) introduction of a patent regime in Germany as well as the more narrow construction of this regime compared to Britain, France and the U.S. We test the validity of these three potential explanations with the help of simulation experiments.  The experiments show that the 2nd explanation—the high responsiveness of the German university system— is the most compelling one because unlike the other two it is true for virtually all plausible historical settings.

Download Paper

“The Moon and the Ghetto” revisited by Richard Nelson

Richard Nelson explained why is worthwhile to revisit his book.

Over thirty years ago I wrote an extended essay, The Moon and the Ghetto, concerned with the troubling question of why societies so rich and capable technologically and organizationally as to be able to land a man on the moon seemed unable to deal effectively with e.g. poverty, illiteracy, slums. I argued that, while politics was part of the reason, in many cases the problem was that our scientific knowledge and technological know-how was not sufficient to point the way to a solution. The general problem of the great unevenness of human progress has not gone away. The questions explored in this seminar are, first, what lies behind the great unevenness of scientific and technological progress. And second, under what conditions does it make sense to seek a solution to a problem by trying to develop stronger know-how. Can progress be made by reorienting our innovation systems?

You can watch his lecture given at INGENIO in Spain on Youtube.

Nelson Ghetto

“China’s Innovation Challenge” published with Cambridge University Press

Arie Lewin, Martin Kenney and Johann Peter Murmann edited a new book on China’s Innovation Challenge: Overcoming the Middle-Income Trap.

New March 2016: Download Fronter Matter and Introductory Chapter

The book will also feature contributions from Justin Yifu Lin, Gordon Redding, Michael Witt, Keun Lee, Douglas Fuller, John Child, Simon Collison, Yves Doz, Keeley Wilson, Silvia Massini, Keren Caspin-Wagner, Eliza Chilimoniuk-Przezdziecka,  Weidong Xia, Mary Ann Von Glinow, Yingxia Li,  Zhi-Xue Zhang and Weiguo Zhong, Chi-Yue Chiu, Shyhnan Liou, and Letty Y-Y. Kwan, and Rosalie Tung.

Detailed Table of Contents

Join discussion and get updates on the book by following its Facebook Page.

China Innovation

Review of “China’s Path to Innovation” by Xiaolan Fu

To date there are few research monographs that go beyond picking out striking cases of innovative companies. We clearly also need systematic analyses of China’s growing innovative capacity. For this reason, Xiaolan Fu’s book China’s Path to Innovation (Cambridge University Press, 2015) is a welcome addition to the literature. Fu is Professor of Technology and International Development at Oxford and has written about innovation in China for more than ten years. China’s Path to Innovation has 16 chapters (Table of Contents).  The book provides an excellent overview of scholarly literature on the development of Chinese innovative capacities. It deserves to be in the library of anyone working on China’s innovative capacity.  Read my full review on

Deepening the Conversation Between Business History and Evolutionary Economics

This article has appeared in the journal “Business History”, Volume 57, Issue 5, 2015.

Abstract: How can business historians and evolutionary economists deepen their conversations? The paper argues that in doing detailed studies of how individual firms develop capabilities over time is where the concerns of business historians who want to tell the history of individual firms and the concerns of evolutionary economists overlap. This is area where more extensive interactions would be most productive.

Download Article

This paper is a commentary on two articles:
1. Constructing an ‘industry’: the case of industrial gases, 1886–2006 by Ray Stokes & Ralf Banken
2. The evolution of the pharmaceutical industry by Franco Malerba & Luigi Orsenigo

Tips for Choosing Appropriate Level of Abstractions (especially for Chinese Researchers)

A lot of Chinese researchers simply want to imitate how top American journals in formulating theories without boundary conditions. This sounds like doing good science but more often its leads to superficial analyses that do not explain what is happening in China. I was asked to write a commentary on an article by Child and Marinova (2014) in Management and Organization Review and this gave me a chance to reflect more broadly on choosing the appropriate level of abstraction in social science Research.  The article is now published.

Reflections on Choosing the Appropriate Level of Abstraction in Social Science Research. 关于在社会科学研究中选择适当的抽象水平的反思

Abstract: Although researchers often do it subconsciously, every explanation involves choosing a level of abstraction at which the argument proceeds. The dominant North American style of research in Organization Theory, Strategy, and International Business encourages researchers to frame their explanations at the highest level of abstraction where country-level contextual factors are suppressed or ignored. Yet to provide powerful explanations for recent developments in China, researchers are drawn to a greater level of context specificity. This tension is evident in the Child and Marinova (2014) paper. One way to reduce the tension is to identify general causal mechanisms that combine in different ways to produce different results depending on context. This research strategy is more effective than seeking invariant, general patterns of development across all times and places.

Keywords: choosing level of abstraction;philosophy of social science;research design;research on industries;research on firms 选择抽象的水平;社会科学的哲学;研究设计;行业研究;企业研究

MOR Abstract

Download Article.


The role of home country demand in the internationalization of new ventures

My article with Salih Ozdemir and Deepak Sardana was just published in Research Policy.

Abstract: International new ventures (INVs) have been documented to exist all around the world, but the literature is silent on the frequency of such companies in different countries. We contend that the propensity of new ventures to internationalize by forming international partnerships is higher in small-domestic demand countries because they have a greater motivation given their limited local demand. After discussing the methodological challenges in testing this hypothesis, we do such a test by studying alliances in the health segment of the biotech industry in relatively small-domestic demand countries (Australia, Israel, and Taiwan) and by comparing the results with five large-domestic demand countries (UK, Germany, France, US, and Japan). We find that young firms in the countries with smaller domestic demand are at least 3 times more likely to enter into international partnerships than their counterparts in countries with larger domestic demand. We further demonstrate that this difference can primarily be explained by the difference in the size of domestic healthcare markets rather than other underlying opportunity structure related factors.

Keywords: International new ventures; Internationalization; Small vs. large demand countries; Young biotechnology firms; International partnerships; Business development partnerships

Highlights of article

Read and Download Full Article here

Murmann Lecture: What constitutes a compelling case study?

I gave a 50-min keynote lecture on what constitutes compelling case study.  The video from the event at the Forum for Case-based and Qualitative Research in Business Administration may be useful for anyone who is attempting to publish case based studies in field of management.

Nanjing Lecture

The slides from the lecture are visible in the video and can also be downloaded here.  Murmann Slides

The lecture is also available within China on the youku platform.  Click here if you want to access video from China:  China Video AccessAlternative China Video Access

Click on “more” for a written summary of lecture both in English and in Chinese.


Carol Dweck: Differences between Growth and Fixed Mindsets

Carol Dweck has spent her career studying how personality traits impact life outcomes. Here is it summarized into one chart.


You can see a larger image by clicking here: Full Size Image


Useful if you consider submitting to AMJ: Editorial Statement by Current Editor of AMJ

I just read the editorial statement of the current editor of AMJ. If you would like to write about big problems that managers are facing in a scholarly way, AMJ may be a great outlet.

Gerry George writes:

A compelling way to frame a study for theoretical contribution is by asking questions on important anomalies or patterns that are intriguing, useful, and nonintuitive. In an earlier editorial with Jason Colquitt, I suggested that we need to explore “Grand Challenges” in management (see the June 2011 “From the Editors” [vol. 54: 432–435]). The principle is to pursue bold ideas and adopt less conventional approaches to address significant, unresolved problems. Not all our studies understandably will be grand, nor will they all challenge conventional wisdom, but considering the relative importance and scale of a problem will likely make a study more relevant to managers, and make it more interesting for our readers. There are multiple ways by which manuscripts can be better positioned for a theoretical and empirical contribution using a problem focus (Alvesson & Sandberg, 2011; Pillutla & Thau, 2013; also see the October 2011 “From the Editors” [vol. 54: 873–879]). What is important to recognize is that this team places emphasis on how a central research problem or question is articulated. Bringing organizational problems to the forefront would ease the burden on vaguely scripted “Managerial Implications” sections of manuscripts (Bartunek & Rynes, 2010).

My editorial team will look for clearly articulated problem statements or research questions motivated by managerial challenges. This problem-based focus shifts the emphasis away from motivating articles using pure theories to tackling important problems through an enriched theoretical lens. For example, Hekman and colleagues (Hekman, Aquino, Owens, Mitchell, Schilpzand, & Leavitt, 2010) motivate their study on gender and racial biases in customer satisfaction surveys by emphasizing the importance of the managerial problem that a 1 percent change in customer satisfaction creates a 5 percent change in return on investment. Understanding the scale and scope of the problem and asking the right question takes primacy over the deftness of theoretical manipulation using constructs, moderators, and moderated mediators. We prefer manuscripts that emphasize how constructs provide a coherent explanation of the phenomenon rather than framing and motivating studies by adding untested moderators and mediators. Such an effort would rightly dissuade authors from identifying smaller “gaps” in the literature and shift the discussion to managerial, organizational, and societal problems that need to be addressed.

Read the Full Editorial

Superb Example of Strategy Process Research:  New Paper by Laurent Mirabeau and Steve Maguire in SMJ

I just read a fantastic research paper that I recommend highly to anyone who is interested in strategy process research.

Mirabeau, L., & Maguire, S. 2014. From autonomous strategic behavior to emergent strategy. Strategic Management Journal, 35(8): 1202-1229.

The authors do wonderful job first summarizing the different strands in strategy process research.  Then they present new findings on how autonomous strategic initiatives become emergent strategy. They introduce the new idea of Ephemeral Autonomous Behavior to balance out the traditional Mintzberg model of emergent strategies.  I have added the paper to my list of exemplary case studies worthy of imitation.

The core of the paper is nicely summarized in these two figures.


(Right click on each figure to open it in a larger format on a new page.)


Will give two presentations at Strategic Management Conference in Madrid, Sep 21-22

1. The Strategic Process and Competitive Dynamics of Industry Convergence

Date: Sunday, September 21, 2014
Time: 11:15 – 12:30
Room: Viena
Session Co-Chairs:

Samina Karim, Boston University
John Prescott, University of Pittsburgh


  * Alfonso Gambardella, Bocconi University
  * Anita McGahan, University of Toronto
  * Johann Peter Murmann, University of New South Wales
  * Fernando Suarez, Boston University

Understanding how industries change has attracted considerable attention because it blurs industry boundaries, redefines the competitive landscape, creates opportunities for new strategies to emerge, destroys competitive advantages while solidifying others, challenges cognitive maps and establishes new institutional arrangements. In this session, expert panelists will bring us up-to-date on the phenomenon of industry convergence (IC) by sharing their perspectives regarding (1) the antecedents, dynamics, and consequences of IC; (2) how to conceptualize strategic management processes and how they may inform the dynamics of IC; (3) how scholars should evaluate the attractiveness of, and rivalry within, IC industries; and (4) promising research directions including theory development and empirical studies.



Who Matters More? The Impact of Functional Background and Top Executive Mobility on Firm Survival

Do some top executives matter more than others? Integrating insights from upper echelons and executive mobility research, we suggest that the functional roles performed by top executives shape their value to the firm. We examine the effects of inter-firm executive mobility on firm survival for New York City advertising firms from 1924 to 1996. We find that, while losing any top executive is damaging, the loss of a top executive whose functional role focuses on internal firm processes is more detrimental to firm survival than losing a top executive whose functional role focuses on managing external exchange relationships. Additionally, in situations when multiple executives leave simultaneously, firms are more negatively affected when the group departing is functionally heterogeneous.

Bermiss, Y. S., & Murmann, J. P. 2014. Who Matters More? The Impact Of Functional Background And Top Executive Mobility On Firm Survival. Strategic Management Journal:

Download article here.

An earlier version that placed more emphasis on heterogeneity of top management teams influencing firm survival is available at SSRN.

Read about article on the HBR Blog.

How Fast Can Firms Grow?

Abstract: Building on recent research on dynamic, high-growth firms—so-called “gazelles”—this paper explores a simple question that is important in both theoretical and practical terms: What is the fastest rate at which firms can grow? Based on a sample of seven high-growth firms (Cisco, GM, IBM, Microsoft, Sears, Starbucks, and US Steel), we find that 162% is the maximum sales growth rate in any one year that an established company can grow without mergers and acquisitions, while the maximum rate of employee growth is approximately 115% even including some mergers and acquisitions. All of the companies in our sample attained a maximum sales growth rate of above 50%, with most hovering around 75%. Furthermore, the firms’ growth rates exhibit similar patterns. No company experienced its maximum sales growth rate toward the latter part of its history. Every company experienced its slowest employee growth rate after attaining its maximum employee growth rate, usually within a decade of one another. Most importantly, all firms show an average sales growth that exceeds the average employee growth. This finding is an indication that successful growing firms have a superior capability to continuously improve employment efficiency and adjust organizational structures to suit an increasing workforce.

Murmann, J. P., Korn, J., & Worch, H. 2014. How Fast Can Firms Grow? Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 234(2-3): 210-233. 

If your library does not subscribe to the journal, the paper just before publication is available on SSRN for download. Or contact me for copy.

Another Great Example of Serendipity in Scientific Discovery

People underestimate that scientists often make progress by chance.  Here is the story of researchers studying a species that has invaded Florida’s Everglades made an unanticipated discovery: deadly Florida pythons have internal GPS.

“We found that Burmese pythons have navigational map and compass senses,” said Shannon Pitman of North Carolina’s Davidson College, the lead researcher of a team of scientists that released six captured snakes back into the wild, then tracked them through the Everglades National Park for up to nine months.

“It wasn’t what we expected. We thought we’d see a kind of aimless, wandering behaviour, but the pythons made their way pretty quickly back to where to where they were captured. It was more sophisticated in terms of movement than we’ve seen in other species of snake.”

What makes the discovery more remarkable is that it was completely accidental. Pitman’s team originally wanted to release the snakes closer to their capture points within the Everglades, as they were more interested in studying the habitat through which they were moving than the actual distances they travelled.

But wildlife officials, whose efforts to eradicate or contain the up to 100,000 non-native snakes estimated to have spread through the park’s 1.5m acres, refused permission.

That led to the team releasing the snakes at more remote locations between 13 and 23 miles away, outside the National Park’s boundaries, and then watching in amazement as one python after another made its way back “home”.

Each snake was fitted with a radio tracker and its position monitored by GPS one to three times per week. All six moved in a near-straight line towards their capture points and five ended up within a couple of miles. The snake with the longest journey took nine months to reach its destination.

Full Story: Guardian

Joel Mokyr Sees no End to Innovation

Mokyr points out the modern GDP measures are not accounting for improvements in quality of products and life.
He sees no end to innovation. Basic science needs to be funded by governments because private individuals and corporations cannot appropriate the returns from these investments. He sees culture that encourages natural skepticism of students as a key ingredient for furthering innovation of a country.

Improving Your Case Method Skills: Two Methodological Pieces by Michael Scriven

The philosopher and polymath Michael Scriven has written extensively on the logic of explanations. Here are two of his most valuable pieces. The first one is how one can make good inferences from single cases studies and the second one one explanations in history.

1. Scriven, M. (1974). Maximizing the Power of Causal Investigations: The Modus Operandi Method. In W. J. Popham (Ed.), Evaluation in education: Current applications: 68-84: McCutchan Pub Corp. Download

2. Scriven, M. (1966). Causes, Connections, and Conditions in History. Philosophical Analysis and History. W. H. Dray, Harper & Row: 238-264.  Download


Scaffolding in Economics, Management, and the Design of Technologies

This chapter reviews the ideas that have been developed to describe the emergence and change of structures in three fields: Economics, Management, and Design of Technologies. The chapter focuses on one empirical setting, the economy, and more specifically how firms, industries, and technologies change over time. Today’s industrialized economies are very different from the economies before the industrial revolution. The chapter presents key theoretical ideas from evolutionary economics, management, and technology that try to explain why and how economy has been so dramatically transformed over the past 400 years. You can download a draft of chapter here or find the book in your library or buy it at or MIT Press.

Excerpts from Arthur Stinchcombe’s on “Theoretical Methods in Social History”

Ten years ago I read Stinchcombe’s “Theoretical Methods in Social History”. I recently reread the parts that I had highlighted and I thought it useful to share some key passages.[1]

One does not apply theory to history; rather ones uses history to develop theory. [2]
It is rather that the fashion in quantitative history has come to be that one must agree to be voluntarily ignorant of the any evidence other than numbers. [3]

As the argument develops, it will become clear why I am unenthusiastic about most quantitative history. Let me state the argument in capsule form.
For a number, say a count, to be theoretically interesting, it has to be a count of a comparable instance. What instances comparable for a scientist is that those instances have identical causal impact. Thus a count is more illuminating, the more theory and the more detailed examination of the facts went into making the instances counted comparable. But this ordinarily means that making a count should be the last stage of a scientific enterprise, a stage reached only after an extensive development of theory on what makes instances comparable. Is the proletarian in the Vyborg district of Petersburg or in the Baltic Sea Fleet equivalent in impact on the Russian Revolution to a proletarian in Moscow? Trotsky convinces me he was not (and if the proletarian was a she, in either place, she was not equivalent to a male proletarian either). Consequently, a count of proletarians in Russia in 1917 is fact of relatively little interest. [4]


My Editorial Statement for Management & Organization Review

MOR is the official journal of International Association for Chinese Management Research. While the journal is focused on China, comparative studies of China and other countries are highly appropriate for the journal.

I am interested in detailed studies of how technologies, organizations, industries and supporting institutions evolve over time. Methodologically, I hope to attract comparative case studies that are rich in descriptive data that is both quantitative and qualitative.  I also hope to attract historical case studies.  Papers that feature particularly innovative companies or organizational and institutional structures are of particular interest.

Examples of papers that illustrate work of interest to this editorial area can be found here.

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