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 [原创]高处不胜寒之三: Nobel Laureate Interview - A. Michael Spence |
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积极生活态度
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作者：积极生活态度 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Frontier visionary Interview
Prof. A. Michael Spence , Stanford University, Nobel Laureate in Economics
- The Informational Structure of Markets: Past, Present and Future
Frontier Journal (FJ): Thanks for joining me. Frontier Journal is interviewing Professor Michael Spence at Stanford University. Prof. Spence is a year 2001 Nobel Prize co-winner in Economics for his joint contribution in discovering the Asymmetric Structure of Marketing. Professor Spencer, my very first question would be, your Ph.D. dissertation at Harvard led to your Nobel Prize Award. Could you provide us some historical context about that in brief?
Prof. A. Michael Spence (MS): I would be delighted to try. When I was a graduate student, I got interested in a variety of questions that had to do with what happened to market. Many markets. Financial market, job markets and so on, in which the traditional assumptions in economics is that people are fully informed, when that is not true. and I was a participant in a faculty seminar that was being held at the Kennedy School in which these subjects were much discussed.
And so I thought, well, markets usually respond to this in some way and the analyses that were available up to date at that point, including George Akerlof path breaking basically markets of information gaps "what happens in the market?" And so I said, I would try to figure out in some sense what would a market do about it and that is where the ideas' signaling came from.
Activity on the supply side of the market or the better informed side of the market that is designed to credibly convey information to the other side of the market.
FJ: Okay. I see. Now, in terms of competitive framework, we have both competitive strategy and competitive advantages, those kind of things will lead out. Yes. Now for markets, are there any theoretical framework about market structure?
MS: Are there any theoretical frameworks of the market structure?
FJ: Yes. Market structure. Analysis or …yes.
MS: Well sure, I mean if you look at the history, the economics in the last 50 years…
In the field of, call it industrial organization, you have the work of Joe Bain, which identified some of the important dimensions of market structure such as entry barriers, concentration on the seller side, and so on. And I think one way to describe the last 50 years of development is we have enriched the economics profession generally has enriched our sense of what relevant market structure is and learned how to integrate it into the analysis of markets. So, for example, informational asymmetries is an example of market structure that we now know something about how to think about. By the way, I mean competitive strategy it develops in the task breaking work by Mike Porter
In some ways is in part the application of the economics of market structure to competitive decision making in a market context by a firm, so they are a very closely related field.
FJ: Ok, I see. Now, in older economy, fairer markets enjoy unfair advantage over buyers by exploiting the asymmetric nature of market structure as you and your co-worker laid out. Now structure becomes more and more symmetrical which is quite transparent, how shall a vendor retain or enhance their compatibility other than traditional competitive strategies such as overall cost to leadership, focus and differentiation.
MS: Well I think the last thing you mentioned is absolutely critical, I mean, obviously it is nice if you have natural entry barriers in the form of economies of scale and scope ___ in the modern world, sellers maintain their ability to command an above normal or positive capital rate o return by successfully innovating, so it is a dynamic equivalent of what I think is the typical path to above competitive returns other than - I mean the other one, is the one you obviously mentioned which is continuous cost reduction as well.
FJ: Oh I see. Okay, okay. So for the same market, in whether it is an emerging market, before the early market or well-established market, mainstream market; if a vendor from a vendor's point of view, we may have three views or perspectives, namely vendor vs buyer, vendor vs supplier and vendor vs competitor. Now from the vendor's point of view, how shall we improve target market efficiency to enjoy overall cost leadership when we are dealing with buyers, with suppliers and (competitors) in general.
MS: In general, yes and including a developing market. The biggest change or the biggest source of efficiency gain in the past 10 to 15 years has been the application of information technology to supply change, in demand change, integrating with systems on which the interactions with buyers and sellers occur, you know, so if you take a company that has vendors, you know, meaning its supply chain, and buyers, which is what we call the demand change, but I think the biggest cost gains have come from both domestically and a global basis from using information technology to integrate these people into the same system.
FJ: Okay, I see. Now, talking about signaling models, you and your co-worker for many years about signal model in market structure analysis. Since you got, market signal identification mechanisms, probably by another research, and now, how do we maximize signal to noise ratio in a given market with supposedly you got all market signals identified. How do we maximize signal to noise ratio in general of course?
MS: Well this slightly difficult. Signal to noise ratios come from the field called signal process and that, if you like, is a quite a technical concept. Now, in a market situation, the analog of that, I mean what drives signaling models is that on average, people with higher quality products have lower cost in sending the signal. That is what makes it work.
But if everybody had the same cost of sending the supposed signal all send it, and it would not differentiate anything from anything else. So, you get noise in a market signaling system if there are some people with lower quality products who also have lower cost. And that makes the signal noisy, meaning, you see the signal that you would normally expect from a high quality seller, then there is some chance that it is actually a low-quality seller. So that would be the analog in economics in signaling models of the sort of technical signals, the noise ratios that is used in the analysis of the transmission of fiberoptic signals for example.
FJ: Yes, but how about the searching cost. For example if a traveler, I might call my travel agency to book a two-way ticket, and also I may go online, you know, go to the airlines, United Airlines, I will book by myself, or I can go to Travelocity to do it or Priceline, or those kinds of things. How do you minimize those searching costs when we are dealing with modern market structures in the new economy?
MS: Well, in some sense, the Internet lowers the search cost. But it gives you the appearance that it increased them, because you are going to multiple sources. The simple truth is, that the reason we did not go to multiple sources before was because it was too expensive and so nobody actually did it. They just phoned their travel agent, and then a little bit later they might phone the airline and spend a lot of time waiting on hold. And so what has really happened is that the transaction costs have declined and as a result of the decline, we go to more sites or sources to get price and other information, and I think that is probably the right way to think about what is going on. It gives you the illusion that you spend more time searching…
FJ: Illusion, yes.
MS: In fact maybe we do, but that is because the cost of doing it has gone down.
FJ: Yes, yes. So, Frontier Journal is interviewing with Professor Spence, Nobel Prize winner in year 2001 on Economics. Professor Spence, nowadays we have heard a lot of buzzwords like innovation, by creating emerging markets or long tail theory like personalization. I would like to ask a curious question, you know, maybe it is very general. What is the correlation among free conceptual framework competitive strategy, market structure and innovation? Right now, all people are talking about innovation, markets and competitiveness. Are there any underlying correlation or relationship among those three.
MS: Yes, there are. I mean, market structure effect for example. Market structure is traditionally measured by the concentration, if you like, the number of firms. The traditional analysis which still has some merit, is that research and development is a fixed cost and so its cost measured in units sold is lower, the larger your market share. So, there is a tendency for highly fragmented markets to find it more difficult to finance or to justify the investment in research and development and innovation. Now, there are ways around that. In Silicon Valley where I live, we do it by having little start ups that are financed by venture capital, but that is only part of the innovation process. So the answer is, these things are connected to each other. I would say, it is very difficult to prove this, but an increasing fraction of the competitive interaction in the global economy is driven by innovation, by dynamic product differentiation, probably more than before. meaning…
FJ: You have been working on information economics for many years. Now whether in old economy or in new economy, market information is very important for sure, no doubt. Information can be categorized as commodity information and non-commodity information for example, non-commodity information we can say such as trade secrets, intellectual property, among others.
MS: Right.
FJ: Now, will your market signaling theory primarily targeted for the vendor-buyer prospect or market. For example, labor market used car and a job market, insurance market is what we call a vendor market, also be valid for the vendor-competitor prospect of the market structure? I am talking about the vendor-competitor for example we as a vendor. If yes, what is the most important strategy in gaining non-commodity information advantage over our competitor in general. Yes, go ahead.
MS: Well maybe the interesting case to look at is financial markets. Financial markets work fairly badly. Attempts to improve their informational structure because they have built-in financial asymmetries right?
FJ: Yes.
MS: I mean a company typically knows more about what is going on in the company than the investors, so we close the informational gap by a combination of signaling on the part of firm is more important in modern financial markets you have disclosure regulations that require that the information be shared so that it becomes more symmetric over time. And so that is one whole class of things I suppose that would fit into what you call commodity information. That is just basic information required to run a market. Then, there is the information that is generated by innovation, and there we do two things to protect the rate of return on the investment in generating those innovations. One is to try to keep trade secrets and the other is to provide intellectual and patent protection so that even if it is not a secret, people are entitled to use the innovation, the new information, the new knowledge without making a contract with the person who developed it. So those are two very different things, I think, you know. You have to have underlying information asymmetries inherently in the innovation process. If the innovator has to generate something new that other people do not already know and you don’t want to close that gap. That is sort of a different problem, trying to make sure that there is a sufficient rate of return to the investment in the innovation.
FJ: Okay, I see. I agree. Now suppose, we can achieve optimal or maximum market efficiency, under bad circumstance, is it possible for us to design an optimal price model to ___ position among vendor, buyer, supplier and competitor? This question may be too general, but I would like to know any underlying relations between an optimal market structure or a well-invested market structure and a well-designed pricing model. Are there any correlations among those two?
MS: Yes there are. We know that certain kinds of market structure will lead to inappropriate pricing, for example, monopoly market structures can lead to pricing that is too high on the supply side and therefore results in an inefficiency. Now sometimes, we put up with maintaining the incentives to innovate but we put up with it only for a certain amount of time. In America, patents typically last for 17 years and then you lose the monopoly. But so the answer is surely, right, that one of the reasons competition policy is important is that it affects both market structures and the behavior that is allowed in certain kinds of market structure. So, a monopoly may have gotten there by legitimate means, but it is not allowed in certain dimensions to use its monopoly or market power to say, destroy competitors. So I think actually competition policy is a very important dimension of policy in all countries including developing ones since they build their market system up.
FJ: Okay, I see. Before I let you go, I have three more questions. Besides serving in the academe as leading research scholar, you also serve in many public and private companies. Public company startups, General Mills, Nike, Siebel spanning many industries. As a member of the board, provide us some of your inside perspective, how do those companies differ in competitive strategy to competitively when they tackle different market structure? Let's take Nike and Siebel as an example because they are totally different markets.
MS: Yes, it is a very good question. What I have observed, and I think most people would agree, is that your competitive strategy is very much a function of which industry you are in. So in the case of Siebel, Siebel was one of the early entrants into a completely new industry called customer relationship management. And so what drove competitive success in that market was product development and effective sales and marketing because they were really building a whole new market that is Seibel and its competitors. Whereas in the case of Nike, it was once a start-up but now it is the largest market-share firm in athletic footwear and apparel, there is still a very high premium on innovation. There is also a very high premium on what we would call marketing or brand image if you like. A lot of what companies like Nike are doing is associating the brand with values, lifestyle, athletic performance, that kind of thing. And a considerable amount of budget goes into advertising and other kinds of marketing activity that are designed to do that. So they seem very different but they are naturally driven by the nature of the industry that they are in.
FJ: I see, so they are totally different. One is emerging market. Yes. So as you mentioned before, sustained growth is one of the key elements in poverty reduction. So you know, we are a startup, there are many startups all over the world, in the US, in India, even in Europe. How to sustain a sustainable growth for a bootstrapping startup in general?
MS: You mean in a company? Or a country?
FJ: No not for a country. For a company.
MS: Oh in a company, I think, you know, a startup typically, at least the ones I am familiar with here at Silicon Valley, there is many elements in sustained growth but it is a hard question to answer. Let me give you an example. Some startups create a new technology, it is widely accepted in the marketplace, and then they grow and grow and grow, like Google would be an example. In other cases, it does not make sense to have the company be a standalone company and it gets acquired by one of the larger co-users of the technology. So the question of sustained growth does not really arrive. There is also natural limit on the speed with which you can grow. For example, if you innovate a new household product, say for the kitchen, you can grow fairly fast for a while. I mean there is a natural limit on that market because you are not really creating a whole new set of economic activity the way you are in some of these other areas. And so the other way you can grow very rapidly, this is particularly pertinent in developing companies, is you can take market share on a global basis.
FJ: Oh yes.
MS: So if you stand back and look at very rapidly growing companies in business process outsourcing, they are basically expanding their market share in those activities and growing very rapidly as a result of that. So, I guess the bottom line is there is a lot of different ways to grow very rapidly that are very dependent on the industry that you are in.
FJ: So there is no silver bullet. Yes.
MS: No silver bullet.
FJ: Professor Spence, what else would you like to add before we wrap up this exciting interview?
MS: The only thing I would like to add is that if you take your previous question and ask as per the economy level "where does rapid growth come from?" very rapid growth of the type that China has managed to achieve comes from engagement with the global economy especially in the early… because the demand in the global economy is for… it has a tremendous capacity to pull the economy along and I think that is a very general proposition. This is a continuous spectrum is lower than high growth in a rapidly growing developing country, we could never grow at 8% or 9% in Europe or America or even Japan now. And that growth tends to come from innovations that increase productivity. So that is what is driving that segment of the global economy. That would be my one added comment.
FJ: You mean an advanced country will slow down like the US and Europe, they can keep on innovating walk up through the value chain to stay as an advanced country for sure.
MS: That is right. We can’t grow more than 4% a year.
FJ: Yes. Sure. Thanks for your time Professor Spence.
MS: I am as delighted to join you.
FJ: Yes I appreciate it. Goodbye.
MS: Thank you.
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作者：积极生活态度 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 [原创]高处不胜寒之三: Nobel Laureate Interview - A. Michael Spence -- 积极生活态度 - (18436 Byte) 2009-6-25 周四, 08:35 (2047 reads) - 高处不胜寒 -- wymwt - (5 Byte) 2009-6-25 周四, 13:52 (232 reads)
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