Daily Archives: March 19, 2008

10, no 15, Commandments of Writing Theory

A conversation with a collaborator about how to write and publish theory led Ted to send me the hot-off-the-press Editor’s comments from the most recent AMR. Got me thinking about some of the other badly needed comments on theory in our field. Distilling them led to the following list. There are many other resources out there about how to think theoretically. These have the advantage of being about the craft of writing and publishing theory. These are all my paraphrases (including colorful language in a few places).

I am very grateful to to the cited authors for offering guidance and directions to those of us setting off across terra incognito.

□ Know that your audience are other scholars interested in same topic, not God, or ignorant savants. Talk to the Guild; the heavens ain’t listening (Rindova 2008).

□ Your theory shall start with a richly detailed problem statement that triggers theorizing (Weick 1989)

□ Your theory shall have a what (elements) a how (processes) and a why (fundamental logic) (Whetten 1989).

□ Your theory shall be a why account that emphasizes the causal nature of events, thoughts, and structure; it delves into reasons for systematic occurrence or non-occurrence.

□ Your theory shall not substitute references, list of variables, diagrams, hypotheses nor data for good theory (Sutton and Straw 1995)

□ Your theory enlightens, illuminates, surprises, delights, and narrates (Weick 1995; Sutton and Straw 1995; DiMaggio 1995).

□ Thou shalt know that the What and How of a theory describe; only Why explains (Whetten 1989).

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Filed under organization theory, Research, social theory, writing

Can’t Grasp Credit Crisis? Join the Club

A good and brief description of how the housing boom, deregulation,  CDOs, and market ideology led us into this mess…

Can’t Grasp Credit Crisis? Join the Club – New York Times
Because these loans go to people stretching to afford a house, they come with higher interest rates — even if they’re disguised by low initial rates — and thus higher returns. The mortgages were then sliced into pieces and bundled into investments, often known as collateralized debt obligations, or C.D.O.’s (a term that appeared in this newspaper only three times before 2005, but almost every week since last summer). Once bundled, different types of mortgages could be sold to different groups of investors.

Investors then goosed their returns through leverage, the oldest strategy around. They made $100 million bets with only $1 million of their own money and $99 million in debt. If the value of the investment rose to just $101 million, the investors would double their money. Home buyers did the same thing, by putting little money down on new houses, notes Mark Zandi of Moody’s Economy.com. The Fed under Alan Greenspan helped make it all possible, sharply reducing interest rates, to prevent a double-dip recession after the technology bust of 2000, and then keeping them low for several years.

All these investments, of course, were highly risky. Higher returns almost always come with greater risk. But people — by “people,” I’m referring here to Mr. Greenspan, Mr. Bernanke, the top executives of almost every Wall Street firm and a majority of American homeowners — decided that the usual rules didn’t apply because home prices nationwide had never fallen before. Based on that idea, prices rose ever higher — so high, says Robert Barbera of ITG, an investment firm, that they were destined to fall. It was a self-defeating prophecy.

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Filed under economic sociology, economics, policy, Political Economy