Beyond Gaussian averages: redirecting international business and management research toward extreme events and power laws
By Pierpaolo Andriani, Bill McKelvey. 2007
158 citations recorded by the source corpus.
Practicing managers live in a world of ‘extremes’, but international business and management research is based on Gaussian statistics that rule out such extremes. On occasion, positive feedback processes among interactive data points cause extreme events characterized by power laws. They seem ubiquitous; we list 80 kinds of them – half each among natural and social phenomena. We use imposed tension and Per Bak's ‘self-organized criticality’ to argue that Pareto-based science and statistics (based on interdependence, positive feedback, scalability, (nearly) infinite variance, and emphasizing extremes) should parallel the traditional dominance of Gaussian statistics (based on independent data points, finite variance and emphasizing averages). We question quantitative journal publications depending on Gaussian statistics. The cost is inaccurate science and irrelevance to practitioners. In conclusion, no statistical findings should be accepted into business studies if they gain significance via some assumption device by which extreme events and (nearly) infinite variance are ignored. Accordingly, we suggest redirecting international business studies, and management research in general.
Subfields: Global and Planetary Change, Management Science and Operations Research, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/db04f6a10821a2e09e16ea87b3c6d6b6d92dc872
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In Global and Planetary Change
In Management Science and Operations Research
In Sociology and Political Science
Citations in the corpus
- An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment (2010, unknown): “The pervasiveness of equifinality and nonlinearities in the evolutionary process in complex systems does not permit one to make causal predictions concerning the relationships between specific variables (Andriani & McKelvey, 2007; Sullivan & Journal of International Business Studies Daniels, 2008).”
- International entrepreneurship, born globals and the theory of effectuation (2011, background): “There is need to learn more about special types of firm and not only to look for the average firm ( Andriani and McKelvey, 2007”