Professor of Economics, The University of Connecticut, richard.langlois@uconn.edu
Richard N. Langlois is Professor of Economics and Director of Undergraduate Studies in the Department of Economics at the University of Connecticut. He was educated at Williams, Yale, and Stanford. Before coming to Connecticut in 1983, he was affiliated with the Center for Science and Technology Policy and the C. V. Starr Center for Applied Economics at New York University. Professor Langlois’s principal research area is the economics of organization. He is the author (with Paul L. Robertson) of Firms, Markets, and Economic Change: A Dynamic Theory of Business Institutions (London: Routledge, 1995), which articulates (among other things) the theory of dynamic transaction costs and the theory of modular technological systems.
Another focus of Professor Langlois’s work has been the economic history of technology. He has written on such industries as computers, semiconductors, semiconductor manufacturing equipment, and software. His history of the microcomputer industry won the Newcomen Award as the best article in Business History Review in 1992. Recently, Professor Langlois has turned his attention to explaining the changes in corporate organization in the late twentieth century, a set of phenomena he refers to as the Vanishing Hand. His latest book, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007), received the 2006 Schumpeter Prize of the International Joseph A. Schumpeter Society. Also in 2006, Professor Langlois received a Provost’s Research Excellence award from the University of Connecticut; and in 2007 he received the University of Connecticut Alumni Association Faculty Excellence Awardin Research (Humanities/Social Sciences).
Business Groups as Natural States
In the United States and a few other developed countries, firms tend to be freestanding units that are widely held, and their subsidiaries are generally unlisted and wholly owned. But those forms are in fact a relative oddity when considered from a global perspective (La Porta et al. 1999). Most often in history and around the world, business activity is organized in groups, pyramids of listed and unlisted firms, generally but not always under family control. In a sense, it would seem, there is something "natural" about pyramidal groups: they seem to crop up whenever governments do not take active measures to beat them down (Morck 2010). North, Wallis, and Weingast (2009) have recently put forward a theory of what they call the natural state. This form of state is "natural" in the same sense that a family firm or a pyramidal group might be considered "natural": it is the default form of organization. The essay I propose will scrutinize in much greater detail the analogy between business groups and natural states. It will do so by considering whether we can understand business groups as themselves examples of natural states.
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