Beyond Gaussian Averages: Redirecting Management Research Toward Extreme Events and Power Laws
Practicing managers live in a world of â€˜extremesâ€™ but management research is based on Gaussian statistics that rule out those extremes. On occasion, deviation amplifying mutual causal processes among interdependent data points cause extreme events characterized by power laws. They seem ubiquitous; we list 80 kinds of them â€“ half each among natural and social phenomena. We draw a â€˜line in the sandâ€™ between Gaussian (based on independent data points, finite variance and emphasizing averages) and Paretian statistics (based on interdependence, positive feedback, infinite variance, and emphasizing extremes). Quantitative journal publication depends almost entirely on Gaussian statistics. We draw on complexity and earthquake sciences to propose redirecting Management Studies. No statistical findings should be accepted into Management Studies if they gain significance via some assumption-device by which extreme events and infinite variance are ignored. The cost is inaccurate science and irrelevance to practitioners.
|Date of creation:||19 Jun 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Durham University Business School, Mill Hill Lane, Durham DH1 3LB, England|
Phone: +44 (0)191 334 5200
Fax: +44 (0)191 334 5201
Web page: http://www.dur.ac.uk/business
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tim Bollerslev, 1986.
"Generalized autoregressive conditional heteroskedasticity,"
EERI Research Paper Series
EERI RP 1986/01, Economics and Econometrics Research Institute (EERI), Brussels.
- Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
- Carley, Kathleen M., 1996. "A comparison of artificial and human organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 31(2), pages 175-191, November.
- S. Battiston & M. Catanzaro, 2004. "Statistical properties of corporate board and director networks," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 38(2), pages 345-352, 03.
- Forni, Mario & Lippi, Marco, 1997. "Aggregation and the Microfoundations of Dynamic Macroeconomics," OUP Catalogue, Oxford University Press, number 9780198288008, December.
- repec:cai:popine:popu_p1977_32n1_0298 is not listed on IDEAS
- repec:cai:popine:popu_p1977_32n1_0034 is not listed on IDEAS
- Zanette, Damián H & Manrubia, Susanna C, 2001. "Vertical transmission of culture and the distribution of family names," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 295(1), pages 1-8.
- Axelrod, Robert & Bennett, D. Scott, 1993. "A Landscape Theory of Aggregation," British Journal of Political Science, Cambridge University Press, vol. 23(02), pages 211-233, April.
- repec:cai:popine:popu_p1977_32n1_0130 is not listed on IDEAS
- Nonaka, Ikujiro & Nishiguchi, Toshihiro, 2001. "Knowledge Emergence: Social, Technical and Evolutionary Dimensions of Knowledge Creation," OUP Catalogue, Oxford University Press, number 9780195130638, December.
- Abraham Ravid, S., 2004. "Hollywood Economics: How extreme uncertainty shapes the film industry, Arthur De Vany; Routledge, London and New York, 2004, pages xvi + 308, ISBN 0-415-31260-4 (hbk), $135.00, 0-415-31261-2 (pbk), $3," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 895-898, December.
- Levy, Moshe & Solomon, Sorin, 1997. "New evidence for the power-law distribution of wealth," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 242(1), pages 90-94.
When requesting a correction, please mention this item's handle: RePEc:dur:durham:2006_03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IT Office)
If references are entirely missing, you can add them using this form.