Penn Economic & Organizational Sociology

Working Paper Abstract Series

Vol. 1 No. 4

July 2001


Editorial Board:

Beth Bechky, Randall Collins, Paula England, Mauro Guillén, Douglas Massey, and Marshall Meyer.


Published by the Penn Economic Sociology & Organizational Studies Group (PESOS).

© 2000, 2001 Trustees of the University of Pennsylvania.


For previous issues, please visit our website:




Our editorial policy appears at the end of the Newsletter.


To add your email address to the distribution list or to stop delivery:

Go to


Please feel free to forward this Newsletter to colleagues and friends.





Pricing Process as a Capability: A Resource Based Perspective

Dutta, Bergen & Zbaracki


Henisz & Delios

Uncertainty, Imitation, and Plant Location: Japanese Multinational Corporations, 1990-96


Yakubovich, Granovetter & McGuire

Electric Charges: The Social Construction of Rate Systems







Pricing Process as a Capability: A Resource Based Perspective


Shantanu Dutta,

Department of Marketing

University of Southern California

Mark Bergen

Carlson School of Management

University of Minnesota

Mark Zbaracki

The Wharton School

University of Pennylvania


Paper available from:




From a resource-based view a central response to the strategic problem of generating rent is value creation. Firms create value by accumulating resources and capabilities which other firms cannot imitate and for which other firms cannot trade or substitute other assets. Even if a firm has created value, however, it is not a foregone conclusion that the firm will capture the potential rents by setting the right prices. Rather, firms must develop that ability. Most views of pricing assume that a firm can readily set appropriate prices. We argue pricing is a capability, so a firm must invest in resources and routines in order to set prices effectively. We base our argument in a study of the pricing process of a large, Midwestern manufacturing firm. We show that pricing resources, routines, and skills may help or inhibit a firm in setting the right price—and hence in extracting value from a strategy. Our view of pricing as a capability contributes to the resource-based view by suggesting that strategists consider the portfolio of value creation and value extraction capabilities a firm uses to create competitive advantage. Our view of pricing as a capability also contributes to economics because it suggests that strategic decisions about pricing capabilities have important implications for a fundamental economic action, determining the “right” price. Without effective pricing capabilities, firms may set the wrong price and both the firm and society lose creative possibilities because resources are used ineffectively. This takes the resource-based-view straight to the heart of what is perhaps the central economic question, the best use of resources.




Uncertainty, Imitation, and Plant Location: Japanese Multinational Corporations, 1990-96


Witold J. Henisz

The Wharton School

University of Pennsylvania

Andrew Delios

Department of Business Policy

National University of Singapore


Paper downloadable from:




This paper combines neoinstitutional theory and research on the institutional environment to explain the process of organizational entry into new geographic markets.  We extend neoinstitutional theory's proposition that prior decisions and actions by other organizations provide legitimization and information to a decision marked by uncertainty, by showing that the prevalence of this effect varies across imitation modes as determined by levels of organizational and market uncertainty. We exploit interorganizational cross-sectional and inter-temporal variation in organizational uncertainty, to demonstrate not only that mimetic strategies are pursued, but also that they are more commonly pursued when the level of uncertainty is high.  To test the influence of structural market uncertainty in the institutional environment, we rely upon observable inter-temporal and cross-national differences in the structure of a country’s political environment to craft an internationally comparable measure of policy uncertainty in a potential host country.  We test these ideas on a sample of international plant location decisions for the population of listed Japanese multinational corporations, across a possible set of 155 countries in the 1990-1996 period.




Electric Charges: The Social Construction of Rate Systems


Valery Yakubovich

Department of Sociology

Stanford University

Mark Granovetter

Department of Sociology

Stanford University

Patrick McGuire

Department of Sociology

University of Toledo


Paper available from:




Price is a central analytic concept in both neoclassical and old institutional economics. Combining the social network perspective with old and new institutionalist approaches to price formation, this paper examines technological, economic, institutional, and political factors which shaped the earliest pricing systems for electricity used in the US, between 1882 and 1910.  We show that certain characteristics of electricity supply led to ambiguities in how the product should be priced, that created consumer skepticism about legitimacy of pricing, and to a politics of pricing among electricity producers. In particular, we investigate why the “Wright system”, arguably inferior in productive efficiency to other alternatives, was widely adopted by 1900. We argue that this outcome resulted in part from the political and organizational clout of its supporters, as well as from their particular conceptions of the boundaries and future of the industry itself. The Wright system best suited the “growth dynamic” strategy promoted by the managers of large central stations in their fierce competition with smaller and more decentralized installations. Thus, even in this apparently highly technical and mainly economic issue of how to price the product, there was ample room for social construction and political manipulation. The outcome reached was by no means inevitable and had a highly significant impact on the shape of the American industrial infrastructure.






A. Titles & Abstracts of working papers by social scientists actively engaged in research will be considered for inclusion in the Newsletter, provided they meet these criteria:


  1. Papers must be scientific in nature.
  2. Papers must not use inappropriate or discriminatory language.
  3. Papers must address a topic related to economic sociology, work, occupations, professions, or organizations.
  4. Papers must be at least 15 double-spaced pages long.
  5. Papers must not have been yet published, although they may have been accepted for publication at a future date.


B. The editors reserve the right not to include papers that fail to meet any of the above criteria.


C. The papers accepted for inclusion in the Working Paper Series are not refereed. Rather, the role of the editors is to make sure that the criteria under point A above are met.


D. Full-length papers should be submitted in Windows Microsoft Word format to: Abstract submissions without the full-length paper will be returned to authors. Submissions in formats other than Windows Microsoft Word will be returned to authors.


E. Authors of papers accepted for inclusion in the Newsletter are requested to provide:


  1. Their institutional affiliation (if any), and an email contact address.
  2. An abstract of the paper not exceeding 250 words, in Windows Microsoft Word format.
  3. A means for people to obtain the full-length paper. These may include: a website or an email address. Non-electronic media of paper distribution will not be accepted.


F. Authors must respond to all requests for papers promptly. Failure to make the full-length paper available will result in exclusion of the paper from the Working Paper Series.