Elinor Ostrom Wins Nobel Prize in Economics
The
Royal Swedish Academy of Sciences announced today that it awarded The Sveriges Riksbank Prize in Economic Sciences
in Memory of Alfred Nobel for 2009 to Elinor Ostrom and Oliver E. Williamson.
Dr. Ostrom's work has challenged traditional ideas of how common property can be managed. In general terms, economists have approached the management of common property in one of two ways: government bodies are best suited to managing resources for the common good; or private markets are more efficient at managing commons. The ongoing political battles over the environment provide a clear example of these two schools of thought. On the one hand, most environmental groups support government management of natural resources, such as forest and fisheries. Their arguments are countered by commercial interests and property-rights advocates who maintain that stewardship of such resources is best accomplished by private interests.
Dr. Ostrom's work, based on many specific studies, examines how users of resources can cooperate in managing resources, with outcomes that generally exceed the predictions of standard theories. She highlights how groups of users, sometimes with competing interests, can work together to develop quite complex management schemes that help the group make decisions and resolve conflicts. As we pointed out in other articles, some of the most interesting work in economics in recent decades has been around how many decision-making processes operate outside of the boundaries of traditional economic theory, whether it be such areas as behavioral economics or the areas that Dr. Ostrom has brought to light.
By now, you must be wondering what her work has in common with marketing. Well, for one, social media represent a good analogy in which a community of users develop sophisticated rules and mechanisms for managing a common resource.
On Wikipedia, users with a shared interest in a topic often bring divergent viewpoints about a subject. For example, on an article about a musical group, some contributors may be ardent fans, while others are vehement detractors. In some cases, there are intense battles between authors over content, but there are community rules and norms that eventually result in more balanced and complete articles. In fact, the more participants there are, the more likely the article will be balanced.
Chris Anderson described the Wikipedia phenomenon this way in The Long Tail:
"In the popular entries with many eyes watching, Wikipedia shows a remarkable resistance to vandalism and ideological battles. On study by IBM found that the mean repair time for damage in high-profile Wikipedia entries such as 'Islam' is less than four minutes. This is not the work of the professional encyclopedia police. It is simply the emergent behavior of a Pro-Am swarm of self-appointed curators. Against all expectations, the system works brilliantly well." [The Long Tail, revised edition. 2008. p. 70]
Wikipedia's arbitration council intervenes when authors cannot resolve
disputes or blatantly partisan in their entries, as it did recently
around articles concerning Scientology, which in turn set off a debate among bloggers about whether Wikipedia was being too heavy-handed.
Technology has enabled many other examples, ranging from open-source software development...to Facebook and Twitter...even to Google. All of them share the same elements: users acting in both their own interest and that of the community (although not always at the same time) and a basic set of rules and shared etiquette that govern behavior and mediate disputes. Once such phenomena reach critical mass, their influence is often surprising: think about the Linux operating system's presence in corporate IT, the success of Google's IPO, or the sheer number of users on Facebook and Twitter.
Marketers are both excited and apprehensive about such self-organizing communities. On the one hand, each community is seen as a potential marketing channel, but on the other, unfavorable opinions about a company can now propagate rapidly. As a consequence, marketers are still trying to feel their way through this social order.
Dr. Ostrom's work in another field, as well as that of other researchers, suggests that user-organized groups are far less chaotic than they appear. As a consequence, companies should work to understand the underlying mechanisms of social behavior before wading into social marketing under the assumption that it is like any other channel.
To view a representative bibliography of Dr. Ostrom's work, visit her page at Indiana University's web site.
Posted at 07:14AM Oct 12, 2009
by David King in General |
