February 09, 2004

Olav SorensonLOS ANGELES — Olav Sorenson has been promoted to associate professor of policy at UCLA Anderson School of Management, receiving tenure, which represents a major rite of passage in any academic career. Dr. Sorenson's accomplishments reflect the combination of excellence in research, teaching and service that is required to achieve this advancement. Pursuing three broad lines of inquiry, Dr. Sorenson conducts research in organizational learning, technology management and the relationship between social networks and economic geography. He is probably best known for the last topic in which he is credited with an early investigation that calls into question a long-held assumption. Previously, research in the area accepted the notion that since the same type of firms do cluster in particular locations, it must be good for them to do so. A high-profile example of these industrial districts is Silicon Valley with its dense concentration of high technology corporations. Dr. Sorenson's study compared the companies in these districts with others in different geographic locales and found there is no benefit to the organization in clustering. The evidence indicates it is the existing social networks that actually determine the geographic distribution of entrepreneurial activity in the area, and most start-up owners do not consider location as a factor in their decision-making.

The unique nature of his work has prompted invitations for Dr. Sorenson to present his results at meetings of prestigious associations in his field. In April 2002, he was asked to give the keynote address to the International Schumpeter Society, an academic group devoted to evolutionary economics. Interest in his research has spread wide enough to generate an additional invitation from the Max Planck Society, a research institution in Germany that also focuses on evolutionary economics.

With a background in sociology, Dr. Sorenson actually started thinking about this subject when he was in graduate school, and he will continue to build on the foundation his work has established. One of the next questions he is considering is: Since the firms themselves do not profit from them, what other possible advantages do industrial districts create? The most important concern here is the relationship between the clustering of companies and wage rates, Dr. Sorenson notes. To investigate this interaction, he is using the extensive data available in Danish census records, which provide easy access to recent wages for everyone in the country unlike U.S. records. The answers would assist policy makers in determining whether or not to encourage industrial districts.

Additionally, Dr. Sorenson will continue to look at how social networks impact the success of business enterprises. Another of his studies examines the film industry and the tendency for repeated transactions between specific talent and distribution companies. He questioned whether access to private information is the explanation, based on knowledge that a particular actor's or director's work really is better than others. It appears it is more of a self-confirming hypothesis with the improved performance of a movie actually generated by the increased support invested in it by the distributor, which seems to confirm the outcome they expect. If adjustment is made for this distributor influence, the preferred talent fares no better in the marketplace than anyone else.

Dr. Sorenson's expertise in the entertainment industry also began early in his career when he served as a consultant for a then small local organization that is now the largest provider of pay-per-view for hotel rooms. Reflecting this interest, Dr. Sorenson recently developed and teaches a unique advanced elective course in entertainment management. His initial survey of offerings at other MBA programs did not turn up any similar classes. Dr. Sorenson identified the need for specialized training, because entertainment differs in several ways from traditional businesses currently explored in the MBA curriculum. The course examines the impact of the tremendous almost entirely fixed costs to produce the product, enormous uncertainty about what will sell and the persistent pressure for continuous innovation. For example, a movie's lifespan is only a few weeks and even notoriously short-lived high tech products usually last for years. These unusual conditions create unique challenges for entertainment managers.

Dr. Sorenson will continue his effort to break new ground in his teaching, research and consulting on strategy issues in entertainment and high technology industries.

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