Assumptions of Rationality and Equilibrium in Strategy Research: The Limits                of Traditional Economic Analysis

Bromiley, Philip; Papenhausen, Chris

doi:10.1177/14761270030014003

Cited by 75 publications

(40 citation statements)

References 62 publications

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“…Firms are seen as atom-like entities aiming to gain above-normal profits in unmediated competition with other firms in a shared market. The RBV assumes firms are profit maximizing entities directed by boundedly rational managers operating in distinctive markets that are to a reasonable extent predictable and moving towards equilibrium (Bromiley & Papenhausen, 2003;Leiblein, 2003). It accepts that information about the future value of a resource is asymmetrically distributed.…”

Section: The Rbv and Its Critiquesmentioning

confidence: 99%

The Resource-Based View: A Review and Assessment of Its Critiques

Kraaijenbrink

Spender

Groen

2009

Journal of Management

1,062

789

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ACKNOWLEDGEMENTSWe express our gratitude to Michael Leiblein and two anonymous Journal of Management reviewers for their outstanding and developmental feedback. We also thank three anonymous reviewers of the Annual meeting of the Academy of Management (2007) THE RESOURCE-BASED VIEW: A REVIEW AND ASSESSMENT OF ITS CRITIQUES ABSTRACTThe resource-based view (RBV) of the firm has been around for over twenty years -during which time it has been both widely taken up and subjected to considerable criticism. We review and assess the principal critiques evident in the literature, arguing they fall into eight categories.We conclude the RBV's core message can withstand criticism from five of these quite well provided the RBV's variables, boundaries and applicability are adequately specified. Three critiques that cannot be readily dismissed call for further theorizing and research. They arise from the indeterminate nature of two of the RBV's basic concepts -resource and value -and the narrow conceptualization of a firm's competitive advantage. As our suggestions for this work indicate, we feel the RBV community has clung to an inappropriately narrow neo-classical economic rationality thereby diminishing its opportunities for progress. Our suggestions may assist with developing the RBV into a more viable theory of competitive advantage, especially if it is moved into a genuinely dynamic framework.

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Section: The Rbv and Its Critiquesmentioning

confidence: 99%

The Resource-Based View: A Review and Assessment of Its Critiques

Kraaijenbrink

Spender

Groen

2009

Journal of Management

1,062

789

View full text Add to dashboard Cite

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“…We need process thinking because traditional cross-sectional models provide a partial picture of the world that evacuates the role of time (Tsoukas and Hatch, 2001) and assumes an equilibrium state (Bromiley and Papenhausen, 2003;Meyer et al, 2005). The presence of equilibrium is itself belied by the very attempts to apply such models to influence dependent variables such as financial performance or competitive advantage.…”

Section: Why Process Thinking Is Neededmentioning

confidence: 99%

Process thinking in strategic organization

Langley

2007

Strategic Organization

302

219

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We need more process thinking in research on strategic organization. Others have said this before in different ways (Meyer et al., 2005;Pettigrew, 1992;Van de Ven, 1992), but when one looks at the majority of empirical work published in the major journals in strategy, it seems that the message bears repeating. Even Strategic Organization, a journal that represents an ideal outlet for this type of research and which, according to the editors, actively welcomes it, has been able to publish only a limited number of empirical articles that embody what I would call process thinking over the first four years of its existence -in my estimate, no more than one or two articles per year. This essay summarizes the case for more process thinking in strategic organization, suggests some ideas for making process thinking more central, and draws attention to some illustrative studies that have shown the way. I begin, however, with a definition. What do I mean by process thinking?Unfortunately, the word 'process' has come to take on such a variety of meanings that communication can be difficult. I do not want to embark on a taxonomic discussion here, as others have done this before (Chia and Langley, 2004;Van de Ven, 1992;Van de Ven, 2005), but I do need to specify what I mean by process thinking in this essay. For me, process thinking involves considering phenomena dynamically -in terms of movement, activity, events, change and temporal evolution. This corresponds to Van de Ven's (1992) third definition of process (the other two being process as an explanation of a relationship and process as a variable). This is also intended to be inclusive of weaker and stronger views of process as described by Chia and Langley (2004). Thus, process thinking may involve consideration of how and why things -people, organizations, strategies, environments -change, act and evolve over time (perhaps expressed best by Andrew Pettigrew [1992: 11] as catching 'reality in flight') or, adopting a more radical process ontology, how such 'things' come to be constituted, reproduced, adapted and defined through ongoing processes (nicely expressed in Tsoukas and Chia's [2002] reference to 'organizational becoming').

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“…1 Yet even as they acknowledge the vital role disequilibrium processes play in competitive entrepreneurial markets, most scholars still privilege equilibrium, whether implicitly or explicitly, by invoking theories based on competitive equilibrium (Alvarez and Busenitz 2001;Knott 2003), punctuated equilibrium (Schumpeter 1934;Haveman et al 2001;Tan 2007), or equilibrium seeking (Kirzner 1973;Shane and Venkataraman 2000;Aldrich and Ruef 2006). Scholars in organization theory (Meyer et al 2005) and strategy (Bromiley and Papenhausen 2003) have pointed out this contradiction and the problems it raises in the context of their own fields. In the field of entrepreneurship, however, it has gone virtually unnoticed.…”

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confidence: 99%

Dynamic Creation: Extending the Radical Austrian Approach to Entrepreneurship

Chiles

Tuggle

McMullen

et al. 2009

Organization Studies

114

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We develop a new perspective on entrepreneurship as a dynamic, complex, subjective process of creative organizing. Our approach, which we call ‘dynamic creation’, synthesizes core ideas from Austrian ‘radical subjectivism’ with complementary ideas from psychology (empathy), strategy and organization theory (modularity), and complexity theory (self-organization). We articulate conjectures at multiple levels about how such dynamic creative processes as empathizing, modularizing, and self-organizing help organize subjectively imagined novel ideas in entrepreneurs’ minds, heterogeneous resources in their firms, and disequilibrium markets in their environments. In our most provocative claim, we argue that entrepreneurs, by imagining divergent futures and (re)combining heterogeneous resources to create novel products, drive far-from-equilibrium market processes to create not market anarchy but market order. We conclude our exposition of each dynamic creative process by offering one possible direction for future research and articulating additional conjectures that help point the way. Throughout, we draw examples from CareerBuilder—a firm that has played a major role in creating and shaping the online model in the job search/recruiting industry—and its industry rivals (e.g. Monster, Yahoo’s HotJobs) to illustrate selected concepts and relationships in dynamic entrepreneurial creation.

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Assumptions of Rationality and Equilibrium in Strategy Research: The Limits of Traditional Economic Analysis

Cited by 75 publications

References 62 publications

The Resource-Based View: A Review and Assessment of Its Critiques

The Resource-Based View: A Review and Assessment of Its Critiques

Process thinking in strategic organization

Dynamic Creation: Extending the Radical Austrian Approach to Entrepreneurship

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