Behavioral Strategy in Perspective

Mie Augier, Christina Fang, Violina Rindova, Mie Augier, Christina Fang, Violina Rindova

• Publisher: Emerald Publishing Limited
• Year: 2018
• Print ISBN: 9781787563483
• eBook ISBN: 9781787563490
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Behavioral strategy has evolved as a field the last decades both intellectually and institutionally. This volume brings together scholars from several generations that have led and defined the behavioral approaches in strategy to reflect on the past, present, and future of behavioral strategy. Thus, rather than seeking empirical contributions that would fill in research gaps and expand research in specific domains, we endeavored to: a) represent the diversity of perspectives that inform behavioral research in strategic management; b) open up a space for reflection and provocation by scholars who are widely recognized as thought leaders both in their respective strands of behavioral strategy research, and in the field as a whole; and c) offer a set of perspectives and directions for the field of behavioral strategy at a pivotal moment in its evolution.

PART I
THE FIELD OF BEHAVIORAL
STRATEGY AND ITS EVOLUTION

SOME THOUGHTS ON THE DEVELOPMENT OF DISCIPLINES, WITH PARTICULAR ATTENTION TO BEHAVIORAL STRATEGY

James G. March

ABSTRACT

The earliest contributors to discussions of strategy were advisors to military leaders, and that model was carried into early business schools, where the teachers of strategy were, for the most part, people with extensive experience as executives or advisors to them. The key course materials were anecdotes and cases, and the standard intellectual discourse was organized around recollected episodes in organizational history. The central contributions of the early teaching of strategy were consciousness of the complications introduced by complexity, competition, and attention to the second-order surprises of intentional action. There was neither a pretense of theory nor a significant involvement in research.

Although it shared in the onus of a general academic skepticism about the academic legitimacy of research on business, the “discipline” of strategy sought to emulate the attributes of more established disciplines. The new field was typified by an early open interdisciplinary flavor that facilitated the differentiation of a new field, and a subsequent refinement that restricted access. By the start of the twenty-first century, this process had run much of its course, and the field of strategy had taken its place as a reasonably respectable academic specialty. The history of an emphasis on real organizations in real situations led to an openness to anchors drawn from sources other than conventional economics. These included particularly the theory of games, the evolutionary theory of the firm, and the behavioral theory of organizations.

The struggle for respectability in economics was repeatedly frustrated by the difficulty of discovering a formulation that honored the litany of economics while fitting the observations of real strategy making. The future seems likely to be more of the same, a combination of efforts to secure recognition through emulation of the standards and barriers to entry that characterize established disciplines, and of exploratory gambits that are mostly destined to be forgotten. The optimal balance is likely to be as elusive as it is in other domains.

Keywords: Intellectual history; disciplines; exploration; academic legitimacy; exploitation; behavioral strategy

There are enough definitions of strategy available to make the definition of “behavioral strategy” a particularly uncertain one. My response to this uncertainty is to limit myself to a minimalist definition by which strategy is a plan for future action that emphasizes outcomes in the relatively distant future and outcomes that depend to an important extent on the actions of adversaries taken in response to one’s own. The study of strategy seeks for the most part to discover an approach to strategy that leads to favorable outcomes. The behavioral study of strategy seeks to understand the processes by which strategies are adopted in organizations and the implications of those behavioral characteristics for strategy making.

AN INCOMPLETE HISTORY

The teaching of strategy making in this sense quite easily lays claim to relevance in the training of managers as a component of the teaching of strategy. Although it is not yet admitted to the inner sanctum of academe, “strategy” in business administration is now a scholarly field somewhat remotely analogous to chemistry, philology, and finance. It was not always so. The earliest contributors to discussions of strategy were advisors to military leaders, and that model was carried into early business schools, where the teachers of strategy were, for the most part, people with extensive experience as executives or advisors to them. The key course materials were anecdotes and cases, and the standard intellectual discourse was organized around recollected episodes in organizational history.

The teaching of strategy was embedded in schools of applied economics or business. Economics has long been typified by some uncertainty about whether its theory should be seen as a guide to intelligent economic behavior or as a predictor of actual behavior. In modern practice, the distinction is blurred by the assumption, sometimes made explicit but sometimes not, that competition for survival assures that the actual behavior of survivors will approximate the optimal, and theories of optimal behavior can be used to predict actual behavior. At least 90% of contemporary economics follows that route.

The optimal behavior that is postulated in almost all modern economics is some variation of means-end rationality, the idea that intelligent individuals and organizations maximize expected subjective returns. Such behavior is both recommended and predicted for economic actors. The central contributions of the early teaching of strategy were consciousness of the complications introduced by complexity, competition, and attention to the second-order surprises of intentional action. Clausewitz wrote of the “fog of war.” There was neither a pretense of theory nor a significant involvement in research.

This changed gradually during the last half of the twentieth century and the first decade of the twenty-first. Although it shared in the onus of a general academic skepticism about the academic legitimacy of research on business, strategy became a recognized subspecialty of business administration. As such a field, it claimed authority to recruit and appoint new colleagues to professorial positions. Scholarly journals appeared, as did scholarly associations. Research dissertations purporting to contribute to strategy as a scholarly field appeared at major research institutions.

The search for order was entirely conventional. The “discipline” of strategy sought to emulate the attributes of more established disciplines. It created scholarly journals with peer-review procedures and (gradually) shared understandings of the characteristics of quality research. As the journals differentiated themselves with respect to standards, so also did individual scholars differentiate themselves by publishing in them. The field laid claim to academic positions that became the possession of properly anointed scholars who gained control of entry to those positions and who began to supervise the advanced training of new entrants to the field and to positions within it. They created professional associations that managed the careers of members of the field, establishing and maintaining standards of merit.

By the start of the twenty-first century, this process had run much of its course, and the field of strategy had taken its place as a reasonably respectable academic specialty. It had neither the cachet nor the history of the great academic disciplines, but it had standing. The story was very similar to the stories that could be told of academic fledglings such as biochemistry and sociology. In each case, the new field was typified by an early open interdisciplinary flavor that facilitated the differentiation of a new field, and a subsequent refinement that restricted access. Strategy had substantially molded an understanding of a field with reasonably well-established terms of discourse, career lines, and rights to academic positions. That shaping of the field led strategy to a position rather close to economics. An important part of this development drew from the writings of Michael E. Porter and his five forces analysis, which was an outgrowth of industrial organizational economics.

It would be a mistake to see this history as primarily a consequence of intended, rational choices. The directions of action that have distinguished the development of strategy and behavioral strategy as quasidisciplines has been little determined by conscious rational choice, but have arisen from the somewhat less rational ways decisions happen in organizations (March, 1994). In particular, the field’s voyage in academic waters led to experimentation with several possible academic anchors. There was an obvious link to economics and to rational theories of choice, but the history of an emphasis on real organizations in real situations led to an openness to anchors drawn from other sources. Three quite varied deviant theoretical gambits become particularly important. The first was the theory of games (Von Neumann & Morgenstern, 1944). Game theory provided a thoroughly respectable framework that had an emphasis on rationality, competition, and the long run. The second anchor was the evolutionary theory of the firm (Nelson & Winter, 1982). Evolutionary theory, with its emphasis on ecological interactions, complexity, and effects, led to greater awareness of industry-wide and community-wide consequences of strategic choices made by individual firms. The third anchor was the behavioral theory of organizations (Cyert & March, 1963). By focusing on how decisions actually occurred in modern organizations, this anchor moved the field a bit from its normative premises and legitimized the term “behavioral strategy” as focused on efforts to understand how strategies evolved in actual organizations.

TALES OF SUCCESS AMONG TALES OF FAILURE

The story is extremely conventional and could be written with only modest idiosyncratic features for virtually any established scholarly discipline in the western world. Most of the survivors have followed similar routes. They begin with relatively precarious combinations of previously separate components, gradually build acceptance as autonomous specialties, and then construct standards and rules that provide barriers against entry. It is a process that typically has involved building independent disciplinary status.

The most conspicuous success story within schools of business is the story of finance. Finance has long been a field of instruction in business schools, originally taught primarily by experienced financial officers with a modicum of economics and numerous practical examples. When, in the 1950s and 1960s, there was a flowering of fundamental ideas, concepts, and models, including behavioral finance, the field became a recognized specialty within economics, with confirmation through Nobel prizes.

The story of finance is a story of success in academic terms. Not all of the stories have been a success. Not all of the would-be scholarly disciplines that have appeared have reached the pinnacle of uniformity that allowed them to survive. Some scholarly start-ups failed. A perusal of college catalogs over the 30 years following World War II will reveal numerous academic initiatives that failed to survive. For the most part, they are forgotten, and history remains primarily a history of success and survival; but the failures are also informative.

Some of the unsuccessful post-World War II initiatives were derivatives of the behavioral science movement in the 1940s, 1950s, and 1960s. This movement, which captured a good deal of academic and financial support, was built on war-time successes. It emphasized interdisciplinary research and the use of mathematics in data analysis and theory building. It shaped an era in which such research was heavily favored and in which several new academic bailiwicks became established, including policy schools and statistics departments.

One conspicuous disciplinary initiative in the social sciences during this period was the Harvard University Department of Social Relations, an interdisciplinary collaboration among three of the social science departments at Harvard University (anthropology, psychology, and sociology) beginning in 1946. The department flowered, had a distinguished history, but ultimately (by the 1970s) died.

In most academic dimensions, the Harvard Department of Social Relations was a success. The department was successful both in recruiting distinguished faculty,¹ and in attracting and graduating productive and imaginative doctoral students.² Despite these successes, the program disaggregated into its component departments around 1972, after about 25 years of distinction. There are many possible explanations for the failure to survive; but most conspicuously, the Harvard Department of Social Relations did not create idiosyncratic conceptions of scholarly virtue and did not replicate itself significantly as an organization. Its graduates found themselves, for the most part, employed in conventional disciplinary departments. As a result, there was no sustained development of a differentiated discipline. The psychologists from the Department of Social Relations thought of themselves as psychologists and found jobs and published primarily in psychology; the sociologists in sociology; and the anthropologists in anthropology. Departments of Social Relations did not thrive away from Harvard.

A somewhat similar, though fuzzier, history can be found within business schools. A quasidiscipline of organization studies arose in the 1950s and 1960s, bringing together particularly scholars from psychology and sociology but including also some recruited from political science and economics. The quasidiscipline spawned associations and journals that became important and established itself as a recognized subcomponent of the business school intelligentsia. In the process, the study of organizations merged with and often replaced the study of management.

Organization studies had difficulty maintaining stability in the face of three internal dynamics. First, the tendency of organizational psychologists and organizational sociologists to differentiate themselves from ea...

Table of contents

• Cover
• Title Page
• Introduction – Behavioral Strategy: A Quick Account
• Part I The Field of Behavioral Strategy and its Evolution
• Part II Perspectives on Behavioral Strategy and Strategizing
• Part III Behavioral Strategy in Action
• Part IV Epilogue
• Index