Strategic management

1. Theory and research in strategic management:
Swings of a pendulum
Robert E. Hoskisson Michael A. Hitt, William P. Wan, Daphne Yiu
(1999)
POON Iris Yee Tung
SKEMA Business School
PhD in Management
Strategy
Citation: Hoskisson, R. E., Wan, W. P., Yiu, D., & Hitt,
M. A. (1999). Theory and research in strategic
management: Swings of a pendulum. Journal of
Management, 25(3), 417-456.

2. Outline of essay
Research Motivation & Objective:
● strategic management has traditionally
focused on business concepts that affect
firm performance
● Review key theories and topics along with
the methods used of the major stages of
developments of strategic management
over the last several decades
Research question
● Has the field of strategic management come back to its roots similar to the
swing of a pendulum?
● How the field will continue to develop in the future?
Method
● Historical overview (tracing the field’s disciplinary roots and depicting
various swings of the pendulum)
Swings of a Pendulum:
Theoretical and
Methodological Evolution in
Strategic Management

3. Historical overview
Early development
a firm’s continued success
is chiefly a function of its
internal and unique
competitive resources
Examples include: Andrews and
his colleagues(Learned et al.,
1965/1969) and Ansoff (1965),
Chester Barnard’s (1938)
Move toward industrial
organization (IO)
highlights Industry
structure and
competitive position in
the industry
Examples include: Porter, 1980,
1985), Bain (1956, 1968) and
Mason (1939).
Move toward
Organizational Economics
From IO to strategic group
research: firm groupings
within an industry, closer to
the firm and direct
competitive rivalry on
boundary relationships
Examples include: M-form
Hill, Hoskisson &Johnson,
Internal governance mechanism
Baysinger& Hoskisson, etc
Rise of RBV
multiplicity of methods to
identify, measure and
understand firm resources,
contribute to sustained
competitive advantages
Examples include: Penrose,
Wernerfelt, Rumelt, etc

4. Early Development
Achievement:
● help define a number of critical concepts and propositions in
strategy, including how strategy affects performance, the
importance of both external opportunities and internal
capabilities, the notion that structure follows strategy, the
practical distinction between formulation and implementation,
and the active role of managers in strategic management
● -Chandler’s : how large enterprises develop new administrative
structures to accommodate growth, and how strategic change
leads to structural change
● -Ansoff: strategic decisions, defined as “decisions on what kind
of business the firm should seek to be in”
● -Andrews and his colleagues: business policy
Research Focus:
● to impart knowledge to practitioners, rather than to pursue
knowledge for scientific advancement
● normative aspect of business knowledge
● identifying and developing the “best practices” for managers
Methodology:
● In-depth case studies of single firms or industries
● If Generalisation is one of the goals, but achieved through
induction, comparative studies)
● Datasource: publicly available sources, internal company
records, and interviews, extensive surveys
Limitation:
● Lack of generalisation
● Examined firms largely as closed systems
Implications:
● a stronger theoretical base and for empirical tests of the
theory to allow generalization
● an open systems approach is necessary.

5. The Swing towards IO Economics
Achievement:
● from inductive, case-studies largely on a single firm or industry,
to deductive, large-scale statistical analyses seeking to validate
scientific hypotheses, based on models abstracted from the
structure-conductperformance (S-C-P) paradigm
● Research on “strategic groups”
● competitive dynamics
● The adoption of the SCP paradigm in SM shifted the research
focus from the firm to market structure
Research Focus:
● mobility barriers or market positions are the critical sources of
competitive advantages that lead to superior performance
● A defining conference event: 1979 at the University of Pittsburgh
organized by Dan Schendel and Charles Hofer
Methodology:
● Schendel and Hatten strongly advocate empirical research
● go beyond the inductive approach and more deductive studies
● commercial databasese PIMPS and COMPUSTAT
Limitation:
● the focus is actually on groups, rather than on firms.
● lack theoretical validity (two untested assertions in strategic group
theory)
● (1) whether strategic groups exist and
(2) whether a firm’s performance depends on strategic group
membership
Implications:
● both theoretical and methodological
● to supplement the more traditional case study with statistical methods.
● ‘a system of generalization to make predictions’ (Friedman, 1953)

6. A Swing Back Toward the Firm: Organizational
Economics
Achievement:
● transaction cost economics & agency theory
● helps swing the strategic management pendulum further
away from the industry level emphasis of the S-C-P
paradigm and toward a firm level of analysis
Research Focus:
● devising appropriate governance mechanisms or
contracts to help reduce transaction or agency costs.
● TCE: multidivisional form (M-form), hybrid forms of
organization, and international strategy, hybrid form of
organization
● Agency theory: innovation, corporate governance and
diversification
Methodology:
● mathematically oriented
● More sophisticated research methods: application of structural
equation modeling
Limitation:
● problem of unobservables: key variables in organizational economics,
such as opportunism and the degree of divergent interests
● Missing piece of TCE and agency theory: ignore idiosyncratic
characteristics of firms that contributed to their competitive advantage
Implications:
● both theoretical and methodological
● to supplement the more traditional case study with statistical
● methods.

7. Back Toward the starting Point: The Resource-based
view
Achievement:
● addresses the fundamental question of why firms are different &
how firms achieve and sustain competitive advantage.
● Research sub-streams also focus on specific types of resources
inside a firm, such as strategic leadership and tacit knowledge.
● Methodologically, the RBV also has helped the field reintroduce
inductive, case-based methods focused on a single or a few
firms into the research to complement deductive, large-sample
● Resource-based theories
● Strategic leadership and strategic decision theory
● Knowledge-based view
Research Focus:
● refocused the field of strategic management on the firm’s
internal characteristics and views firms’ internal resources as
the source of competitive advantages
Methodology:
● RBV emphasizes the idiosyncratic nature of a firm’s
resources and capabilities
Limitation:
● empirical testing of the resource-based theory faces great
challenges
● Proxies may not be valid measures for the underlying
constructs.

8. Research Implications
Theories
● sustainability of firms’ competitive advantages
● importance of dynamic core competencies
● Rapid change in technology and the rise of the information
age
● Issue of globalization
● Importance of the institutional context of international
research
● Stewardship theory
● More integrating multi-level research
Methodology
● The research question and context should dictate the
choice of the appropriate research methods.

9. Thank
you

10. Reference
Hoskisson, R. E., Wan, W. P., Yiu, D., & Hitt, M. A. (1999). Theory and research in strategic management: Swings of a pendulum. Journal of
Management, 25(3), 417-456