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Strategic
Management
and
Determinism
L. J. BOURGEOIS, III
Stanford University
Contingencytheoriesof managementand economic theoriesof industrial
organizationboth contributeto a mechanisticviewof thestrategicmanager
as "analyst." In this view, thesecretto managerialeffectivenessis through
the applicationof scientificlaws orprinciples, be they "lawsof organiza" Thispaperarguesfor a viewof strategic
tion" or "lawsof themarketplace.
managementas a creativeactivityand suggestsa dialecticbetweenfree will
and determinismin conceptualizationsof strategicbehavior.
Threestrandsof thought seem to relegate"management" to a reactive-adaptiveprison of deterministiccircumstances.On one hand, organization
theory evolved to the point that the embracingof
open-systemsperspectivesled to the recentvogue of
contingencytheoriesthat posit "one best way" for
each of variouscircumstances(Kast& Rosenzweig,
1974)and to populationecologymodelsof organization survivalbasedon environmental"fit" (Aldrich,
1975).In this view, the rightcombinationof organizationaldesignvariables,matchedwithparticularenvironmental states (e.g., turbulence), will yield
superiorperformance.
Thetraditionof industrialorganizationeconomics
is similar: industry structure(e.g., concentration
ratio)combineswithaggregatefirmconduct(combination of factorsof production)to yield some level
of industryprofitability.Applicationof this viewto
the individualfirm level has led to studiesattempting to indicatewhichcombinationof environmental
and firm-specificvariableswill yieldsuperiorperformance(Hambrick,MacMillan,& Day, 1982;Schendel & Patton, 1978).
On anotherhand, policyanalystssay that policies
are "really"formedthroughan incrementaland/or
politicalprocessand that attemptsat rationalplanningare futile(Braybrooke& Lindblom,1970;Cyert
& March, 1963).This school suggeststhat the limits
to humanand organizationalrationalityrelegatethe
policymakerto the role of arbiter or reactor, exploitingopeningsas they occur amidstthe furor of
politicalmaneuveringin orderto make incremental
steps toward some goal; it has even gone so far as
to suggest that good managersavoid articulating
DeterministicImperativesfor Management
Determinismin OrganizationTheory
The organizationtheory literatureis repletewith
deterministiccontingencytheoriesin whichthe role
of humanchoice is relegatedto a place quite secondaryto the imperativesof environmentalturbulence
(Burns& Stalker, 1961;Lawrence& Lorsch, 1967);
technologicalprocesses(Perrow, 1967;Woodward,
1965);sizeandownership(Blau, 1970;Pondy, 1969);
information processing requirements(Galbraith,
1973);or naturalselectionprocesses(Aldrich,1975;
Hannan& Freeman,1977).For example,postulated
relationshipsregarding"goodnessof fit" considerations betweenorganizationsand environmentimply
586
whichpersonalintentionsdo guideindividual(micro)
behaviors, and systemic rationality, in which inten-
composedof numerouspotentialconsumerswaiting
for the priceto come downand of manycompetitors
striving for product standardizationin order to
achieve the economies of scale necessaryfor cost
reductions.Given the competitivenatureof the industryat this stage and the increasingprice elasticity of the product,the environmentof a firmat this
stage might be characterizedas highly volatile and
uncertain.Note thatthe deterministic
imperativehere
emanates from classical microeconomictheory: in
orderto survivethe growthstage, the firmmustseek
long runeconomiesto scale;the manufacturing
function must be emphasizedin the allocationof financial resourcesand managerialattention.
Hofer's papertook the productlife cycle concept
a step furtherby includinga muchlargernumberof
environmentalvariablesthanillustratedabove(e.g.,
he includesthe type of distributionsystem, nature
of customermotivationto purchase,frequencyof
purchase,etc.), andit concludedwiththe barebeginnings of an inventoryof hypothesesthat posit the
"optimal" businessstrategyfor a given configuration of contingencies.
It is herethat such a deterministicmodel runsinto difficulty. If the scholarsin the field wereto attemptto developfully this inventoryof hypotheses,
they would still be writing them, for, if each of
Hofer'sindependentenvironmentalvariableswereto
be consideredin its simplestform-as a dichotomy
of extremesratherthan a continuum-the number
of contingenciesthat wouldhaveto be accountedfor
would be enormous(Table 1).
Limitationsof DeterministicViews
There is a more fundamentalconclusion to be
drawnfrom the foregoinganalysis:the strategyof
a firmcannotbe predicted,nor is it predestined;the
strategic decisions made by managerscannot be
assumedto be the productof deterministicforcesin
theirenvironments.Any suchassumptionwouldeliminatethe veryneedfor managementbecauseit implies that the strategy of an organizationfollows
moreor lessautomaticallyfroma technicalappreciation of its environmentalsituation.On the contrary,
the very natureof the concept of strategyassumes
a humanagent who is able to take actions that attemptto distinguishone's firmfromthe competitors.
Thisis theveryfoundationof Newman's"propitious
niche"(Newman,1971;Newman,Summer,& Warren, 1972).(Evena literalinterpretation
of the product life cyclemodelimpliesa "shakeout"fromwhich
only a few dominantfirms emerge;they must have
differed in some way from the failures!)
Not onlymustconceptualattemptssuchas Hofer's
reduceto purelysituationaltheoriesof strategy,but
the empiricalworkout of Purduepointsin the same
direction.As anticipatedin theirmodelingof strategy
in the beerindustry,it was foundthat strategieswere
not homogeneous,but tendedto occurin clustersor
"strategicgroups"of companies(thegroupstended
to reflectthe national,regional,or local orientations
of the memberbrewers).However,fromthe original
sampleof 13 firmsemerged6 groups:withan average
of little morethan 2 firmsper "group,"the attempt
virtuallyresultedin a case-by-casedescription(Hatten et al., 1978).
Similarresultsare producedby researchusingthe
Profit Impactof MarketStrategies(PIMS)database
(Buzzell,Gale, & Sultan, 1975).Originallyset up to
searchfor the "laws" that governbusinessprofitability, the only generalizable"law" is that the major determinantof profits is market share. Most
Table 1
Strategic Contingencies for PLC Stages
PLC Stage
Introduction
Growth
Maturity
Saturation
Decline
Number of
Variablesa
Resulting Number
of Contingenciesb
6
13
21
26
17
64
8,200
2,097,000
67,109,000
131,000
Table 2
Summaryof DeterministicViews
Field
Information requirements
Natural selection
Policy
Existing strategy/structure
Blau (1970);
Pondy (1969)
Perrow (1967,
1970); Woodward (1965)
Duncan (1972a,
1972b);
Lawrence &
Lorsch (1967)
Galbraith (1977)
Aldrich (1975)
Dye (1975);
Bourgeois &
Brodwin (in
press)
Cyert & March
(1963); Lindblom (1959)
Murray (1978)
Carter (1971)
Hofer (1975)
Hatten et al.
(1978), Schendel
& Patton (1978)
Market share
Buzzell et al.
(1975)
Power of suppliers and buyers Porter (1979a)
Mobility barriers
Caves & Porter
(1977)
590
view of things, the independent variables of contingency theory comprise only one subset of the multiple points of referencewhich constitute the total frame
of reference of decision makers. As such they act
merely as partial constraints which may potentially
affect decision making if the decision maker believes
they are important. Contextual factors are therefore
subsumed as premises within the more global process
of strategic decision making. The advantage of this
shift in the level of analysis is that it identifies other
important referents which enter and influence the
decision making process. Most significantly, it allows
for a consideration of the part played by premises
which reflect the goals and interests of those who
make the decisions. . . Viewed from this angle, the particular environment, size, and technology which ensue from these decisions are artifactual manifestations
of managerial policy, rather than immutable constraints determining what is possible (Bourgeois &
Astley, 1978, pp. 9-10).
Adopt a DialecticalView
Most strategicmanagementresearchersundoubtedly are sympatheticto the argumentthat it is the
"degreesof strategicfreedom" that are important
ratherthanan absolutechoicebetweendeterminism
and free will. Yet, researchtraditionframesthinking in deterministic logic. It is argued that a
philosophicalstance should be adoptedthat allows
for free will and creativitywhen models are constructedfromempiricaldata.An exampleof thiskind
of inductivethinkingis foundin Burgelman's(1983)
work, in whichhe conceptualizesthe (free-will)notion of "autonomous strategic behavior" taking
place within (otherwisebureaucratic)firms.
This does not meanthat dialecticlogic shouldoccur only withinthe mindsof individualresearchers;
it can and shouldproceedamongstrategicmanagementresearchers
whosetrainingcomesfromdifferent
disciplines(Jemison, 1981). As Marchreports,the
latter has precedentin the developmentof theories
of choice,in which"behavioral[descriptive]
andnormativetheorieshave developedas a dialecticrather
than separatedomains" (1978, p. 588).
RecognizeReciprocalCausality
Conclusions
This paper has arguedfor a shift in the way researchin strategyis conductedin order to encompassthe creativeactivityimpliedin its management.
This entailsa suspensionof traditionallinearthinking and the adoptionof a dialecticalpoint of view.
This is not a unique perspective;in fact, the seeds
are alreadypresent:
Causeandeffect, meansandends, seedandfruitcannot be severed;for the effect alreadyblooms in the
cause,the end preexistsin the means,the fruitin the
seed.
[RalphWaldo Emerson]
CombineQuantitativeand QualitativeResearch
Whereverpossible, large sample "quantitative"
researchshouldbe combinedwithgood historicalor
clinicalanalyses.In this manner,the researchercan
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