mb-12-39 strategic management and determinism

Strategic Management and DeterminismAuthor(s): L. J. Bourgeois, IIISource: The Academy of Management Review, Vol. 9, No. 4 (Oct., 1984), pp. 586-596Published by: Academy of ManagementStable URL: http://www.jstor.org/stable/258482 .Accessed: 13/01/2015 04:22

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?Academy of Management Review, 1984, Vol. 9, No. 4, 586-596.

Strategic Management and Determinism

L. J. BOURGEOIS, III Stanford University

Contingency theories of management and economic theories of industrial organization both contribute to a mechanistic view of the strategic manager as "analyst. " In this view, the secret to managerial effectiveness is through the application of scientific laws orprinciples, be they "laws of organization " or "laws of the marketplace. " This paper argues for a view of strategic management as a creative activity and suggests a dialectic between free will and determinism in conceptualizations of strategic behavior.

Three strands of thought seem to relegate "management" to a reactive-adaptive prison of deterministic circumstances. On one hand, organization theory evolved to the point that the embracing of open-systems perspectives led to the recent vogue of contingency theories that posit "one best way" for each of various circumstances (Kast & Rosenzweig, 1974) and to population ecology models of organization survival based on environmental "fit" (Aldrich, 1975). In this view, the right combination of organizational design variables, matched with particular environmental states (e.g., turbulence), will yield superior performance.

The tradition of industrial organization economics is similar: industry structure (e.g., concentration ratio) combines with aggregate firm conduct (combination of factors of production) to yield some level of industry profitability. Application of this view to the individual firm level has led to studies attempt- ing to indicate which combination of environmental and firm-specific variables will yield superior performance (Hambrick, MacMillan, & Day, 1982; Schen- del & Patton, 1978).

On another hand, policy analysts say that policies are "really" formed through an incremental and/or political process and that attempts at rational planning are futile (Braybrooke & Lindblom, 1970; Cyert & March, 1963). This school suggests that the limits to human and organizational rationality relegate the policymaker to the role of arbiter or reactor, exploiting openings as they occur amidst the furor of political maneuvering in order to make incremental steps toward some goal; it has even gone so far as to suggest that good managers avoid articulating

policy decisions or goals altogether (Quinn, 1977; Wrapp, 1967).

If one is to follow the dicta of most of these schools, then one faces the prospect of having to suggest that a management interested in influencing the destiny of its organization may as well resign itself to succumbing to the matrix of deterministic forces presented by environmental, technical, and human forces that impinge on its freedom of choice. At best, management becomes a computational exercise. At worst, it becomes a reactive waiting game, exploiting contingencies only as they arise through political forces. Although these views are indispensable for empirical research purposes, it is argued here that their inherent reductionism eliminates much of the richness that characterizes the strategic management process, and that they may constrain the advance- ment of strategic management as an academic discipline.

Deterministic Imperatives for Management Determinism in Organization Theory

The organization theory literature is replete with deterministic contingency theories in which the role of human choice is relegated to a place quite secon- dary to the imperatives of environmental turbulence (Burns & Stalker, 1961; Lawrence & Lorsch, 1967); technological processes (Perrow, 1967; Woodward, 1965); size and ownership (Blau, 1970; Pondy, 1969); information processing requirements (Galbraith, 1973); or natural selection processes (Aldrich, 1975; Hannan & Freeman, 1977). For example, postulated relationships regarding "goodness of fit" considera- tions between organizations and environment imply

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that the design of an organization follows more or less automatically from the degrees of variation and complexity presented by the environment (Dill, 1958; DuBick, 1978; Duncan, 1972a, b). What such theories do is assume that these "contextual" constraints are binding in their effects and dramatically reduce the range of organizational response alternatives to those that will produce the proper "fit" with the independent variable in question.

James Thompson summarizes this view quite suc- cintly in the opening chapter of Organizations in Ac- tion. He argues that "organizations do some of the basic things they do because they must-or else!" (1967, p. 1). Later on, he states that the "variables controlled by the organization are subordinated to the constraints and contingencies it cannot escape" (p. 78, italics added). In contrasting closed-system and open-system strategies for studying organizations, Thompson allows as how the latter lets in more variables than a person can comprehend at one time, resulting in unpredictability and uncertainty, and the former gives the psychological comfort of assuming determinacy. (Although Thompson was referring to the uncertainties faced by an administrator, if one looks closely enough, one notices the author's pur- pose of reducing his own analytical uncertainty by seeking determinacy among the conceptual and empirical schemes available.)

Determinism is one characteristic of the organizational literature cited. Another is reductionism: the studies tend to focus on one independent variable (e.g., degree of turbulence) as it causes managers to manipulate one dependent variable (e.g., structure). (A sociology of science explanation for this will be suggested below.) In addition, the theories generally are derived from static, cross-sectional correlation studies, which present problems of causal inference: these types of analyses assume that the systems being studied are in equilibria. In one study that attemp- ted to correct for both of these limitations, Dewar and Hage (1978) sought theoretical synthesis by ex- amining how rates of change of two independent variables (size and technology) affect the rates of change of two dependent variables (complexity and structural differentiation). But even with a dynamic analysis, they found that explanations for the effects of the two contextual variables together could not be developed. Thus, they were reduced to separate causal models for each independent variable. As argued below, perhaps the pursuit of deterministic explanations forces this reductionism.

Determinism in the Policy Process Literature

In the ubiquitous quest for the reduction of uncertainty, perhaps humans need the variable-reducing function that deterministic theories provide. From within the policy literature come explanations of firm behavior in which managers seek to reduce the number of contingencies and courses of action from which they must choose to respond (Cyert & March, 1963). And although the rational-comprehensive school of policy formulation posits the designing of organizations as the rational process of implemen- ting strategy (Bourgeois & Brodwin, 1984; Galbraith, 1977; Uyterhoeven, Ackerman, & Rosenblum, 1977), organization structures themselves affect future decisions and place constraints on subsequent strategy formation. Dye's (1975) analysis of city government presents an institutional model in which policy outcomes are influenced by which administrative structure (mayor-council or council-manager) is used. Thus, standardized operating procedures, institu- tionalized roles, personal empires, and power relationships interconspire in such a way that only incremental and marginal decisions arrived at through negotiating and sequential attention to goals can suc- ceed in initiating changes. Because massive reorganization normally is regarded as impractical from a cost standpoint, and is severely resisted because of its threat to existing power bases and its effect of renewing uncertainties inherent in the chang- ing of formal relationships, structural inertia gives rise to the incrementalism described by Lindblom (1959). Similarly, competing coalition groups with uncertainty-reducing standard operating procedures promote sequentialism in goal attentiveness and serve as stifling obstacles to comprehensiveness in strategy formulation. The "political forces" effect on strategy so aptly described by Cyert and March (1963) also function vertically within hierarchies to affect policy outcomes by influencing the transmission of information to the policymakers "Carter, 1971).

This "political process" view is deterministic in the sense that policy outcomes are determined by forces beyond the control or cognition of the policymaker; outcomes conforming to prior intentions or proac- tion are, at best, accidental. In a review of models of "rational" choice, March (1978) made the distinc- tion between models of calculated rationality, in which personal intentions do guide individual (micro) behaviors, and systemic rationality, in which intentions are discovered or learned as organizational ac-

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tion unfolds. In either case, outcomes are the product of (sometimes random) group interaction, not management. For example, one model of calculated rationality is March's "garbage can" model of organizational choice (Cohen, March, & Olsen, 1972), in which decisions are produced "by the apparent tendency for people, problems, solutions, and choices to be joined by the relatively arbitrary accidents of their simultaneity rather than by their prima facie relevance to each other" (March, 1978, p. 592). Now, one implication of determinism is that there are certain scientific laws (cause-effect relationships) that govern events. Those laws are discoverable through experimentation, either by scientists or by practi- tioners. In this spirit, one systemic model, adaptive rationality, suggests that "if the world and preferences are stable and the experience prolonged enough, behavior will approach the behavior that would be chosen rationally on the basis of perfect knowledge" (March, 1978, p. 592). In other words, there are some (deterministic) laws at work which will be discovered by managers as accumulated experience permits them to be revealed.

The above policy literature tends to emphasize internal structure or political determinants of policy, but other research maintains that strategy often is not formulated (within the firm) but is negotiated with external parties in the environment. This is especially true in government-regulated industries (e.g., utilities) in which the "zone of strategic discretion" for top level corporate managers is being reduced (Murray, 1978). Following this "external constraint" view of the policymaking process, the discovery of new opportunities and alternatives is not necessarily the product of rational environmental scanning, as suggested by proponents of strategic planning; these alternatives often are presented to the manager by elements in the environment itself. For example, Carter (1971) suggests that not infrequently managers' attention is called to strategic opportunities by sources outside the firm; and this was the basis for Aharoni's (1966) thesis that the foreign investment decisions made the American multinational firms were the result of receiving proposals from hard-to-ignore sources in their environments (such as foreign govern- ments, clients, etc.), rather than from either infor- mal or formal search (Aguilar, 1967). Conversely, a "rational" approach to coaligning with the environment, such as cooperating or merging with other organizations, may be blocked, reversed, or otherwise thwarted by governmental action.

Following this trend of identifying the "forces from without" that constrain strategymaking, another recent line of research in strategic management is represented by the use of industry economics in analyzing the competitive behavior of firms within particular industrial environments.

Determinism in the Strategy Content Literature

Industrial organization economics posits an industry "structure" (number and size of firms, level of demand, etc.), which determines the inherent profitability of a particular industry. Strategic management scholars have refined this orientation by at- tempting to explain differences in performance of individual firms within industries. This research assumes that a set of company actions (strategies) can be matched to industry imperatives to achieve max- imal performance. The Purdue studies of the beer industry (Hatten, Schendel, & Cooper, 1978; Schen- del & Patton, 1978) are prototypical of this orientation, which relies on the basic premise that there are certain technological, legal, operational, and competitive constraints on organizational activity once a firm has entered into a particular competitive environment.

The most articulate exposition of this argumenta- tion was offered by Hofer (1975) in a provocative paper entitled, "Toward a Contingency Theory of Business Strategy." This paper drew on marketing's product life cycle concept to hypothesize the op- timality of situation-specific strategies, and it represented an exponential increase in conceptual rigor over the original attempts at situational prescriptions for strategies initiated by Katz (1970). For example, Katz proffered four universal "rules" for corporate strategy (e.g., "always lead from strength," p. 349) plus eight conditional "axioms" that apply depending on company size relative to ts industry (e.g., for large firms, "give up the crumbs," p. 362).

The product life cycle concept lays out operating and strategic contingencies for each stage of the cycle. Each of these stages usually is described along a nominal scale, and each represents the competitive/economic nature of an industry from its incep- tion (invention and introduction of a new product) through maturity and decline (the market has been saturated and the product, through standardization, begins to take on the characteristics of a commodity). For example, at the growth stage, the environment is

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composed of numerous potential consumers waiting for the price to come down and of many competitors striving for product standardization in order to achieve the economies of scale necessary for cost reductions. Given the competitive nature of the industry at this stage and the increasing price elasti- city of the product, the environment of a firm at this stage might be characterized as highly volatile and uncertain. Note that the deterministic imperative here emanates from classical microeconomic theory: in order to survive the growth stage, the firm must seek long run economies to scale; the manufacturing function must be emphasized in the allocation of financial resources and managerial attention.

Hofer's paper took the product life cycle concept a step further by including a much larger number of environmental variables than illustrated above (e.g., he includes the type of distribution system, nature of customer motivation to purchase, frequency of purchase, etc.), and it concluded with the bare begin- nings of an inventory of hypotheses that posit the "optimal" business strategy for a given configuration of contingencies.

It is here that such a deterministic model runs in- to difficulty. If the scholars in the field were to attempt to develop fully this inventory of hypotheses, they would still be writing them, for, if each of Hofer's independent environmental variables were to be considered in its simplest form-as a dichotomy of extremes rather than a continuum-the number of contingencies that would have to be accounted for would be enormous (Table 1).

Table 1 Strategic Contingencies for PLC Stages

Number of Resulting Number PLC Stage Variablesa of Contingenciesb

Introduction 6 64 Growth 13 8,200 Maturity 21 2,097,000 Saturation 26 67,109,000 Decline 17 131,000

aAdopted from Hofer, 1975. bComputed by 2n, where n =number of variables.

If, as Einstein (1934) asserted, the "grand object" of all theory is to explain as large a number of obser- vable phenomena with as few concepts and laws as possible, then any "contingency theory" of strategy

has a few hurdles to surmount. (The irony here is that Hofer, explicitly set out to reduce the number of "circumstances" from a potential of 18 x 1015.) The foregoing is reminiscent of the criticism surrounding the ultimate environmental determinism represented by Skinnerian behaviorism; that is, it relies on the premise that the controller must be in possession of an exhaustive inventory of all the environmental stimuli that serve as reinforcers to the subject being controlled (Scott & Mitchell, 1972).

Limitations of Deterministic Views

There is a more fundamental conclusion to be drawn from the foregoing analysis: the strategy of a firm cannot be predicted, nor is it predestined; the strategic decisions made by managers cannot be assumed to be the product of deterministic forces in their environments. Any such assumption would eli- minate the very need for management because it implies that the strategy of an organization follows more or less automatically from a technical apprecia- tion of its environmental situation. On the contrary, the very nature of the concept of strategy assumes a human agent who is able to take actions that attempt to distinguish one's firm from the competitors. This is the very foundation of Newman's "propitious niche" (Newman, 1971; Newman, Summer, & War- ren, 1972). (Even a literal interpretation of the product life cycle model implies a "shakeout" from which only a few dominant firms emerge; they must have differed in some way from the failures!)

Not only must conceptual attempts such as Hofer's reduce to purely situational theories of strategy, but the empirical work out of Purdue points in the same direction. As anticipated in their modeling of strategy in the beer industry, it was found that strategies were not homogeneous, but tended to occur in clusters or "strategic groups" of companies (the groups tended to reflect the national, regional, or local orientations of the member brewers). However, from the original sample of 13 firms emerged 6 groups: with an average of little more than 2 firms per "group," the attempt virtually resulted in a case-by-case description (Hat- ten et al., 1978).

Similar results are produced by research using the Profit Impact of Market Strategies (PIMS) data base (Buzzell, Gale, & Sultan, 1975). Originally set up to search for the "laws" that govern business profitability, the only generalizable "law" is that the ma- jor determinant of profits is market share. Most

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PIMS-based research starts with reductionist and deterministic goals, but usually ends up with studies whose results can be conveyed only with reference to long lists of variables or variable clusters, making it difficult to accumulate knowledge from one study to the next.

The primary limitations of deterministic theories, then, are that they: (1) are reductionist, resulting in losing the richness of both independent variables (such as the environment) and dependent variables (structure, strategy); (2) ignore reciprocal cause- effect; (3) if pursued to their extreme, result in hyper- contingency theories or studies of situational cases; most important; (4) reduce managers to mechanistic computers who must apply scientific laws to achieve results; and (5) relegate managers to a passive role, constrained by a variety of forces. These "forces" are summarized in Table 2.

Table 2 Summary of Deterministic Views

Field Managers are Constrained by Reference

Organization Size and ownership Blau (1970); Theory Pondy (1969)

Technology Perrow (1967, 1970); Wood- ward (1965)

Environmental turbulence Duncan (1 972a, 1972b); Lawrence & Lorsch (1967)

Information requirements Galbraith (1977) Natural selection Aldrich (1975)

Policy Existing strategy/structure Dye (1975); Bourgeois & Brodwin (in press)

Internal political forces Cyert & March (1963); Lind- blom (1959)

External political forces Murray (1978) Environmental impingement Carter (1971)

Strategy Product life cycle Hofer (1975) Industry structure 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)

Origins of Deterministic Views

Given the management-process origins of these fields, in which managers were seen as the planners, organizers, leaders, and controllers of the firms (Koontz & O'Donnell, 1964; Newman et al., 1972), this development of the state of these administrative theories is curious. How did this state of affairs come about? A plausible speculation is that three streams have converged. First, fields have advanced dramatically in their application of "scientific" methods of measurement, observation, and statistical analysis. As the degree of empiricism climbs, so do the aspira- tions of the investigators in obtaining scientific "truth"; and in pursuing this ideal they have taken on some of the values of the "hard" sciences that they are emulating in the application of method. The problem is, the physical science model chosen is close to that of Newtonian physics, which represents the ultimate in deterministic explanation for the world as it is perceived (Sullivan, 1933).

A second stream is merely a reflection of the ideal of parsimony in any theory. Under this law, a sim- ple theoretical solution that explains a set of empirical facts is preferable to a more complex explanation. Ignoring for a moment that contingency theories, in the main, were derived from correlational analyses of structure rather than process and that the causal explanations sought were available only through inference, contingency models give, in fact, the simplest theoretical solution that can support the data. This parsimoniousness, of course, provides the psychological security alluded to above in describing Thomp- son's work.

The third stream involves the move from the "micro" or individual behavior approach to studying organizational behavior, to the more "macro" or sociological approach, which takes the organization-not the individual actor-as the unit of analysis. As one abstracts away from the individual towards the collectivity, one runs the risk of personi- fying the collectivity; and even if that trap is avoided, one has defined away the individual as the prime in- fluencer of organized activity. With the individual lost to the aggregate, the explanation of the behavior of organizations in terms of "causal textures" (Emery & Trist, 1965; Terreberry, 1968), "natural selection" (Aldrich, 1975), or other abstract "forces" become plausible.

The blinders imposed by this last stream are most vivid in organizational sociology. For example, in his

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review of Guest's (1962) study of two consecutive plant managers (a poor one followed by a successful one), Perrow (1970) reinterpreted Guest's data to argue that the "good" leader succeeded primarily as a result of having been granted autonomy from head- quaters. That is, success was a function of decentralization-a sociological variable-not just managerial skill. In fact, this leader negotiated both the autonomy and a plant-modernizing capital budget at the time he took over. Perrow reports this, but he argues that the most important factor was "the situation in which the two leaders... operated" (1970, p. 13, italics added). The net effect of this sociological view downplays the ability of a manager to create his or her own situation.

The Alternative to Determinism: Strategic Choice

Thus, one comes full circle and notes that the problem with many of these theories is that they downplay the role played by the human agent-that stubborn- ly unpredictable human actor-who has the power to direct the organization; they fail to acknowledge the way in which organizational actors, in fact, make strategic choices that determine how an organization finds itself within a particular context in the first place. This acknowledgement has been making its stubborn infiltration into current thinking, sparked initially by John Child's heretical voice in a sociology journal (Child, 1972), but which subsequently has received the enthusiastic attention of policy scholars.

The seeds for this refreshing challenge to determinism can be found, interestingly enough, in Thompson's (1967) work. For, in discussing "coalignment" as the basic administrative function, he asserts:

We must emphasize that organizations are not simply determined by their environments. But if the organization is not simply the product of its environment, neither is it independent. The configuration necessary for survival comes ... from finding the strategic variables... which are available to the organization and can be manipulated in such a way that interaction with other elements will result in a variable coalignment (1967, p. 148). That is, although there always are some constraints

present in any situation, whether they be external to the organization (governmental, economic, industrial, etc.) or internal (human needs, power structures, information systems, technological processes,

etc.), the manager or the top management coalition always retain a certain amount of discretion first to select the situation, domain, industry in which he/she or they choose to operate, and secondly-and more importantly-to choose goals that are not optimiz- ing or economically rational, but that merely allow the organization to generate enough "slack" to engage felicitously in what Simon (1957) would term "satisficing" behavior. Once performance exceeds this satisficing level, a sufficient margin of surplus may have been generated to accommodate managerial styles, organizational structures, or other courses of action that do not "fit" the prescriptions of deterministically and rationally derived theories of management. It is in this context that management's values and preferences override any dicta. For if, as in most definitions, strategy making includes the choice of organizational goals, and to the extent that these goals reflect managerial preferences, then unless these goals are coincidentally identical for all firms the deterministic views break down. These choices of goals, domains, technologies, and structural variables are what Child (1972) has referred to as strategic choices. Given the power for these choices to influence organizational contexts and performance criteria, it is of no small consequence that the prop- ositions of contingency theory have been found to be less than faithful explainers of the empirical data (Pennings, 1975).

The direct influence of industrial organizations in shaping their own environments, of course, was the central theme of John Kenneth Galbraith's New In- dustrial State. Economists, like latter-day organization theorists, are wont to posit environmental forces under the rubric of the "market" or Adam Smith's "invisible hand." But Galbraith dismissed the "myth of the system... [in which] the market is a force of transcendent power" (1971, p. 356.) Instead, the market is steadily being replaced by planning, in which output, prices, and consumer demand is in- creasingly under the control of the corporations.

So it is contended that the top management or dominant coalition always retain a certain amount of discretion to choose courses of action that serve to coalign the organization's resources with its environmental opportunities, and to serve the values and preferences of management. As has been argued elsewhere, this relegates the independent (usually contextual) variables of contingency views

to the status of elements which may, or may not, be taken into consideration in strategic choice. In this

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view of things, the independent variables of contingency theory comprise only one subset of the multiple points of reference which 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 en- sue from these decisions are artifactual manifestations of managerial policy, rather than immutable constraints determining what is possible (Bourgeois & Astley, 1978, pp. 9-10). Although the argument presented so far might risk

dismissal as a metaphysical discourse legitimizing the role of management, one must consider the alternative: if organizational action is determined by immutable forces, then the management of organizations may as well be abdicated to mechanics. Other- wise, strategy is downgraded to the status of serving merely to reduce managerial uncertainty by giving managers "something to do" while they await the contingencies to which they must respond.

The Role of Strategic Choice: Determinism versus Free Will

As stated earlier, one possible source for deterministic biases in theoretical schemes derives from their methodology being modeled on that of the physical sciences. Ironically, the debate between the proponents of determinism versus free will began among physical scientists two centuries ago when biological developments (and biology was not yet a ''science") introduced the concept of "organism" in opposition to the doctrine of materialistic mechanism (Whitehead, 1925). The root of the conflict lies in that theoretical physics was erected to explain and predict the characteristics, properties, locations, and motions of inanimate matter. It was not equipped to handle the issue of "life." Likewise macro-organization and industrial economic theories are uneasy with individual actors making the strategic choices that give "life" to their organizations.

Whereas physics was designed to ignore concepts such as life, a challenge to determinism emerged from its own ranks, following the introduction of quan-

tum physics, in the principle of indeterminacy: This principle is the negation of the strict determinism that has hitherto reigned in science. Until quite recent- ly science has assumed that a knowledge of the present is sufficient to enable us to determine the future. We have hitherto believed that every event in nature is an example of strict cause and effect. The possible exceptions are provided by those of our own actions which are, we say, the result of "free will." But many have thought that the strict determinacy found in nature would ultimately be extended to our mental processes, and that our consciousness of free will is an illusion. The principle of indeterminacy has pro- foundly changed this outlook (Sullivan, 1933, pp. 69-70).

What, then, becomes of determinism? It becomes a useless principle... A determinist may say, as some of them do, that indeterminacy is un- thinkable. Strict cause and effect, they may say, is a necessity of thought. This is the old problem of free- will and determinism... When Eddington says that something analogous to free-will must be put at the basis of physical phenomena, he means that the principle of indeterminacy... belongs to as fundamental a category of thought as does the notion of strict causality. Both alternatives are equally possible. The question is, which of these principles does nature obey? And the answer we have obtained so far is that the ultimate processes of nature are not strictly determined (Sullivan, 1933, pp. 71-72). As in physics, so in social science. Economists,

psychologists, and organization theorists are all vic- tims of linear thinking, in which the reduction of a chaotically large number of phenomena into a one- way sequence of cause and effect allows the psychological security of the illusion of "prediction," but which disallows the strategist as a "cause" and ignores the real possibility of a cycle in which cause and effect are mutually interacting. But from its Aristotelian roots, modern physics thinking has emerged as dialectical, entertaining notions of mutual causation between the factors under consideration. If the theoretical development of the behavioral and policy sciences is to continue to parallel that of the physical sciences, it is suspected that the debate between the believers in organizational "free will," or the power to enact unique strategies, and the proponents of contingency views has just begun. It is speculated, however, that any emergent theory of organizational functioning will have to yield a central position to strategic choice and to consider the possibility of reciprocal causation among external (environmental or "contextual") factors, strategic decisions, and internal (structural, power and re-

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sources distribution) factors. So, though environmental and internal forces act as constraints, strategy making often selects and later mzodifies the sets of constraints. Dialectical thinking will be required to countenance this state of affairs, which might be described as an interactive tension between the inertia of environmental and internal forces and the kinetics of strategic choice.

A recent approach that exemplifies this dialectical thinking was proposed by Bourgeois (1980a), in which "domain definition" and "domain naviga- tion" are conceptualized as the more or less free-will and determined components of strategic management, respectively. In this view, the initial selection and definition of domain, termed primary strategy, constitutes the process through which managers creatively "enact" (Weick, 1969) their environments and define their own requisite levels of performance. It is subsequent to the domain definition that managers, in effect, set up administrative and technological arrangements to "navigate" through their chosen domains, presumably according to the prescriptions of contingency theory or the dictates of industry economics.

Implications for Research on Strategic Management

Whereas the need for this type of dialectical thinking is clear, in order to enhance understanding of strategic management, the implications for research are less so. Those academic brethren who espouse the "hard science" values of the physical sciences in their choice of research methods will be uncomfortable with such intractable notions as free will, environmental enactment, domain definition, creativity, and the like, and their influence on the evaluation and choice of method is not insignificant. On the other hand, no one would deny that it is the experimentation and risk taking of creative entrepre- neurs that provide the data through which the "laws" are discovered in the first place.

Given both the limitations of deterministic theories and their advantages (they do explain variance among a wide array of variables and they do call attention to some critical areas of inquiry), what research recommendations might be made? Four are suggested here: adopt the dialectical view argued above; recognize reciprocal causality and deal with it in research; combine research perspectives; and com-

bine quantitative and clinical research methods.

Adopt a Dialectical View

Most strategic management researchers undoub- tedly are sympathetic to the argument that it is the "degrees of strategic freedom" that are important rather than an absolute choice between determinism and free will. Yet, research tradition frames thinking in deterministic logic. It is argued that a philosophical stance should be adopted that allows for free will and creativity when models are con- structed from empirical data. An example of this kind of inductive thinking is found in Burgelman's (1983) work, in which he conceptualizes the (free-will) notion of "autonomous strategic behavior" taking place within (otherwise bureaucratic) firms.

This does not mean that dialectic logic should occur only within the minds of individual researchers; it can and should proceed among strategic management researchers whose training comes from different disciplines (Jemison, 1981). As March reports, the latter has precedent in the development of theories of choice, in which "behavioral [descriptive] and nor- mative theories have developed as a dialectic rather than separate domains" (1978, p. 588).

Recognize Reciprocal Causality

Adopting a dialectic view should facilitate dealing with reciprocal causality in research designs. There are at least two ways of doing this. One is to let both "causes" and "effects" (e.g., contexts, administrative arrangements, strategies) vary together without imputing any direction of causality a priori, as Miller and Friesen (1978) did using the Q-factor method to derive strategy archetypes. The other is to provide dual-direction interpretations of correlational data analyses when making causal inferences, as was done by Bourgeois (1980b, 1982) in his studies of environmental turbulence, goals and means consensus, and economic performance.

Combine Research Perspectives

Both the recognition of reciprocal causality and a dialectical view can be enhanced if research perspectives are combined in designs. For example, Jemison (1981) has suggested that strategy outcomes (content) and process (decision behavior) be examined simul- taneously. Although causal inferences are not drawn, much of Mintzberg's historical research is of this

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type: he traces both decisions and decision processes over time (Mintzberg & Waters, 1982). Longitudinal statistical techniques, such as cross-lagged correla- tions, can aid in analyzing this type of data.

Porter (1979b) has suggested that perspectives from industrial organization and strategic choice be combined in aiding understanding of strategic management. In a somewhat different vein, Van de Ven (1979) suggested that strategic choice and environmental constraints be treated as two separate dimen- sions, each of which may vary on a unique continuum, rather than as polarities in a single scale. In essence, Miles and Snow (1978) did this when they examined organizations in four industries and inter- preted why the strategic behavior of successful organizations varied within industries or domains.

Another way to combine perspectives is to combine data sources. For example, Bourgeois and Singh (1983) combined economic (financial) and behavioral (questionnaire) data to study organizational slack and political behavior among top management. Because slack has been hypothesized to facilitate creative (i.e., nondeterministic) strategic behavior (Child, 1972), this method could be extended to study the mediating effects of slack on environmental constraints and strategic choices.

Combine Quantitative and Qualitative Research

Wherever possible, large sample "quantitative" research should be combined with good historical or clinical analyses. In this manner, the researcher can

search for the laws revealed through statistical analyses of the aggregate data-the study of confor- mity, as Starbuck (1976) terms it-and supplement these with a clinical understanding of how the stra- tegists of the firms created their strategies and organizations in the first place-Starbuck's (1976) "anatomy of deviance." The former will allow an explanation of statistical variance among populations of firms, and the latter will permit explanation of the unexplained variance by understanding particular (individual firm) behaviors and situations.

Conclusions

This paper has argued for a shift in the way research in strategy is conducted in order to encom- pass the creative activity implied in its management. This entails a suspension of traditional linear thinking and the adoption of a dialectical point of view. This is not a unique perspective; in fact, the seeds are already present:

Cause and effect, means and ends, seed and fruit cannot be severed; for the effect already blooms in the cause, the end preexists in the means, the fruit in the seed.

[Ralph Waldo Emerson] In the case in study here, what comes first, the strategist? The strategy? The social and political structure? Or the environmental context in which these are found? Through the types of thinking and methods of research outlined above, strategic behavior can be considered as the mutual and reciprocal influence of all of these.

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http://www.jstor.org/page/info/about/policies/terms.jspArticle Contentsp. 586p. 587p. 588p. 589p. 590p. 591p. 592p. 593p. 594p. 595p. 596Issue Table of ContentsThe Academy of Management Review, Vol. 9, No. 4 (Oct., 1984), pp. 577-800Volume Information [pp. 780 - 784]Front Matter [pp. 577 - 585]Strategic Management and Determinism [pp. 586 - 596]On Formulating Strategic Problems [pp. 597 - 605]A Comparison of Multiple Constituency Models of Organizational Effectiveness [pp. 606 - 616]A Single Value Function for Evaluating Organizations with Multiple Constituencies [pp. 617 - 625]Matching Managers to Strategies: A Review and Suggested Framework [pp. 626 - 637]Formulating Vertical Integration Strategies [pp. 638 - 652]Studying Organizational Cultures through Rites and Ceremonials [pp. 653 - 669]Organizational Socialization and Group Development: Toward an Integrative Perspective [pp. 670 - 683]Task Visibility, Free Riding, and Shirking: Explaining the Effect of Structure and Technology on Employee Behavior [pp. 684 - 695]A Predecision Support System [pp. 696 - 703]Communication and Innovation Implementation [pp. 704 - 711]A Meta-Analysis of the Relationships between Individual Job Satisfaction and Individual Performance [pp. 712 - 721]Hypothesized Interdependence, Assumed Independence [pp. 722 - 735]Control in Organizational Life: The Contribution of Mary Parker Follett [pp. 736 - 745]Risks for Efficiency: Comprehensive Reform of Direct Regulation [pp. 746 - 756]Archetypal Social Systems Analysis: A Reply to Mitroff [pp. 757 - 762]Mutual Projection in the Performance and the Criticism of Work in the Social Sciences: Reply to Obert [pp. 763 - 764]Book Reviewsuntitled [pp. 765 - 768]untitled [pp. 768 - 769]untitled [pp. 769 - 771]untitled [pp. 771 - 772]untitled [pp. 772 - 774]untitled [pp. 775 - 776]Publications Received [pp. 777 - 779]Errata [p. 779]Back Matter [pp. 785 - 800]

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