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Strategic Management and Determinism

Author(s): L. J. Bourgeois, III


Source: The Academy of Management Review, Vol. 9, No. 4 (Oct., 1984), pp. 586-596
Published by: Academy of Management
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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
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

policy decisions or goals altogether(Quinn, 1977;


Wrapp, 1967).
If one is to follow the dicta of most of these
schools,thenone facesthe prospectof havingto suggest that a managementinterestedin influencingthe
destinyof its organizationmay as well resignitself
to succumbingto the matrixof deterministicforces
presentedby environmental,technical,and human
forcesthatimpingeon its freedomof choice.At best,
managementbecomesa computationalexercise.At
worst,it becomesa reactivewaitinggame, exploiting
contingenciesonly as they arise through political
forces. Although these views are indispensablefor
empiricalresearchpurposes, it is arguedhere that
their inherentreductionismeliminatesmuch of the
richnessthat characterizesthe strategicmanagement
process, and that they may constrainthe advancement of strategic management as an academic
discipline.

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
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Determinismin the Policy Process Literature

that the design of an organizationfollows more or


less automaticallyfrom the degreesof variationand
complexitypresentedby the environment(Dill, 1958;
DuBick,1978;Duncan,1972a,b). Whatsuchtheories
do is assumethat these "contextual"constraintsare
bindingin their effects and dramaticallyreducethe
rangeof organizationalresponsealternativesto those
that will producethe proper"fit" withthe independent variablein question.
JamesThompsonsummarizesthis view quitesuccintlyin the openingchapterof OrganizationsinAction. He arguesthat "organizationsdo some of the
basic things they do becausethey must-or else!"
(1967, p. 1). Lateron, he states that the "variables
controlledby the organizationare subordinatedto
the constraintsand contingenciesit cannot escape"
(p. 78, italics added). In contrastingclosed-system
and open-systemstrategiesfor studying organizations, Thompsonallowsas how the latterletsin more
variablesthana personcan comprehendat one time,
and uncertainty,and the
resultingin unpredictability
formergivesthe psychologicalcomfortof assuming
determinacy.(AlthoughThompsonwas referringto
the uncertaintiesfaced by an administrator,if one
looks closely enough, one noticesthe author'spurpose of reducinghis own analyticaluncertaintyby
seekingdeterminacyamongthe conceptualand empirical schemesavailable.)
Determinismis one characteristicof the organizational literaturecited. Anotheris reductionism:the
studies tend to focus on one independentvariable
(e.g., degreeof turbulence)as it causesmanagersto
manipulateone dependentvariable(e.g., structure).
(A sociology of scienceexplanationfor this will be
suggestedbelow.) In addition,the theoriesgenerally
are derivedfrom static, cross-sectionalcorrelation
studies,whichpresentproblemsof causalinference:
these types of analysesassumethat the systemsbeing studiedarein equilibria.In one studythatattempted to correctfor both of these limitations, Dewar
and Hage (1978) sought theoreticalsynthesisby examining how rates of change of two independent
variables(size and technology) affect the rates of
changeof two dependentvariables(complexityand
structuraldifferentiation).But even with a dynamic
analysis,they foundthat explanationsfor the effects
of the two contextualvariablestogethercould not
be developed.Thus, they were reducedto separate
causal models for each independentvariable. As
arguedbelow, perhapsthe pursuitof deterministic
explanationsforces this reductionism.

In the ubiquitousquestfor the reductionof uncertainty, perhapshumansneed the variable-reducing


function that deterministictheories provide. From
withinthe policyliteraturecomeexplanationsof firm
behaviorin whichmanagersseekto reducethe number of contingenciesand courses of action from
whichthey mustchoose to respond(Cyert& March,
1963). And although the rational-comprehensive
school of policy formulationposits the designingof
organizationsas the rationalprocessof implementing strategy(Bourgeois& Brodwin,1984;Galbraith,
1977;Uyterhoeven,Ackerman,& Rosenblum,1977),
organizationstructuresthemselvesaffect futuredecisions and place constraintson subsequentstrategy
formation.Dye's (1975)analysisof city government
presentsan institutionalmodel in whichpolicy outcomesare influencedby whichadministrativestructure (mayor-councilor council-manager)is used.
Thus, standardizedoperating procedures,institutionalizedroles, personalempires,and power relationshipsinterconspirein such a way that only incrementaland marginaldecisionsarrivedat through
negotiatingand sequentialattentionto goalscan succeed in initiating changes. Because massive
reorganizationnormallyis regardedas impractical
from a cost standpoint, and is severely resisted
becauseof its threatto existingpower bases and its
effectof renewinguncertainties
inherentin the changing of formal relationships,structuralinertiagives
rise to the incrementalismdescribedby Lindblom
(1959). Similarly,competingcoalition groups with
uncertainty-reducing
standardoperatingprocedures
promotesequentialism
in goal attentivenessand serve
as stiflingobstaclesto comprehensiveness
in strategy
formulation.The "political forces" effect on strategy so aptly describedby Cyert and March(1963)
also function verticallywithin hierarchiesto affect
policy outcomesby influencingthe transmissionof
informationto the policymakers"Carter,1971).
This "politicalprocess"viewis deterministic
in the
sensethat policy outcomesare determinedby forces
beyondthe controlor cognitionof the policymaker;
outcomesconformingto prior intentionsor proaction are, at best, accidental.In a reviewof models
of "rational"choice,March(1978)madethe distinction between models of calculated rationality, in

whichpersonalintentionsdo guideindividual(micro)
behaviors, and systemic rationality, in which inten-

tions are discoveredor learnedas organizationalac587

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Following this trend of identifying the "forces


from without" that constrainstrategymaking,anotherrecentline of researchin strategicmanagement
is representedby the use of industryeconomicsin
analyzingthe competitivebehaviorof firms within
particularindustrialenvironments.

tion unfolds. In eithercase, outcomesare the product of (sometimesrandom) group interaction,not


management.For example,one model of calculated
rationalityis March's "garbagecan" model of organizationalchoice(Cohen, March,& Olsen, 1972),
in which decisions are produced"by the apparent
tendencyfor people,problems,solutions,andchoices
to be joined by the relativelyarbitraryaccidentsof
their simultaneityratherthan by theirprima facie
relevanceto eachother"(March,1978,p. 592).Now,
one implicationof determinismis that thereare certain scientific laws (cause-effectrelationships)that
governevents. Those laws are discoverablethrough
experimentation,either by scientists or by practitioners. In this spirit, one systemicmodel, adaptive
rationality,suggeststhat "if the world and preferences are stable and the experience prolonged
enough, behavior will approachthe behaviorthat
would be chosen rationallyon the basis of perfect
knowledge"(March, 1978, p. 592). In otherwords,
thereare some(deterministic)
lawsat workwhichwill
be discoveredby managersas accumulatedexperience
permitsthem to be revealed.
The above policyliteraturetendsto emphasizeinternal structureor political determinantsof policy,
but otherresearchmaintainsthat strategyoftenis not
formulated(withinthe firm) but is negotiatedwith
externalpartiesin the environment.Thisis especially
truein government-regulated
industries(e.g., utilities)
in which the "zone of strategicdiscretion"for top
level corporatemanagersis being reduced(Murray,
1978).Followingthis "externalconstraint"view of
the policymakingprocess,the discoveryof new opportunitiesandalternativesis not necessarilythe productof rationalenvironmental
scanning,as suggested
by proponents of strategic planning; these alternatives often are presentedto the managerby elementsin the environmentitself. For example,Carter
(1971) suggeststhat not infrequentlymanagers'attentionis calledto strategicopportunitiesby sources
outsidethe firm;and this was the basisfor Aharoni's
(1966) thesis that the foreign investmentdecisions
madethe Americanmultinationalfirmswerethe result of receiving proposals from hard-to-ignore
sourcesin theirenvironments(suchas foreigngovernments, clients, etc.), ratherthan from eitherinformal or formalsearch(Aguilar,1967).Conversely,a
"rational" approach to coaligning with the environment,suchas cooperatingor mergingwith other
organizations,may be blocked, reversed,or otherwise thwartedby governmentalaction.

Determinismin the StrategyContent Literature


Industrialorganizationeconomics posits an industry"structure"(numberand size of firms, level
of demand,etc.), whichdeterminesthe inherentprofitabilityof a particularindustry.Strategicmanagement scholars have refined this orientationby attemptingto explaindifferencesin performanceof individual firms within industries. This research
assumesthat a set of companyactions(strategies)can
be matchedto industryimperativesto achievemaximal performance.The Purduestudies of the beer
industry(Hatten,Schendel,& Cooper, 1978;Schendel & Patton, 1978)are prototypicalof this orientation, whichrelieson the basic premisethat thereare
certaintechnological,legal, operational,and competitiveconstraintson organizationalactivity once
a firm has entered into a particularcompetitive
environment.
The most articulateexpositionof this argumentation was offered by Hofer (1975) in a provocative
paper entitled, "Towarda ContingencyTheory of
BusinessStrategy."This paperdrewon marketing's
product life cycle concept to hypothesizethe optimality of situation-specific strategies, and it
representedan exponentialincreasein conceptual
rigor over the originalattemptsat situationalprescriptionsfor strategiesinitiatedby Katz(1970).For
example,Katzprofferedfour universal"rules" for
corporate strategy (e.g., "always lead from
strength,"p. 349) plus eight conditional"axioms"
that applydependingon companysize relativeto ts
industry(e.g., for largefirms,"giveup the crumbs,"
p. 362).
The productlife cycle conceptlays out operating
and strategiccontingenciesfor each stage of the cycle. Each of these stages usually is describedalong
a nominal scale, and each representsthe competitive/economicnatureof an industryfrom its inception (inventionand introductionof a new product)
throughmaturityand decline(the markethas been
saturatedand the product,throughstandardization,
beginsto takeon the characteristics
of a commodity).
For example,at the growthstage, the environmentis
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has a few hurdlesto surmount.(Theironyhereis that


Hofer, explicitlyset out to reducethe numberof "circumstances" from a potential of 18x 1015.)The
foregoingis reminiscentof the criticismsurrounding
the ultimateenvironmentaldeterminismrepresented
by Skinnerianbehaviorism;that is, it relies on the
premisethat the controllermust be in possessionof
an exhaustiveinventory of all the environmental
stimulithat serveas reinforcersto the subjectbeing
controlled(Scott & Mitchell, 1972).

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

aAdopted from Hofer, 1975.


bComputed by 2n, where n =number of variables.

If, as Einstein(1934)asserted,the "grandobject"


of all theoryis to explainas largea numberof observable phenomenawith as few conceptsand laws as
possible,then any "contingencytheory"of strategy
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Origins of Deterministic Views

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 causeeffect; (3) if pursued to their extreme, result in hypercontingency 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.

Given the management-processorigins of these


fields, in whichmanagerswereseen as the planners,
organizers, leaders, and controllers of the firms
(Koontz& O'Donnell, 1964;Newmanet al., 1972),
this developmentof the stateof theseadministrative
theoriesis curious.How didthis stateof affairscome
about?A plausiblespeculationis that threestreams
have converged.First, fields have advanceddramatically in their applicationof "scientific" methods
of measurement,observation,andstatisticalanalysis.
As the degreeof empiricismclimbs,so do the aspirations of the investigators in obtaining scientific
"truth";and in pursuingthis ideal they have taken
on some of the values of the "hard" sciencesthat
they areemulatingin the applicationof method.The
problemis, the physicalsciencemodelchosenis close
to that of Newtonianphysics, which representsthe
ultimatein deterministicexplanationfor the world
as it is perceived(Sullivan, 1933).
A secondstreamis merelya reflectionof the ideal
of parsimonyin any theory. Underthis law, a simpletheoreticalsolutionthatexplainsa set of empirical
facts is preferableto a more complex explanation.
Ignoringfor a momentthat contingencytheories,in
the main, were derivedfrom correlationalanalyses
of structureratherthan processand that the causal
explanationssoughtwereavailableonly throughinference,contingencymodelsgive, in fact, the simplest
theoreticalsolution that can supportthe data. This
parsimoniousness,of course,providesthe psychological securityalludedto abovein describingThompson's work.
The third stream involves the move from the
"micro" or individualbehaviorapproachto studying organizationalbehavior,to the more "macro"
or sociologicalapproach,whichtakes the organization-not the individualactor-as the unit of analysis. As one abstracts away from the individual
towardsthe collectivity,one runsthe riskof personifyingthe collectivity;andevenif thattrapis avoided,
one has definedawaythe individualas the primeinfluencerof organizedactivity.Withthe individuallost
to the aggregate,the explanationof the behaviorof
organizationsin termsof "causaltextures"(Emery
& Trist, 1965;Terreberry,1968),"naturalselection"
(Aldrich, 1975), or other abstract"forces" become
plausible.
The blindersimposedby this last streamare most
vividin organizationalsociology.Forexample,in his

Table 2
Summaryof DeterministicViews
Field

Managers are Constrained by Reference

Organization Size and ownership


Theory
Technology
Environmental turbulence

Information requirements
Natural selection
Policy

Existing strategy/structure

Internal political forces


External political forces
Environmental impingement
Strategy

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)

Product life cycle


Industry structure

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)

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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 headquaters. 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-modernizingcapital 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.

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 optimizing 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 preferencesoverride 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 strategicchoices. Given the power for these choices
to influence organizational contexts and performance
criteria, it is of no small consequence that the propositions 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 Industrial 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 Galbraithdismissed 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 increasingly 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 relegatesthe independent (usually contextual) variables of contingency views
to the statusof elementswhichmay, or may not, be
taken into considerationin strategicchoice. In this

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 stubbornly 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 mustemphasizethat organizationsare not simply determinedby their environments.But if the
organizationis not simplythe productof its environment, neitheris it independent.The configuration
necessary for survival comes ... from finding the
strategic variables... which are available to the
organizationand can be manipulatedin such a way
that interactionwith other elementswill resultin a
variablecoalignment(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,
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tum physics, in the principle of indeterminacy:


Thisprincipleis the negationof the strictdeterminism
thathas hithertoreignedin science.Untilquiterecently sciencehas assumedthat a knowledgeof the present is sufficientto enableus to determinethe future.
We havehithertobelievedthat everyeventin nature
is an exampleof strictcauseand effect. The possible
exceptionsare providedby those of our own actions
whichare,we say, the resultof "freewill." Butmany
have thought that the strict determinacyfound in
naturewould ultimatelybe extendedto our mental
processes,and that our consciousnessof free will is
an illusion. The principleof indeterminacyhas profoundly changedthis outlook (Sullivan, 1933, pp.
69-70).
What, then, becomes of determinism?
It becomesa uselessprinciple... A deterministmay
say, as some of them do, that indeterminacyis unthinkable.Strictcause and effect, they may say, is
a necessityof thought.Thisis theold problemof freewill and determinism...When Eddingtonsays that
somethinganalogousto free-willmust be put at the
basisof physicalphenomena,he meansthatthe principle of indeterminacy...belongsto as fundamental
a categoryof thought as does the notion of strict
causality.Both alternativesareequallypossible.The
question is, which of these principlesdoes nature
obey?And the answerwe haveobtainedso far is that
the ultimateprocessesof naturearenot strictlydetermined (Sullivan, 1933, pp. 71-72).
As in physics, so in social science. Economists,
psychologists, and organization theorists are all victims of linear thinking, in which the reduction of a
chaotically large number of phenomena into a oneway 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, entertainingnotions 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-

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).

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. Otherwise, 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 materialisticmechanism
(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 determinismemerged from
its own ranks, following the introduction of quan592

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bine quantitativeand clinical researchmethods.

sourcesdistribution)factors.So, thoughenvironmental and internal forces act as constraints, strategy


makingoften selects and later mzodifiesthe sets of
constraints.Dialecticalthinkingwill be requiredto
countenancethis state of affairs, which might be
describedas an interactivetensionbetweenthe inertia of environmentaland internal forces and the
kineticsof strategicchoice.
A recentapproachthat exemplifiesthis dialectical
thinking was proposed by Bourgeois (1980a), in
which "domain definition" and "domain navigation" areconceptualizedas the moreor less free-will
and determinedcomponents of strategic management, respectively.In this view, the initial selection
and definitionof domain, termedprimarystrategy,
constitutes the process through which managers
creatively"enact" (Weick,1969)theirenvironments
and definetheirown requisitelevelsof performance.
It is subsequent to the domain definition that
managers, in effect, set up administrativeand
technologicalarrangementsto "navigate"through
their chosen domains, presumablyaccordingto the
prescriptionsof contingencytheory or the dictates
of industryeconomics.

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).

Implications for Research on


Strategic Management

RecognizeReciprocalCausality

Whereasthe needfor this type of dialecticalthinking is clear, in order to enhanceunderstandingof


strategicmanagement,the implicationsfor research
areless so. Thoseacademicbrethrenwho espousethe
"hardscience"valuesof the physicalsciencesin their
choice of researchmethods will be uncomfortable
with such intractable notions as free will, environmentalenactment,domaindefinition,creativity, and the like, and their influenceon the evaluation and choice of method is not insignificant.On
the other hand, no one would deny that it is the
experimentationand risktakingof creativeentrepreneursthatprovidethe datathroughwhichthe "laws"
are discoveredin the first place.
Givenboth the limitationsof deterministic
theories
andtheiradvantages(theydo explainvarianceamong
a wide arrayof variablesand they do call attention
to some critical areas of inquiry), what research
recommendations
mightbe made?Fouraresuggested
here: adopt the dialectical view argued above;
recognize reciprocalcausality and deal with it in
research;combine researchperspectives;and com-

Adoptinga dialecticview shouldfacilitatedealing


with reciprocalcausalityin researchdesigns. There
areat leasttwo waysof doingthis. Oneis to let both
"causes"and "effects" (e.g., contexts,administrative arrangements,strategies)varytogetherwithout
imputingany directionof causalitya priori,as Miller
and Friesen(1978)did usingthe Q-factormethodto
derivestrategyarchetypes.The other is to provide
dual-directioninterpretationsof correlationaldata
analyseswhenmakingcausalinferences,as was done
by Bourgeois(1980b, 1982)in his studiesof environmentalturbulence,goals and meansconsensus,and
economic performance.
CombineResearchPerspectives
Both the recognitionof reciprocalcausalityand a
dialecticalview can be enhancedif researchperspectives arecombinedin designs.For example,Jemison
(1981)has suggestedthat strategyoutcomes(content)
and process(decisionbehavior)be examinedsimultaneously.Althoughcausalinferencesarenot drawn,
much of Mintzberg'shistoricalresearchis of this
593

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search for the laws revealed through statistical


analysesof the aggregatedata-the studyof conformity, as Starbuck(1976)termsit-and supplement
these with a clinicalunderstandingof how the strategists of the firms created their strategies and
organizationsin the first place-Starbuck's (1976)
"anatomyof deviance." The former will allow an
explanationof statisticalvarianceamongpopulations
of firms,andthe latterwillpermitexplanationof the
particular(inunexplainedvarianceby understanding
dividualfirm) behaviorsand situations.

type:he tracesboth decisionsand decisionprocesses


over time (Mintzberg& Waters,1982).Longitudinal
statisticaltechniques,such as cross-laggedcorrelations, can aid in analyzingthis type of data.
Porter(1979b)hassuggestedthatperspectivesfrom
industrialorganizationand strategicchoice be combined in aidingunderstandingof strategicmanagement. In a somewhat different vein, Van de Ven
(1979) suggestedthat strategicchoice and environmentalconstraintsbe treatedas two separatedimensions, each of which may vary on a unique continuum,ratherthan as polaritiesin a singlescale. In
essence, Miles and Snow (1978) did this when they
examinedorganizationsin four industriesand interpreted why the strategic behavior of successful
organizationsvaried within industriesor domains.
Another way to combine perspectivesis to combinedatasources.For example,Bourgeoisand Singh
(1983)combinedeconomic(financial)and behavioral
slackand
datato studyorganizational
(questionnaire)
politicalbehavioramongtop management.Because
slackhas beenhypothesizedto facilitatecreative(i.e.,
nondeterministic)strategicbehavior(Child, 1972),
thismethodcouldbe extendedto studythe mediating
effects of slack on environmentalconstraintsand
strategicchoices.

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]

In the case in study here, what comes first, the


strategist?The strategy? The social and political
structure?Or the environmentalcontext in which
these are found? Throughthe types of thinkingand
methods of research outlined above, strategic
behaviorcan be consideredas the mutualand reciprocal influenceof all of these.

CombineQuantitativeand QualitativeResearch
Whereverpossible, large sample "quantitative"
researchshouldbe combinedwithgood historicalor
clinicalanalyses.In this manner,the researchercan

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