Chaos theory in Strategy Research

Abstract

Scholars in several fields contended that instability, dynamicity, evolution, and change have become in the very nature of organizations. This proposal argues that such traits are indeed, embedded in the organizational characteristics whether they are an outcome or input. Organizations are always subject to constraints, threats, imposed changes, voluntary changes. I argue that organizations exist in a chaotic domain, their realization is largely affected and influenced by many factors, and therefore their courses of actions are strategically subject to change and adjustments to the extent of their comprehension. The realization depends largely on the ability to trace initial conditions, required configurations after strategic actions, and the attractiveness of the stranger attractors exist along the way of their path in the chaotic domain. I apply these concepts of chaos theory in the strategic alliance context. I argue that firms may ignore very small changes that may cause a misunderstanding and incomplete realization of the necessary course of actions. Furthermore, firms should not expect similar results of their prior strategic actions, unless they are able to control many variables which seems to be difficult. Firms will be prone to shocks, ups and downs with respect to their performance, depending on their ability to control the path and undergo the required course in response to uncontrollable forces in their surroundings.