Rational Strategic Management and the Normative Solution

Abstract

The aim of this paper is threefold: (1) to show that the first-order problem of strategic management is fundamentally a normative problem that cannot be simply assumed away, (2) to introduce the notion of ‘normative fit’ as a concept to aid managers in rationally solving the normative problem, and (3) to argue that achieving normative fit is a rational and necessary approach to solving the normative problem. I outline the logic of appropriateness as a normative framework of rational decision making and argue that rational strategic management begins with the need to construct a cognitive representation of the strategic problem space by rationally determining the appropriate parameters by which a strategic decision will be made and evaluated. Then, I propose a ‘normative solution’ to this problem predicated on achieving normative fit according to the logic of appropriateness. It is rational because it adheres closely with the logic of appropriateness and necessary due to the interaction effects among the vast diversity and plurality of applicable norms. I close with the implications of the ‘normative solution’ on theories of corporate governance, stakeholder theory, and the CSV and CSR debate on the role of business in society.