The Fascinating Psychological Microfoundations of Strategy and Competitive Advantage

Abstract

This article puts forth an agenda for the psychological study of strategy and competitive advantage. It centers this agenda within the microfoundations program, a program originating within strategy that seeks to understand firm heterogeneity and competitive advantage by examining individuals and their interrelationships. The article first reviews key theories and frameworks in strategy by taking a functionalist view, that is, by starting with a focus on organizational criteria (operational performance, organizational performance, competitive advantage). It then discusses the importance of resources and how psychology may contribute to an understanding of these resources. Organizational psychology and organizational behavior research that links to higher-level outcomes or resources is reviewed next. The article concludes with questions that we believe will fascinate scholars of organizational psychology and organizational behavior as well as with implications for practice. We hope this article helps stimulate a paradigmatic shift in organizational psychology and organizational behavior, as their theories and findings are much more strategic than is currently appreciated.