Theory-based View Research Articles

Competing with Theories: Using Awareness and Confidence to Secure Resources and Rents

An assumption of factor market efficiency is often used to grant primacy to firms’ existing unique and valuable resources as the source of economic rents. But this assumption is difficult to reconcile with observed market outcomes. For instance, five of the six companies with the highest global market capitalization in 2022 were upstarts in their industries with few resources at their origins. More surprising, three of these entrants were assisted by incumbents with vastly superior resources in assembling the resources they required. In this paper we explore how entrants compete with theories to secure resources from incumbents and capture rents. We introduce a modeling approach in which theories with causal logic generate awareness of valuable potential future states and shape the beliefs about payoffs and probabilities associated with these states. We combine work in the theory-based view and value capture theory to distinguish among three distinct sources of economic rents that are potentially available to entrants: awareness rents, confidence rents, and resource rents. We explore the circumstances under which these three types of rents are available. By exploring the role of theories and awareness in value creation and capture, our paper seeks to deepen our understanding of how entrants both attract resources and secure rents.

Artificial Intelligence and Strategic Decision-Making: Evidence from Entrepreneurs and Investors

This paper explores how artificial intelligence (AI) may impact the strategic decision-making (SDM) process in firms. We illustrate how AI could augment existing SDM tools and provide empirical evidence from a leading accelerator program and a start-up competition that current large language models can generate and evaluate strategies at a level comparable to entrepreneurs and investors. We then examine implications for the key cognitive processes underlying SDM—search, representation, and aggregation. Our analysis suggests that AI has the potential to enhance the speed, quality, and scale of strategic analysis, while also enabling new approaches, like virtual strategy simulations. However, the ultimate impact on firm performance will depend on competitive dynamics as AI capabilities progress. We propose a framework connecting AI use in SDM to firm outcomes and discuss how AI may reshape sources of competitive advantage. We conclude by considering how AI could both support and challenge core tenets of the theory-based view of strategy. Overall, our work maps out an emerging research frontier at the intersection of AI and strategy. History: This paper has been accepted for the Strategy Science Special Issue on Theory-Based View. Funding: The authors are grateful to their collaborating organizations and to the University of Michigan, Bocconi University Junior Researchers’ Grant, and the INSEAD eLab Research Fund for financial support.

The Theory-Based View and Strategic Pivots: The Effects of Theorization and Experimentation on the Type and Nature of Pivots

The Theory-Based View and Strategic Pivots: The Effects of Theorization and Experimentation on the Type and Nature of Pivots

Theory-Based Entrepreneurial Search

How should Theory-based entrepreneurs search for strategies to implement their ideas? The theory-based view of strategy posits that decision makers hold key conjectures about their path to success and use theory to understand and test beliefs underlying those conjectures. This causal framework also has implications for entrepreneurial search: the process by which entrepreneurs uncover strategies to implement their ideas. In this paper, we develop a Bayesian model where entrepreneurs update their beliefs as they conduct entrepreneurial search. We find several optimal behaviors for Theory-based entrepreneurs such as reverting to a previous strategy after finding a relatively poor strategy and continuing to search after finding a relatively good strategy, which are missing when entrepreneurs lack such a theory-based approach. As our theoretical predictions align with examples of successful entrepreneurs, our findings both provide a method to empirically identify Theory-based entrepreneurs and demonstrate the usefulness of applying the theory-based view to entrepreneurial behavior more generally.

Strategy Theory Using Analogy: Rationale, Tools and Examples

We discuss why analogical reasoning is widely used in strategy formulation, implementation, and evaluation despite its assessment by many logicians as a weak form of logical argumentation. Given this popularity, we consider how analogies might be used to assist in strategic decision making to develop better strategy arguments, including those consistent with the theory-based view of strategy. We develop an extended analogy between the online platforms Tripadvisor and Glassdoor to illustrate our main points. We also describe in steps how to build and evaluate strategy analogies and we suggest why working with analogies may be helpful to those practicing the theory-based view of strategy.

Four Approaches to New Venture Creation: Taking Stock and Moving Forward

Lean startup, effectuation, creation theory, and the theory-based view represent four different descriptive theories of how new ventures emerge and/or normative theories of how new ventures should be developed. We juxtapose the four approaches and describe their similarities and differences, which provides a foundation for considering complementarities among the approaches and constructing a future research agenda for additional reconciliation and contextualization regarding how successful new ventures are, or should be, developed under varying circumstances.

Financial Resources and Firm Performance

This research aims to determine the effect of financial resources on company performance. This research uses a sample of manufacturing companies listed on the Indonesia Stock Exchange 2016-2022. Company resources become an important part of the development the company, especially financial resources which are the main factor in carrying out the company's operational activities. The company's performance becomes benchmark for investors and creditors to assess the company's condition. The company's financial resources in this research come from cash flow, liquidity, and leverage. Cash flow used financial analysis to determine the income and expenses made by the company. Liquidity used to assess the company's ability to meet its obligations. Leverage as company debt used to finance and purchase company assets. The results showed that only free cash flow had significant effect on company performance. This happens because the company's performance is reflected in the higher will increase the amount of profit earned by investors. This shows that the company utilizes ability of the company's internal resources to utilize financial resources to create competitive advantage so that the company's performance can manage its cash flow to finance assets owned by the company. The results of this research support the resource-based theory-based view.

A Scientific Method for Startups

Recent scholarship has sought to develop a “scientific method” for startups. In this paper we contrast two approaches: lean startup and the theory-based view of startups. The lean startup movement has served an important function in calling for a normative and scientific approach to startups and venture creation. The theory-based view shares this agenda. But there are differences in the underlying theoretical mechanisms and practical prescriptions suggested by each approach. We highlight these differences and their implications for both research and practice. For example, we contrast lean startup’s emphasis on bounded rationality and entrepreneur–customer information asymmetry with the theory-based view’s emphasis on generative rationality and belief asymmetry. The theory-based view focuses on contrarian beliefs, associated problem formulation, and the development of a startup-specific causal logic for experimentation, resource acquisition, and problem solving. The right mix of entrepreneurial actions is contingent and startup-specific—guided by a startup’s unique theory. After pointing out differences between the lean and theory-based view of startups, we discuss opportunities for partial reconciliation, as well as opportunities for empirically comparing perspectives. Overall, we emphasize that a scientific method for startups needs to recognize the importance of contingent, discriminating alignment between entrepreneurial theories and the actions they prescribe (including different types of experimentation and validation, search, and forms of organization).

Foundations of a Theory-Based View of Strategy, Entrepreneurship, and Innovation

Foundations of a Theory-Based View of Strategy, Entrepreneurship, and Innovation

Introduction to the Virtual Special Issue: Strategy Science’s Contributions to Doctoral Reading Lists

Introduction to the Virtual Special Issue: <i>Strategy Science</i>’s Contributions to Doctoral Reading Lists

An Empirical Study on the Use of Digital Technologies to Achieve Cost-Effectiveness in Healthcare Management.

Objectives: Healthcare cost reduction is one of the major challenges of the current era. This study was based on the general system theory-based view to assess the significance of sensing communication technologies and processing actuation technologies in improving healthcare quality, leading to cost reduction. Moreover, the contingent rule of healthcare supply chain management in enhancing the influence of improved quality on healthcare cost reduction was also empirically tested. Methods: The sample of the study comprised 337 middle and senior healthcare managers employed in various government and private hospitals and health institutions in Jakarta, Indonesia. The administrative departments of each hospital and health institution was visited to take their consent to conduct this survey at their clinical and non-clinical departments. The data collected was analyzed using SmartPLS ver. 4 software. Results: Results reveal a significant direct and indirect influence of sensing communication technologies and processing actuation technologies on achieving cost-effectiveness in the healthcare sector, in the presence of perceived quality improvement as a mediator. However, the strength of the associations varied and was based on highly reliable and familiar nature of sensing communication technologies compared to processing actuation technologies which were emerging and gaining popularity in recent years. Conclusion: Considering the healthcare cost as a critical factor based on limited resources in emerging economies, healthcare institutions/centers should use digital technologies to achieve cost-effectiveness for providing healthcare facilities in the industry 4.0 era.

Broadening our Sight: Re-Imagining Organizational Theories, Practices &amp; Pedagogies

Many arguments have been proposed in favor of organizational theorists broadening their sights —that it “creates synergies, increased value-added, and positive results for individuals, organizations, society, and the field of management and organizations” (source: http://aom.org/annualmeeting).Yet, as foundational frameworks on managerial agency (behavioral, evolutionary, sensemaking) indicate, the cognitive, affective, and institutional barriers for broadening our sight are profound. Effectively, theorists—just as managers— focus on local opportunities; and, as a consequence, organizational theories, practices, and pedagogies often fall short of addressing societal grand challenges. The proposed symposium showcases contemporary efforts in strategic management and entrepreneurship to address some of these concerns. The symposium features presentations by five scholars [Gino Cattani, Todd Zenger, Saras Sarasvathy, Richard Whittington, and Shubha Patvardhan] focused on broadening the sight on topics core to organizational theories, practices, and pedagogies— innovation, value creation, strategic agency, entrepreneurial education, and corporate oversight. Drawing on extensive conceptual and empirical work on innovators, entrepreneurs, and strategy practitioners, the panelists offer a revised understanding of (i) how innovators evaluate investment in a resource—not only on the basis of its “real option” value but, more importantly, its “shadow option” value [Gino Cattani] (ii) how economic actors operate —not just as “computers” “processing information”; but as “scientists” engaged in “theorizing” [Todd Zenger]; (iii) how strategic agency should be portrayed and practices—not just as oriented to “adapt” to the environment and “boundedly rational;” but as also oriented to “shape” the environment, and capable of “creative rationality” [Shubha Patvardhan]; (iii) how entrepreneurship education should be imparted— as a “method” a la the scientific method to “all”, rather than as an “outcome” of policy focused on “unicorns” [Saras Sarasvathy]; (iv) how corporate oversight can be most effectively accomplished —not just via traditional, “regulatory” mechanisms, but more through “normative” means [Richard Whittington]. Technologies as Shadow Options Presenter: Gino Cattani; New York U. Re-imagining Entrepreneurship Education: Lessons from Effectuation Research Presenter: Saras Sarasvathy; U. of Virginia A Theory-Based View of Entrepreneurship and Resource Formation Presenter: Todd Zenger; U. of Utah, David Eccles School of Business Oversight: The Grand Challenge of Corporate Control Presenter: Richard Whittington; U. of Oxford Creative Rationality Presenter: Shubha Patvardhan; U. of Delaware

The Theory-Based View: Economic Actors as Theorists

This paper outlines the theory-based view of strategy and markets. We argue that novel or “great” strategies come from theories. Entrepreneurs and managers originate theories and hypotheses about which activities they should engage in, which assets they might buy, and how they will create value. A firm’s strategy, then, represents a set of contrarian beliefs and a theory—a unique, firm-specific point of view—about what problems to solve, and how to organize and govern the overall process of value creation. We outline the cognitive and perceptual, organizational, and economic foundations of the theory-based view of strategy. We also discuss the essential attributes needed for a firm-level theory of strategy. Throughout the paper we offer informal examples of our argument, by briefly discussing the strategies of companies like Apple, Uber, Disney, Wal-Mart, and Airbnb. The theory-based view of strategy and markets also offers important insights for how firms govern themselves (including ownership, boards, and organization design) and how firms interact with capital markets and external evaluators and stakeholders. We conclude with a discussion of the practical and managerial applications of the theory-based view.

The Theory-Based View: Economic Actors as Theorists

This paper outlines the theory-based view of strategy and markets. We argue that novel or “great” strategies come from theories. Entrepreneurs and managers originate theories and hypotheses about which activities they should engage in, which assets they might buy, and how they will create value. A firm’s strategy, then, represents a set of contrarian beliefs and a theory — a unique, firm-specific point of view — about what problems to solve, and how to organize and govern the overall process of value creation. We outline the cognitive and perceptual, organizational and economic foundations of the theory-based view of strategy. We also discuss the essential attributes needed for a firm-level theory of strategy. Throughout the paper we offer informal examples of our argument, by briefly discussing the strategies of companies like Apple, Uber and Airbnb. The theory-based view of strategy and markets also offers important insights for how firms govern themselves (including ownership, boards and organization design) and how firms interact with capital markets and external evaluators and stakeholders. We conclude with a discussion of the practical and managerial applications of the theory-based view.

Six Work System Lenses for Describing, Analyzing, or Evaluating Important Aspects of IS Security

This article presents six ways to use work system concepts for describing, analyzing, or evaluating IS security at the system rather than enterprise level. As a whole, this theory-based view delves into topics that typical technology or process-focused cybersecurity approaches may overlook. This article introduces work system theory and then summarizes six lenses that each imply broadly applicable questions and issues for describing, analyzing, or evaluating IS security situations, tools, or systems.

Scenario-based potential effects of carbon trading in China: An integrated approach

Using China’s provincial panel data and national panel data of OECD (Organization for Economic Co-operation and Development) and BRICS (Five major emerging national economies: Brazil, Russia, India, China and South Africa), this paper simulates the scenario-based potential effect of carbon trading in China. Analysis methods included Stochastic Frontier Analysis, Difference-in-differences Model, and Nonlinear Programming Technique. Results indicated that in a theory-based view of carbon trading, the shadow price of carbon dioxide generally rises, with a non-linear negative correlation with carbon dioxide emissions. In different regions, the shadow price of carbon dioxide presents a digressive tendency among eastern, central, and western areas, with divergent gaps between and within areas. When the greatest goal is assumed to reduce national carbon intensity as much as possible at the given national GDP (Gross Domestic Product) (Scenario I), carbon trading has the effect of reducing carbon intensity by 19.79%, with the consideration of Porter Hypothesis effect. If the rigid constraint of national GDP is relaxed, and the dual constraint of both economic growth and environment protection in each region is introduced (Scenario II), the resulting effect is a reduced carbon intensity of 25.24%. China’s general carbon intensity in 2012 was higher than goals set at the Copenhagen Conference, but lagged behind the goal of Twelfth Five-Year Plan for National Economy. This study provides realistic and significant technical support for the government to use in designing and deploying a national carbon trading market.

Lebenslaufforschung in der Epidemiologie und den Sozialwissenschaften. Gemeinsam einsam?

Life course influences are being increasingly considered as a key to better understanding of health and social inequalities in health. Our aim is to examine the potential of a broader interdisciplinary perspective on the life course and health, one that integrates sociological and psychological theory and generates greater dialogue between epidemiology and the social sciences. The paper reviews major principles and concepts applied in different disciplines that deal with life course and proposes a theory-driven research framework which better informs interdisciplinary exchange and illustrates how a bio-psycho-social perspective on life course can be infused more fully into epidemiology. The paradigmatic principles of interdisciplinary life course research (human agency, timing in lives, linked lives, historical context) provide a strong theoretical framework for a holistic and theory-based view of life course and its interdependent pathways. The stress process represents an important aetiological mechanism between the organising concepts of the life course and health. To better understand the development of health and health inequalities across the life course, an interdisciplinary approach is required. The suggested theoretical contributions to models of epidemiological life course research supplement the long appreciated methodological focus of the field and will encourage interdisciplinary dialogue.

Homogeneous Wireless Power Transfer for Move-and-Charge

This paper presents a homogeneous wireless power transfer (WPT) technique to continuously energize the moving target. Due to the mobility of the charging target, the misalignment between the primary and secondary coils inevitably deteriorates the energy transfer performance by adopting the conventional WPT technique, so the constant energization mechanism is the most important issue for move-and-charge systems. The proposed homogeneous WPT technique utilizes the alternate winding design to gaplessly assemble primary coils, aiming to enhance the magnetic flux density. Besides, the vertical-and-horizontal secondary coil is also implemented to further improve the capability of acquiring energy for charging targets, especially in the area of the coils gap. In such ways, the proposed homogeneous WPT technique can effectively fulfil a continuous charging mechanism for moving targets. Also, this paper deduces the equivalent circuit model to analyze the mutual effect among multiple primary coils, which offers the theory-based view for the design of move-and-charge systems. Besides, both simulation and experimental results are provided to verify the feasibility of the proposed homogeneous WPT technique for move-and-charge systems.

Fostering pre-service teachers’ motivation-related practical wisdom through a mentoring procedure

This article introduces a procedure aimed at fostering pre-service teachers’ reflective thinking and practical wisdom and encouraging them to adopt a theory-based view of promoting learners’ motivation while taking into account learners’ different motivational profiles. The procedure is based on a study about the promotion of science-related motivation among students with different motivational orientations by employing an inquiry-based science teaching approach and out-of-school learning, as well as supporting learners’ basic psychological needs, in order to provide relevant and meaningful conditions for learning. The procedure for pre-service teacher education encompasses lessons intended to familiarize student teachers with theoretical perspectives, authentic case studies of learners with different motivational orientations, support for lesson planning, and reflection on the implemented plans. The described procedure may be used in teacher education during mentoring sessions in practicum periods.

Why do people stick to Facebook web site? A value theory-based view

Purpose– Based on past study, three different value constructs, including social value, hedonic value, and epistemic value, were adopted in this study to examine their influence on individual's stickiness to use Facebook. Besides, this paper aims to explore how “trust” affects the personal usage behaviors.Design/methodology/approach– The research model was tested with data from 345 Facebook's users using a web survey. The partial least squares technology was used to test the proposed hypotheses.Findings– Results confirmed that hedonic value served as important value concerns for Facebook users. Besides, considering trust factor, the respondents can be classified into two groups. In the high-trust group, social value and hedonic value produced significant impacts on stickiness. In the low-trust group, the statistical results show that epistemic value and hedonic value had impacts on the stickiness for Facebook web site use, but social value aspect had no significant impact.Research limitations/implications– The respondents were mainly the subjects that belonged to the young age group in Taiwan. Therefore, it should be cautious to generalize the conclusions to other areas or the elder.Practical implications– This study results facilitate web site operators and marketing researchers to understand what value factors and trust affect the user stickiness of Facebook. Their marketing plan and application plug-in can be accordingly adjusted.Originality/value– This study provides positive evidences how value factors affect Facebook stickiness. The paper also proved that high-trust and low-trust people have different value models.