Behavioral Foundations of Strategic Management

Philip Bromiley holds the Curtis L. Carlson Chair in Strategic Management and is Chair of the Department of Strategic Management and Organization at the Carlson School of Management, University of Minnesota.

• 1. Introduction. Objectives of Strategic Management Research:.What is an Explanation?.Rigor in Strategy Research.Rationality and Bounded Rationality.Summary of the Argument.Outline of the book.2. Basics of A Behavioral Approach.Basic Views of Decisions.Bounded Rationality.Routines.Aspirations and Search.Aspiration Levels.Search.Alternative Variations.Slack.The Ecological or Selection Argument.Two Criticisms of the Bounded Rationality View.Summary.3. A Behavioral Critique of Rationality and Equilibrium.The Behavioral Critique of Rationality.Rationality Assumptions are Untestable.Only Optimizers Survive – Selection.Correctness of Assumptions Doesn’t Matter because Optimization Predicts Well.Does Optimization Predict Well?.Prediction is the Appropriate Test of a Theory.The Assumptions are Close Enough.Very Weak Form Rationality?.Optimization is Best!.Logical Problems of Rationality and Equilibrium.Bounded rationality in economics.Game theory.A Lack of Rigor.Uses of Formal Models.Summary.4. A Behaviorist’s Perspective on Current Strategy Approaches.Behavioral Traditions in Strategy.No Rules for Riches?.Resource Based View.The RBV versus’ Porter’s Industry Analysis.Transactions Costs.Agency Theory.Summary.5. Behavioral Methodology.Importance of Process.Process and Testing.Time Series and Endogeneity.6. Where do we go from here?.Management Strategy and External Strategy.Competition.Prescription.Statistics.Behavioral Theory of the Firm.Concluding Remarks.7. References