Strategizing, Disequilibrium, and Profit

This book starts from the proposition that frameworks used in business strategy lack realism because they are built on equilibrium-based foundations carried over from the domain of neoclassical economics. Mathews proposes instead a conceptual framework consistent with the turbulence found in real economies, and brings strategizing into conformity with such phenomena as innovation and technological change, network formation, capture of substitution effects in modular systems, and many other interesting features of modern economies that are passed over by mainstream equilibrium-based analysis. This new framework is based on the way firms assemble resources into a distinctive bundle, then build activities out of these resources to generate revenue, and link the resources to the activities through routines created and administered by management.

Table of Contents:
Contents Preface Acknowledgments List of abbreviations List of Charts 1. Introduction Strategizing vs. economizing; Outline of chapters 2. Capitalism is not and never can be a stationary system The Schumpeterian schema and dynamic competition vs. a comparative static framework: Structure, Conduct, Performance; Applications in a test case: the Flat Panel Display industry 3. Entrepreneurial profits can only be earned in disequilibrium The Knightian theory of profits; Strategic opportunities and earning profits in disequilibrium; Why Knightian profits vanish at perfectly competitive equilibrium 4. Rents vs. profits as strategizing goals Ricardian and monopoly rents - and their inadequacies as goals for strategizing; Organizational, managerial and entrepreneurial rents as illusory goals for firms 5. Strategizing is carried out by resource-based firms The Penrosean firm as vehicle for strategizing; Fundamental strategic categories of the firm: Resources, activities and routines; Strategic goals associated with resources: complementarities; with activities: increasing returns; and with routines: learning by doing 6. No firm is an island: Strategizing in networks The firm with its multiple connections; Resources, activities and routines at the network level, and strategic goals associated with them 7. The economy as a whole: Entrepreneurial, industrial and evolutionary dynamics The Schumpeterian notion of the economy as a whole, linking strategizing via entrepreneurial dynamics to industrial dynamics and evolutionary dynamics 8. Strategizing in disequilibrium: Comparative static vs. dynamic frameworks The workings of the framework as a totality; Generation of an Activities-based view of strategizing, a Resources-based view, and a Routines-based view (or Dynamic capabilities perspective), in both comparative static and dynamic settings 9. Towards a unified theory of management The advantages for management of adopting a consistent disequilibrium framework - not least in developing a platform for the unification of the functional disciplines of management Appendix. Entrepreneurship and economics: A case of shocking neglect References Index