Strategic Management Evolution

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Strategic Management Evolution, 1985 – 2002: Controversies over Accounting Profitability Modern concept of Strategic Management started in the 50’s at Harvard Business School(Ghemawat, 2002; Hoskisson, Hitt, Wan, & Yiu, 1999). Even the first authors mentioned its basic ideas since the 30’s (Barnard, 1938), the formalization of this new discipline is thanks to the work of Chandler (1962), Ansoff (1965) and Andrews (1971). Since then, researchers had studied firms in order to understand their strategic behavior and one question has been especially controversial: What drives firm profitability? This essay analyses the evolution of the classic works developed by Schumalensee (1985), Rumelt (1991) and McGahan & Porter (1997, 2002).Using an historical perspective, the evolution of the strategic management research shows a permanent evolution toward sophisticated methods can better explain and predict the complexity of firm dynamics. Strategic Management Research has been described as a Pendulum that had swing from a firm toward an industry perspective (Hoskisson et al., 1999). From Management and Economics, considered papers present the evolution of successive empirical researches that try to demonstrate what really matters about firm profitability. The first considered research was conducted by the economist from MIT Richard Schamlensee (1985). The author states that its purpose was to estimate the relative importance of profitability factors suggested by the literature. Those factors were firm, market and market share, with a clear influence from the Industrial Economics approach but including also the Revisionist Approach (Market Share) and the Resource View Approach (Firm). One important distinction is that the author did not state conclusions about causality, just a descriptive analysis to understand what explains the variance of the firm profits. Despite the conclusions that will be analyzed later, one of the major achievements of the author was...
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