Deep Roots: A History of Strategic Management

As this is the first “spotlight on strategic management” feature to appear in Business Horizons, it seems important to begin with a brief history of how the field developed before progressing on to an examination of current foci and future issues of potential importance. The field of strategic management has advanced substantially in both the theoretical domain and empirical research over the last 25 years. While the roots of the field can perhaps be traced back as early as 320 BC to the work of Sun Tsu, the evolution of the field in the last few decades has been dramatic (Hitt, Boyd, & Li, 2004). Recent work traced the intellectual structure of the field over the period 1980—2000 (Ramos- Rodriguez & Ruiz-Navarro, 2004). Some of the most cited works represent particular perspectives such as industrial organization economics (Porter, 1980, 1985), corporate strategy-product diversification (Chandler, 1962; Rumelt, 1974), transaction cost economics (Williamson, 1975), evolutionary economics (Nelson & Winter, 1982), resource dependence (Pfeffer & Salancik, 1978), and the behavioral theory of the firm (Cyert & March, 1963).
While agency theory and transaction cost economics have played prominent roles in building our understanding of executive and firm behavior, industrial organization economics and the resource- based view of the firm (RBV) have dominated much of the research and thinking in the field over the past 25 years (Ramos-Rodriguez & Ruiz- Navarro, 2004; Wright, Filatotchev, Hoskisson, & Teng, 2005). Much of the work in the decade of the 1980s used the structure-conduct-performance approach ushered in by Porter (1980, 1985) or the strategy-structure-performance focus explained in a review article by Hoskisson and Hitt (1990). Research in the 1990s and 2000s, however, has been dominated by the RBV (Barney, 1991, 2001). During the 1990s and since, rich streams of research emerged in such areas as competitive strategy (D’Aveni, 1994; Gimeno, 2004), corporate governance (Daily, Dalton, & Rajagopalan, 2003; Hoskisson, Hitt, Johnson, & Grossman, 2002), international strategy (Lu & Beamish, 2004; Penner- Hahn & Shaver, 2005; Tallman, 2001), strategic leadership (Finkelstein & Hambrick, 1996; Hambrick & Cannella, 2004), and dynamic capabilities (Helfat & Peteraf, 2003; Teece, Pisano, & Shuen, 1997; Winter, 2003). Emerging areas of strategic management research include strategic entrepreneurship (Amit & Zott, 2001; Hitt, Ireland, Camp, & Sexton, 2001; Hitt, Ireland, Camp, & Sexton, 2002), strategy process (Chakravarthy, Mueller-Stewens, Lorange, & Lechner, 2003; Floyd, Roos, Jacobs, & Kellermanns, 2004), and network strategies (Dyer & Singh, 1998; Gulati & Singh, 1998; Ireland, Hitt, & Vaidyanth, 2002). The resource-based view of the firm, or RBV theory, is evident in much of this research, and other theoretical domains such as organizational learning have been incorporated into areas of research such as international strategy (Hitt, Hoskisson, & Kim, 1997), strategic alliances (Kogut & Zander, 1992), and mergers and acquisitions (Barkema & Vermeulen, 1998; Vermuelen & Barkema, 2001).
The field has been transformed from one based largely on normative case-based research into one emphasizing theory and empirical research using valuable data and rigorous analytical tools. Yet, the field still has some limitations in the general research methodologies employed (Boyd, Gove, & Hitt, 2005) and must take important steps to improve research practices in line with many of the other disciplines in business.
Although strategic management began as a largely practice-oriented field, it is important to recognize that the emphasis on scholarship has created a gap between the research perceived as quality by academicians and the relevance of that research as perceived by practitioners. Baldridge, Floyd, and Markoczy (2004) found there was a statistically significant positive relationship between academic quality and global relevance of strategic management research, but the amount of overlap in the two evaluations was small. This might have implications for future development of the field. (Michael A. Hitt, 2005)