The focus of the ﬁeld of strategic management is on choices with respect to the direction of the evolution of the business enterprise.
It covers subjects of primary concern to senior executives, and to anyone interested in the success and failure of the business enterprise. The ﬁeld is grounded in practice and exists because of the importance of the subject, and the need for frameworks that can help managers think through business decisions. The ﬁeld studies the choices enterprises must make in order to continue to survive and prosper in the long run in an environment where it is assumed that there is competition for customers, technology, people, ﬁnancial capital, and other inputs.
Technological innovation and changing customer tastes are part of the landscape in which strategic decisions are made. Strategic choices include the selection of products and services to offer cus- tomers, the market segments to address, the business models to employ, the appropriate level of diversiﬁcation, and organizational structures, policies and practices needed to coordinate activities. It is a basic proposition of the ﬁeld of strategy that these choices are interrelated and should not therefore be made in isolation. The ﬁeld views the enterprise as both adapting to its environment, and in some cases even shaping that environment.
The assumption adopted in the ﬁeld of strategic management that the enterprise has meaningful choices, and that managers make a difference, is in contrast to organizational ecology that presumes that path dependencies are so strong that the enterprise simply cannot adapt, and managers are rather helpless in the face of strong technological, market, and social determinism. Instead of adaptation, organizational ecology sees a population of business enterprises that changes in composition over time. Some ﬂourish and others perish while still others are born. Organizational ecol- ogy does recognize strategy, but mainly when choices are made at the time the enterprise is founded.
The strict ecological view is at odds with the ﬁeld of strategic management and with frameworks that recognize that managers can make strategic (investment) choices, and engage in orga- nizational renewal and transformation. However, change is not automatic or costless, and is often thwarted by various kinds of organizational inertia and decision-making biases. Neverthe- less, entrepreneurs and managers can affect outcomes. This is particularly true when positive feedback situations exist, and opportunities to make value-enhancing cospecialized investments are present. As David (1992) notes, such situations are especially prone to appear at early stages in the development of integrated production and distribution systems.
Strategic management as a ﬁeld has grown signiﬁcantly over the past two decades. It has moved closer to getting established as a scientiﬁc ﬁeld, including establishing its own journal and professional society, and gaining some acceptance from other disci- plines (Rumelt et al., 1994). Although the roots of the ﬁeld can be traced back to the ideas of Sun Tzu, Leo Tolstoy, and Clausewitz, the ﬁeld really took off in the early 1980s. A research agenda began to emerge around the importance of analyzing competitive forces; and then later around ideas on resources, competencies, and capabilities.1
While borrowing from economics, the ﬁeld of strategic manage- ment has been eclectic in its employment of economic paradigms because (neoclassical) economics cannot explain a number of phe- nomena that are of interest to scholars in the ﬁeld of strategic man- agement (such as ﬁrm heterogeneity, industry dynamics, entrepre- neurship, and competitive advantage) (Teece and Winter, 1984). Because it is pragmatic, the ﬁeld of strategic management is also forced to be interdisciplinary. Indeed, the problems addressed in the practice of strategic management require insights from multiple disciplines.
Source: Teece David J. (2009), Dynamic Capabilities and Strategic Management: Organizing for Innovation and Growth, Oxford University Press; 1st edition.