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The Theory of the Business, Falsification and Avoiding Managerial Unawareness

Author

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  • Doron Faran

    () (Department of Industrial Engineering and Management Ort Braude Academic College of Engineering, Karmiel, Israel)

Abstract

Organizational strategy is based, too often implicitly, on a theory about the organization's environment. Although the falsity of this theory puts the entire strategy at risk, managers are usually unaware of both the theory and the peril. The issue of theory falsification is mostly associated with the philosopher Karl Popper, but unfortunately the management literature identifies with his rival, Thomas Kuhn. The wish to apply Popper's doctrine in the managerial context faces another difficulty – the formation of the theory. Whilst Popper sketches a hierarchical structure of a theoretic system, managers hold a one-tier theory-of-action that harms falsification. An adaptation of the Popperian method for the managerial context is suggested and examined through Action Research. The findings indicate that a careful extraction of an upper-level theory from the theory-of-action and its testing through derivable scenarios enables early falsification, namely before the actions are taken.

Suggested Citation

  • Doron Faran, 2009. "The Theory of the Business, Falsification and Avoiding Managerial Unawareness," Interdisciplinary Management Research, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 5, pages 89-101.
  • Handle: RePEc:osi:journl:v:5:y:2009:p:89-101
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    References listed on IDEAS

    as
    1. David Dequech, 2000. "Fundamental Uncertainty and Ambiguity," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 41-60, Winter.
    2. Durand, Thomas & Mounoud, Eléonore & Ramanantsoa, Bernard, 1996. "Uncovering strategic assumptions: Understanding managers' ability to build representations," European Management Journal, Elsevier, vol. 14(4), pages 389-398, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Organizational learning; Philosophy of science; Strategy; Theory-of-action; Unawareness;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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