The Limitations of Analytical Frameworks for Strategic Dynamics

This chapter focuses on the fundamental problem in the analysis of strategic behavior in dynamic contexts. It explains why theorizing efforts in strategic management have remained inadequate to the task of generating a comprehensive framework for the analysis of firms’ strategic behavior in dynamic competitive environments, or even to understand the complexities of the phenomenon. On the one hand, the IO/Game theory approach to modeling the firm-environment interaction poses several analytical challenges due to the computational burden, data requirements, and so on. On the other hand, the largely organization-centric evolutionary theorizing within the evolutionary perspectives on strategy falls short of capturing the richness of the co-evolutionary dynamics particularly the endogeneity of firms’ strategic behavior with the dynamic environment. A review of the stream of strategy dynamics, which has emerged purportedly to weave in both the internal and external sources of dynamism into a unified conceptual and analytical framework, provides insights into various conceptualization and analytical issues. It identifies the underlying motivation, the conceptual and analytical shortcomings as well as their sources, and notable attempts to address the inherent conceptual and analytical weaknesses. This chapter concludes by highlighting the analytical challenges and shortcomings of two other analytical frameworks—namely competitive dynamics and dynamic capabilities—in lending themselves to explain and analyze a variety of ‘dynamic’ issues.