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The influence of critical realism on managerial prediction

Author

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  • Nuno Ornelas Martins

    () (Faculdade de Economia e Gestão, Universidade Católica Portuguesa - Porto)

  • Ricardo Morais

    () (Faculdade de Economia e Gestão and CEGE, Universidade Católica Portuguesa - Porto)

Abstract

In this conceptual paper we suggest that a critical realist perspective alters managerial views on prediction and strategy formation. For that purpose, we review alternative notions of prediction in economic theory in the light of critical realism. In addition, we review the role of prediction in alternative streams of thought on strategy formation. The corollary of such a literature review is a new conceptualisation of the organisational environment as an open system which is not prone to prediction but can be a source of learning for strategists. Such critical realist view alerts researchers and practitioners for the provisional nature of scientific explanations and the dangers of premature prediction. Critical realism is thus a promising avenue for further research on strategy formation and more appropriate strategizing.

Suggested Citation

  • Nuno Ornelas Martins & Ricardo Morais, 2015. "The influence of critical realism on managerial prediction," Working Papers de Gestão (Management Working Papers) 02, Católica Porto Business School, Universidade Católica Portuguesa.
  • Handle: RePEc:cap:mpaper:022015
    as

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    File URL: http://www.feg.porto.ucp.pt/docentes/repec/WP/022015_Martins_Morais_The_influence_of_critical_realism.pdf
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    References listed on IDEAS

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    1. Ramanathan, Ramu & Engle, Robert & Granger, Clive W. J. & Vahid-Araghi, Farshid & Brace, Casey, 1997. "Shorte-run forecasts of electricity loads and peaks," International Journal of Forecasting, Elsevier, vol. 13(2), pages 161-174, June.
    2. Tony Lawson, 2009. "The current economic crisis: its nature and the course of academic economics," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 759-777, July.
    3. Stephen Pratten, 2005. "Economics as progress: the LSE approach to econometric modelling and critical realism as programmes for research," Cambridge Journal of Economics, Oxford University Press, vol. 29(2), pages 179-205, March.
    4. Sen, Amartya K, 1980. "Description as Choice," Oxford Economic Papers, Oxford University Press, vol. 32(3), pages 353-369, November.
    5. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, vol. 75(3), pages 308-313, June.
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    Keywords

    critical realism; prediction; economic modelling; strategy formation;

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