Strategy without Ontology

Author(s): Thomas C. Powell

Source: Strategic Management Journal, Vol. 24, No. 3 (Mar., 2003), pp. 285-291
Published by: Wiley
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 Strategie Management Journal
Strat. Mgmt. J., 24: 285-291 (2003)
Published online inWiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smj.284

RESEARCHNOTES AND COMMENTARIES

STRATEGYWITHOUT ONTOLOGY
THOMAS C. POWELL*
Australian Graduate School of Management, Sydney, New South Wales, Australia

Professor Arend's critique raises fundamental epistemological issues for strategy research, par
ticularly the concern that pragmatist philosophy forecloses access to objective truth and scientific
progress. This response discusses the empiricist underpinnings of pragmatism, and addresses

Professor Arend's specific concerns about the connections between competitive and
advantages
firm performance. Copyright ? 2003 JohnWiley & Sons, Ltd.

...
STRATEGY AND OBJECTIVE TRUTH If a science is defined by an ability to predict
and control the dependent variables of interest
then strategy research cannot fare well.
Professor Arend's ultimately
critique raises important issues, a new definition is needed to provide a
Perhaps
and I appreciate the opportunity to respond. I fairer measure of progress in strategy but
research,
intended my article as a discussion paper on strat that, us back to the
unfortunately, brings language
egy and philosophy of science, and have been game where we began.

encouraged by the many public and private com

mentaries.

Arend's paper raises numerous objections, but I do not share this pessimism or despair. I
saves its crucial and most passionate objection believe strategy research can fare quite well, that
for last: that I would deny strategy researchers control and prediction are not beyond the reach
access to objective truth. In Powell's world, the of our work, and that our particular 'language
critique suggests, strategy researchers might as
game' can be as productive as any in the social
well abandon the quest for truth and follow 'the sciences. My original paper was, in large part, an
lure of rich consulting rewards ... without any attempt to develop the epistemological foundations
worry about having underlying theories proven for this belief.
wrong.' Arend then concludes on a note of despair:
But what emerges in Arend's critique, as in
Durand's earlier commentary, is that many strategy
researchers want something more than to 'fare
Key words: empiricism; strategy; ontology; competitive
advantage; pragmatism well.' They want to fare well and to preserve their
Correspondence to: Thomas C. Powell, Australian Graduate
School of Management, Gate NSW
common-sense intuitions about reality, truth, and
11, Botany Street, Sydney,
2052, Australia. E-mail: thomasp@agsm.edu.au scientific progress.

Copyright ? 2003 JohnWiley & Sons, Ltd. Received 10 July 2002

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 286 T. C. Powell

I do not think this is possible. For any empirical believe in their divine reality; the 'correspondence'
discipline, epistemological beliefs have theoretical view says that propositions copy reality; the 'coher
and methodological consequences, and habitual ence' view says they connect only with other
beliefs can lead to dogmatism, illusion, or despair. propositions; and the 'conceptualise view says
In a world where common sense and conventional propositions 'shadow' but do not copy reality;
wisdom often mislead us, philosophy should, in 'monists' believe reality is unified under a sin
Wittgenstein's words, 'show the fly out of the fly gle principle; 'pluralists' believe reality is dis
bottle.' Our philosophy of strategy should show tributed; and 'dualists' believe reality is bifurcated.
us the way, even if it means relinquishing the And while the ontological 'isms' proliferate, a
comforts of well-worn epistemological beliefs. pure empiricism, clear of the ontological fray, has
These wider epistemological concerns go be proven elusive.

yond the scope of my original paper, which This elusiveness is illustrated in the history of
dealt specifically with the competitive advantage positivist epistemologies. Positivism arose in the
hypothesis. But they are relevant to Arend's com nineteenth century as an attempt to provide an
ments on objective truth and scientific progress, ontology-free epistemological defense for emerg
and therefore the following section addresses them, ing scientific theories?particularly the theory of
providing the empiricist underpinnings support natural selection, which was under attack from
ing the earlier paper. In the second section, I existing theories, religious interests, and popu
address Arend's more specific concerns on com lar opinion; and later, for sociological functional
petitive advantage. ism, neoclassical economics, and behaviorist psy
chology. Like 'logical positivism,' its twentieth
century descendent, nineteenth-century positivism
STRATEGY AND EMPIRICISM attempted to establish a complete logic of sci
ence by distinguishing factual from value-laden
Philosophers agree on very little, but nearly all propositions, codifying the elements of scientific
of them believe that human experience originates, method, establishing criteria for empirical inves
at least in part, in sense impressions. Philoso tigation, and defining the requirements of good
phers disagree about whether experience origi scientific theory (Menand, 2001).
nates entirely in sense impressions (Locke's 'tab At its early twentieth-century peak, 'logical
ula rasa'), or is supplemented by preexisting sense positivism' was constructed on three platforms:
making machinery (e.g., Kant's 'categories'), but (1) Logic?distinguishing analytic (logically nec
these debates?though essential in epistemol essary) from synthetic (empirically meaningful)
ogy?have little direct relevance for research in propositions; (2) Verifiability?the insistence that
natural or social science. The primacy of empiri propositions be, in principle, testable, i.e., contain
cal experience is noncontroversial, and nearly all observable or measurable terms; and (3) Mean
researchers (and nonresearchers alike) are, in the ing?that the meaning of a proposition is its
broadest sense, empiricists. means of verification; and unverifiable ('metaphys
For research, the telling differences concern ical') propositions are not wrong, but meaningless.
the origins and consequences of sense impres These platforms, founded in part on a (mistaken)
sions?or, more properly, the ontology of sense reading of Wittgenstein's Tractatus, were promul
Empiricism itself provides no onto gated in Vienna by Schlick, Carnap, and Feigl, and
impressions.
logical guidance. Sense impressions may be lit in Cambridge by Ayer and the 'analytical school'
eral copies of 'real' objects and phenomena, or (see Ayer, 1946; Reichenbach, 1951; Kraft, 1953).
they may be private, solipsistic dreams, or shared Positivism succeeded insofar as its vocabulary
cultural imaginings. Whatever it is that 'causes' and analytical methods survive in the philosophi
or 'stands behind' sense impressions?if any cal mainstream. But there are few remaining posi
thing?does not impress itself independently upon tivists, and positivism's decline is one of the more
us. Empiricism is ontologically silent. dramatic chapters in recent philosophy. Although
and scientists, however, have not positivism began with ontology-free aspirations, its
Philosophers
remained silent. 'Realists' believe in increasingly dogmatic insistence on observability
ontologically
the hard reality of sense impressions, 'idealists' and the absurdity of metaphysics opened logical
believe in their transcendental reality, and 'theists' positivism to attacks from every quarter?realists,

2003 John Wiley & Ltd. Strut. J., 24: 285-291

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 Research Notes and Commentaries 287

theists, idealists, philosophers of language, social these claims. There may be real planets there. But
constructionists, Kuhnians, neo-pragmatists, post we cannot be sure, and more to the point for empir
modernists, and even analytical philosophy itself. ical research?it doesn't make any difference. The
Quine (1953), for example, showed that the ana planet's (or the manager's, or the firm's) ontolog
lytic-synthetic distinction, though useful in some ical status has no research consequences.1
contexts, is often undecidable; and, along with What does
have research consequences, and
Pierre Duhem (1954), emphasized the ambiguity pernicious ones, is the interjection of ontologi
of the verifiability criterion, and the improbability cal beliefs, which tend to run in escalating chains
of decisive empirical tests. of ideology: a hard reality exists; thus, our sense
Philosophers of science may eventually abandon impressions to that reality; thus, our
correspond
the idea of a complete, consistent empirical system, language corresponds to that reality; thus, the
as many have
already abandoned the notion of a terms in our propositions are real; thus, we are
comprehensive logic of science (Kincaid, 1996). approaching truth; etc., etc.; or
conversely: real
But this brief history shows that neither philoso ity is transcendental; thus, reality is perfect; thus,
phers nor empirical researchers can afford the lux sense impressions are imperfect; thus, truth is
ury of carrying dogmatic ontological beliefs on accessible only by thought; etc., etc.
the backs of their epistemologies. We may never Under a broad empiricist epistemology, beliefs
achieve an entirely consistent empirical system, about ultimate 'truth' and 'reality' have no research
but we can at least learn the most important epis consequences. They are, to quote William James
temological lesson: of what we cannot know, we (1890: 1264), 'altars to an unknown god'?we can
must remain silent
(Wittgenstein, 1922: 151). believe in them or not, or be agnostic, as we are
The essential premises of a broadly construed inclined. But introducing ontological beliefs into
empiricism are straightforward: we receive infor the research context seems a strange and nefari
mation from our sense impressions; we do not ous intrusion?like bringing political opinions into
know what 'stands behind' these sense impres weather predictions. Unless someone had an ulte
sions (if anything); and our 'sense-making machin rior motive, it isn't clear why they would do it.
ery' (which may or not preexist sense impres None of this impugns scientific methods or sci
sions) deploys language and concepts to help us entific contributions to society. But it does impugn
pretensions. As Wittgen
and communicate our sense the scientist's ontological
organize, interpret,
impressions. In this way, a family of sense impres stein put it: 'What a Copernicus or a Darwin really
sions (describable adjectivally as 'short,' 'brown,' achieved was not the discovery of a true theory, but
'furry,' 'loud') may give rise to a sense-making of a fertile new point of view' (Wittgenstein, 1977:
sign (the grammatical substantive 'dog'), or to 18). Our discoveries are not inferior by virtue of
a proposition about sense-making relations ('The solving scientific problems?this is exactly what
dog barked because he was hungry'), as an ana
good theories do. But it is self-serving for scientists
lytical and discursive convenience. These conve to insist, over and above solving human problems,
niences, of course, do not give rise to an indepen that science transports us into the transcendental
dent entity (a dog) or relation (a cause)?there realm of reality and objective truth.
may or may not be a real dog feeling hungry, Among the many available ontologies, empirical
barking behind our sense impressions. researchers seem
particularly attracted to common
These ideas are widely misunderstood, and sense realism, and often
vindicate it with proofs:
even prominent empiricist philosophers have the accumulation of evi
intersubjective agreement,
attached ontological beliefsempiri to their dence, the involuntary character of sense impres
cism?Cambridge analytical philosopher G. E. sions, etc. But strike me very
these
'proofs'
Moore insistedhis pen was independently real much like the ontological and design proofs of
because he could see and feel it (Moore, 1959: God's existence. The conclusion may someday be
33); and Karl Popper, while rejecting common proven true, but people invoke the 'proofs' for
sense realism, insisted on the reality of objects other reasons?to
persuade, encourage, control,
such as planets because we perceive them
intersubjectively, and through artificial devices like 1
In logic, this idea is sometimes presented in 'redundant' or
telescopes (Popper, 1963: 117). But nothing in the 'disquotational' form?that the proposition 'p is true' adds
empiricist epistemology either accepts or denies nothing to the proposition 'p.'

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288 T. C. Powell

cajole, or to justify habitual beliefs. In any case, right. But as for myself, I wonder what researchers
my accepting or rejecting them has no conse hope to gain by mixing strategy with ontology.
quences for research, other than making it more Indeed, Arend's critique, which drives itself to
complicated. Empiricism, without the ontology a vague and despairing conclusion, demonstrates
attached, already stipulates that observers cannot the consequences of clinging to a common-sense
freely choose their sense impressions, that different realism that neither hears nor answers back. What
observers experience similar sense impressions, ever our ontological beliefs, they can only pull us
that these impressions may 'accumulate,' and that deeper into the fly-bottle.
'intersubjective agreement' makes for good sci I believe Arend's despair is unfounded. Under
ence. But empiricism remains silent on what it any reasonable empiricism, we can theorize, gather
does not know?the origins of experience. data, make discoveries, establish careers, main
Moreover, common-sense realism might be tain our research integrity, and be 'scientific,' and
wrong. Our sense impressions might stem entirely all without the ontological baggage. Moreover,
from shared unconscious imaginings, or from the we can free ourselves from enervating tribal dis
Cartesian evil demon, or we might all be?as putes (e.g., 'objectivist vs. subjectivist' debates),
the philosophy professors say?'brains in a vat,' and admit a wide and inclusive array of theories,
under the control of some diabolical scientist. methodologies, and perspectives, from functional
In one sense, inter subjective agreement should ist to interactionist to postmodern. And along the
not astound us?similarly constructed, similarly way, we can gain a more profound appreciation
trained beings observing in the same way will of our work; that our research is not reduced by
give similar reports. Certainly, the convergence of its detachment from myths of ontological 'reality,'
observations says nothing about what lies outside but enhanced by its authentically human character;
those observations. None of us, for example, will that we are not 'passive mirrors,' but active explor
report observing in four spatial dimensions and, in ers, discoverers, and organizers of experience.
general, our sense faculties and shared experiences
impair our imaginations. All of us may look
through a telescope, perceive a white sphere, and ON COMPETITIVE ADVANTAGE AND
call it a fact of science?but we need not get FIRM PERFORMANCE
carried away about 'reality' or 'truth': an alien
using the same telescope might hear music and Professor Arend's critique raises a number of
call the moon a fugue in B-flat. issues specific to the hypothesis of competitive
We may not feel subjectively as though we advantage. The main objections are as follows:
are inventing ordinary experience, but that belief (1) that firm performance should be defined in rel
does not imply that we are discovering an objec ative, not absolute, terms; (2) that my concept of
tive reality independent of perception?we may, competitive disadvantage has antecedents in strat
in fact, be discovering ourselves, in the sense egy research; (3) that abductive inference and the
of becoming blindingly familiar with our shared pragmatist view deny the scientific value of strat
frame of reference, i.e., the peculiarities of human egy research; and (4) that my account of com
sense impressions and sense-making machinery. petitive advantage neglects key features of the
In the nineteenth century, William James put it advantage-performance relation: e.g., the origins
as follows: of competitive endogeneity of advan
advantage,
tages, changes in advantages, and attacks on rival
The mind is not a mirror with no foot
floating
advantage. The remainder of the paper addresses
hold, passively reflecting what it comes upon.
these concerns.
Mental interests, hypotheses, postulates help make
the truth the mind declares. There belongs to mind
a a vote. It is in the game.
spontaneity, (James,
Defining competitive advantage and firm
1878: 3)
performance

Clearly, some researchers do believe that science Professor Arend is concerned that, in discussing
holds a mirror to objective reality. From his com the logic of competitive advantage, my proposi
ments on objective truth and scientific progress, I tions do not define the terms 'competitive advan
infer that Professor Arend believes this, as is his tage' and 'performance.' However, as noted in

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 Research Notes and Commentaries 289

the paper, my argument addresses only the logical of praising the concept of competitive disadvan
structure of competitive advantage propositions, tage, and showing how the concept was fore
not their content?we could express any com shadowed in earlier the
strategy research?e.g.,
petitive advantage hypotheses using these forms. 'W' in SWOT, inertia, inefficiency, core rigidities,
In later sections, my paper specifically presented and strategic liabilities. He then concludes that, in
a resource-based definition of competitive advan prior research, 'negative causes have not been well
tage, and analyzed its epistemological properties integrated with positive causes to explain overall
in relation to other definitions (e.g., competitive effects, positive, negative, There and neutral.
is
advantage as market power). But the conclusions a vacuum for sophisticated propositions on how
in the logic section did not depend on our agree competitive advantages and disadvantages com
ment about definitions?to quote the paper, these bine, on how each combines with similar causes,
conclusions 'would apply to any propositions p and and on how advantages may become disadvantages
q so long as they were arranged in parallel logical and vice versa.'
forms' (Powell, 2001: 881). I agree with most of this, since it echoes my
Arend seems particularly adamant that 'perfor own paper. But as a point of clarification, my
mance' be defined not in absolute terms, but as concept of competitive disadvantage was a logi
performance relative to competition. I do not see cal construct?a fiction designed to
propositional
how we disagree here, or how my own construal
suggest how we might improve our inferences
could be misunderstood: all of the propositions in about superior performance. Empirical researchers
the paper used the term 'superior performance.' can interpret it variously, including the ways sug
But Arend takes this objection a step further, above and those in my own
gested suggested
claiming that the notion of relative performance article, but in my paper competitive disadvantage
vitiates the need for a concept of competitive dis
played a formal rather than empirical role. Logi
The is as follows: consider
advantage. argument cally, the only restriction is that competitive dis
Powell's hypothetical industry in which firms per not be redefined as to other
advantage equivalent
form differently, but no firm has sustainable com constructs in the same propositions?i.e., it is
petitive advantages; then the firms differ only in not anti-performance, and not the mirror image of
their competitive disadvantages; and thus relative
competitive advantage.
performance is a function of differences in com
petitive disadvantages. But, Arend argues, why not
'redefine the baseline,' and simply refer to firms Abductive inference and pragmatism
with fewer competitive disadvantages as firms with
Having commented on these subjects in two previ
competitive advantages? ous papers (Powell, 2001, 2002), I will not repeat
The problem is that however we operational those arguments here. In any case, I find very lit
ize competitive disadvantage?and my paper sug tle to disagree with in Professor Arend's comments
gested some of the possibilities?it cannot be the on abduction and pragmatism. He asserts his dis
inverse of competitive We
advantage. obviously agreement, but then devotes a substantial part of
do not need a new concept if we are only going to his critique to exploring the reasons why strat
'redefine the baseline' to rescue an existing con
egy research may not converge to objective truth,
cept. As Arend seems to recognize, this lands us before finally concluding that the analysis 'pro
'squarely on the second problem of tautology.' But vides room for debate.' As part of this discussion,
much worse, it lands us back on the first prob he reflects on the desire for objective truth and
lem, leaving us without an inferential foundation scientific progress, as I addressed earlier.
for connecting firm-specific attributes with supe On the other hand, I have found that, in defend
rior performance?we can eliminate competitive ing a pragmatist interpretation of strategy research,
disadvantage, but we still need an alternative that one runs the risk of being misunderstood. In Pro
is not a disguised attempt to rescue the hypothesis
fessor Arend's critique, I am concerned about three
of competitive advantage. apparent misunderstandings. First, Professor Arend
suggests that pragmatism and abductive inference
The concept of competitive disadvantage the
degrade 'scientific value' of strategy research,
From the above critique of competitive disad reducing strategy to the 'poor brother of eco
vantage, Professor Arend takes the unusual step nomics; a dismal science without the science.' As

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290 T. C Powell

noted earlier, this conclusion is unwarranted. Prag a better epistemological portrayal of our work.
matism is founded on an inclusive empiricism, and They also recognize that, in a world of war
makes no judgment on strategy's scientific value ring and incommensurate philosophies of science,
in relation to economics or any other discipline. researchers need to get on with their work, and
Second, although Professor Arend concedes that that an inclusive philosophical foundation can help
the resource-based view suffers to varying degrees them do so. As philosopher-scientist Ernst Mach
from all the epistemological shortcomings noted in put it: 'Imagine the position scientists would be in
my article (tautology, unfalsifiability, etc.), he is at if they had to refute all the philosophical systems
pains to show that theoretical advance must repre one by one' (Mach, 1906: 368).
sent more than inference to the best explanation. Pragmatism is, in that narrow sense, an episte
In this connection, he provides the following sce mological 'justification' for our work?it describes
nario: 'consider a firm that has created, at a cost, what we do, enables us to act, and tries to stand
a
strategic
asset?a resource that is valuable, rare, clear of ontology. Of course, pragmatism itself is
inimitable, non-substitutable, appropriable, etc. ... not perfect, complete or value-free, and I could
Now assume that the value is trend-dependent and imagine abandoning it if a more convincing justi
it lasts for one day, increasing firm revenues; not fication came along. Professor Arend may believe
long enough to recoup the investment. The firm that the discovery of 'objective truth' is more con
is likely to have inferior performance even though vincing, but on this we disagree.
it has fulfilled RBV requirements of competitive
advantage.'
Complexities of the advantage-performance
Again I cannot disagree, since this conclu
relation
sion is consistent with my own (a 'quadrant 2'
firm). But it does not, as Arend Professor Arend correctly points out that there is
implies, refute
abductive inference by showing that new strat more to strategy research than connecting com
to firm and more
egy theories correct 'holes' in previous theories. If petitive advantage performance;
this process illustrates abductive infer to firm performance than a simple connection with
anything,
ence in action?though it hardly seems a decisive competitive advantage. I fully agree, and I endorse
view has a ready his sentiments on the importance of developing
example, since the resource-based
menu of responses to the 'quadrant 2' scenario more sophisticated accounts
of firm performance.
the asset was not valuable; that its rents were His examples effectively illustrate the possibilities,
(that
not although I would caution that our 'sophisticated'
appropriable, etc.).
in an earlier section of his critique, theories should strive for consistency?it is not
Finally,
Professor Arend makes the following statement: consistent, for example, to insist that competitive
'Research that either uses relative measures or advantage is both uncontrollable and endogenous.
considers both and In any case, my own article did not attempt to
explicitly positive negative
causes of performance is logically valid. However, develop a comprehensive theory of strategy, but
it is not, as Powell and others (e.g., Kirzner, 1973) rather to establish the philosophical foundations
assert, necessarily meaningful as a prescription for for the research connecting competitive advantages
future action.' with sustained superior performance.
To clarify, I do not (and did not) assert that
propositions of logic have any prescriptive value
whatsoever, and I have no idea how my paper A FINAL NOTE
could have given that impression. I affirm most
'is' does not imply 'ought.' Pragma At several points in his critique, Professor Arend
vehemently:
tism and abductive inference do not supersede the expresses concern about 'language games,'
a term

logic of the propositional calculus, and they do not I borrowed from Wittgenstein's later works (Witt
connect strategy research with genstein, 1953, 1958), and used in my paper to
epistemologically
management practice.
denote (as I explained it): 'a way of seeing that
Moreover, I have not argued that researchers directs scholars to remove problems that lie in
should try to be pragmatic or instrumental. At the way of discovery about firm performance'
best, pragmatism and abductive inference describe (Powell, 2001: 885). But Arend uses this expres
what we do as researchers, and I have not found sion idiosyncratically: 'Strategy may be as much
2003 John Wiley & Ltd. Strut. 24: 285-291
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 Research Notes and Commentaries 291

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