Rumelt, R. P., Schendel, D. E., & Teece, D. J. 1994.

Fundamental issues in
strategy.
In Rumelt, Richard P., Schendel, Dan E. and Teece, David J.
(Eds.), 1994, Fundamental Issues in Strategy: A Research Agenda:
9-47. Boston: Harvard Business School Press.

W2

Instructor:
Presenter:
KEY ISSUES
History of strategic management
Precursors
• The origin of strategic management was a business policy
course, which was about business practices or phenomena
described in cases, in business schools over 100 years ago.
• Studies on this field lied in studies of economic
organization and bureaucracy.
• Some remarkable works were:
 Science of work by Taylor (1947)
 Functions of the executive by Barnard (1938)
 Distinctive competence concept by Selznick (1957)
KEY ISSUES
History of strategic management
The 1960s
• The concept of strategic management was introduced and
adopted by organizations.
• Three significant publications at that time were:
 Strategy and Structure by Alfred Chandler (1962)
 Corporate Strategy by Igor Ansoff (1965)
 the textbook Business Policy: Text and Cases by Kenneth
Andrews (1965)
• During this period, the concepts of strategy and structure
were defined properly.
KEY ISSUES
History of strategic management
The 1970s
• Works on this field began to transit toward a research
orientation.
• In the early of this time, concepts of strategic and long-
term planning played important roles in the field.
• Then, understanding and testing the connection between
strategy and performance was also conducted.
KEY ISSUES
History of strategic management
The 1980s
• Under the globalization of the world’s economy, the focus
of strategic management shifted to how large multinational
corporations directed and coordinated their resources and
activities.
KEY ISSUES
Allied Disciplines
Economics
• It is involved with public welfare and wealth distribution
in society.
• There were four subfields of economics:
 Transaction Cost Economics
 Agency Theory
 Game-theoretic Industrial Organization
 Evolutionary Economics.
KEY ISSUES
Allied Disciplines
Organizational Sociology
• It addresses groups of individuals and their activities as
groups.
• Four remarkable theoretical works about organizations:
 transaction cost economics
 resource dependence
 organizational ecology
 new institutionalism
KEY ISSUES
Allied Disciplines
Political Science
• It is related to choices made by groups.
• Two dramatic shifts in paradigm of political science field:
 Behavioral revolution
 political science’s own new institutionalism

Psychology
• It is involved with individuals, the mind and behavior.
KEY ISSUES
Fundamental Questions

How do firms behave?

This question focuses on whether organizations behave
rationally, and the model of behavior should be adopted by
researchers and policy makers.

Why are firms different?

The key point if this is the factors that sustain the
heterogeneity in resources and performance among
competitors.
KEY ISSUES
Fundamental Questions

What is the function of or value added by the

headquarters unit in a diversified firm?
It is about the determinants that limit the scope of the firm.

What determines success or failure in

international competition?
The focus of this question is about the origins of
organizations’ success and their manifestations in global
settings.
THE THEORETICAL CONTRIBUTIONS
• Although the field of strategic management has
established and developed for not a long time, research in
this discipline is constantly evolving apace.
• The paper gave us, management researchers, a holistic
understanding on the emergence of strategic management.
• Knowledge on this field was articulated and organized in a
way not that was independent but that integrated with
allied disciplines.
• Therefore, this reading, as a review paper, contributed to
the literature of strategic management.
Thank you
for
listening