Teece, D. J. 2020.

Fundamental issues in
strategy: Time to reassess?
Strategic Management Review, 1(1):
103-144.
KEY ISSUES
Four fundamental questions in strategy by Rumelt,
Schendel & Teece (1994):
1. How do firms behave?
2. Why are firms different?
3. What is the function of, or value added by, the
headquarters unit of a multi-business firm?
4. What determines the success or failure of the firm is
international competition?
 KEY ISSUES
Due to the rise of China, the four fundamental questions
are expanded with three sub-questions:
4a. How do home country conditions shape the
competitive advantage of multinationals?
4b. What determines the success or failure of global
business firms in China?
4c. How do managers build and sustain competitive
advantage when confronting rivals benefiting from
state support?
 KEY ISSUES
Four exceptional characteristics of Chinese economy
First, Chinese government creates an asymmetric
competitive advantage for its firms by encouraging strong
competition among local enterprises by not only allowing
but also actively financing a slew of new domestic
entrants in the technology fields it has chosen, and
providing regulatory and physical infrastructure for new
markets.
 KEY ISSUES
Four exceptional characteristics of Chinese economy
Second, the Chinese advantage is supported in part by a
series of national regulations and local practices that
break international rules but are difficult to counteract by
non-Chinese enterprises such as tariffs and quotas.
 KEY ISSUES
Four exceptional characteristics of Chinese economy
Third, Chinese military and civilian sectors are strongly
connected in conjunction with the limits on press freedom
and the substantial political control of information.
Last, China’s influence extends well beyond its borders
and becomes a source of great uncertainty.
KEY ISSUES

The Dual Foundations of Competitive Outcomes

 THE THEORETICAL CONTRIBUTIONS
Possible answers of three sub-questions
4a. Strategic managers need to examine the regulatory
environment, national innovation system, national
priorities, and military and diplomatic of home
country to have a deep understanding of how firm-
level competitive advantage in home country is shaped.
 THE THEORETICAL CONTRIBUTIONS
Possible answers of three sub-questions
4b. Firms, which compete in a politically driven market
economy like China, should equip with the capacity to
collaborate with national governments and business
partners to level the playing field as much as possible
while competing effectively.
 THE THEORETICAL CONTRIBUTIONS
Possible answers of three sub-questions
4c. Firms should have the ability to sense opportunities
and threats, respond with high-quality decisions, then
transform institutions and infrastructure as necessary.
Thank you
for listening