Teaching the history of strategic management

Abstract

INTRODUCTION When learning about strategic management, it is not only important to study the main concepts and theories but also their historical evolution. The historical perspective provides us with an in-depth understanding of what strategic management is all about. Importantly, learning about the history is not only learning about the theoretical developments and trajectories but also about changes in the business environment. Addressing these changes and new phenomena has forced and inspired scholars to refine the old concepts and theories or create new ones. We can say that the evolution has taken place in two ways: through accumulation of scientific knowledge and through empirical inputs from the changing business environment. Learning a history of a discipline of any kind may sound boring and irrelevant, but in fact it can be seen as an exciting journey to study how the theory and practice have coevolved and intertwined; how new phenomena and questions arise and how this evolutionary process deepens our knowledge and understanding. It is worth noting that the history of the actual independent discipline of strategic management is fairly young. The early history goes back to the 1970s. Its main professional forum, the Strategic Management Society (SMS), was not established until the year 1981. Naturally, the field has long roots in the earlier developments of military and later business strategy that finally led to the situation where the scholars of strategic management saw the need for creating a more solid foundation for the field. From the very beginning, the core question of strategic management has been why some firms are more successful than others and how firms can sustain their competitive advantage. What can be more relevant questions for business! Learning about the strategic management and its history provides us with a profound understanding of these highly important questions of every single entrepreneur. Through its core question, strategic management research expresses its practical relevance and a close link with the changes taking place in the global business environment. The question has not become less relevant during the past decades. Quite the opposite. Since the establishment of the SMS in 1981, the business environment has gone through enormous changes, such as the rise of networks instead of conglomerates, keen competition based on globalization, and the digitalization-based rise of the platform ecosystems, to name a few. These all have disrupted and challenged established industries and companies’ competitive advantage and made them ask the question how to sustain it. From the practical perspective, the importance of strategic management is to be motivated by its ability to answer everyday problems faced by companies. In a way, strategic management offers us a checklist to look at when trying to understand, for instance, why some companies in the industry outperform the others and why some formerly strong companies rapidly lose their leading position (e.g. Nokia vs. Apple). The answers given by strategy research help also understand more “local” problems. If you have to give answers why some of your neighborhood restaurants or corner shops succeed or fail, just start to look at their competitive position following the guidelines of Porter. Or, if you would like to start a company of your own and you are asking which kind of resources you should have to be successful, have a look at the so-called VRIN (valuable, rare, inimitable, non-substitutable) attributes offered to you by the resource-based view. If your company or the company you are consulting is losing its competitive advantage due to rapid changes in the business environment then it is advisable to look at the checklist given by the dynamic capability view. Briefly, knowing the basic ideas of strategic management and its evolution helps you understand the business world much more than just analyzing it from the more specific perspectives of, let us say, economics, finance, accounting or marketing. Strategic management puts those complicated things together by asking how to achieve and sustain competitive advantage. This chapter is organized as follows. After the introduction, the course design for teaching the history of strategic management is briefly presented followed by the main theoretical outlines of strategic management. The overview of the history is followed by suggestions for course assignments.