Strategic Management and Determinism

Author(s): L. J. Bourgeois, III

Source: The Academy of Management Review, Vol. 9, No. 4 (Oct., 1984), pp. 586-596
Published by: Academy of Management
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?Academy of Management Review, 1984, Vol. 9, No. 4, 586-596.

Strategic Management and Determinism

L. J. BOURGEOIS, III
Stanford University

Contingency theories of management and economic theories of industrial

organization both contribute to a mechanistic view of the strategic manager
as "analyst. " In this view, the secret to managerial effectiveness is through
the application of scientific laws orprinciples, be they "laws of organiza-
tion " or "laws of the marketplace. " This paper argues for a view of strategic
management as a creative activity and suggests a dialectic between free will
and determinism in conceptualizations of strategic behavior.

Three strands of thought seem to relegate "man-
agement" to a reactive-adaptive prison of deter-
ministic circumstances. On one hand, organization
theory evolved to the point that the embracing of
open-systems perspectives led to the recent vogue of
contingency theories that posit "one best way" for
each of various circumstances (Kast & Rosenzweig,
1974) and to population ecology models of organiza-
tion survival based on environmental "fit" (Aldrich,
1975). In this view, the right combination of organi-
zational design variables, matched with particular en-
vironmental states (e.g., turbulence), will yield
superior performance.
The tradition of industrial organization economics
is similar: industry structure (e.g., concentration
ratio) combines with aggregate firm conduct (combi-
nation of factors of production) to yield some level
of industry profitability. Application of this view to
the individual firm level has led to studies attempt-
ing to indicate which combination of environmental
and firm-specific variables will yield superior perfor-
mance (Hambrick, MacMillan, & Day, 1982; Schen-
del & Patton, 1978).
On another hand, policy analysts say that policies
are "really" formed through an incremental and/or
political process and that attempts at rational plan-
ning are futile (Braybrooke & Lindblom, 1970; Cyert
& March, 1963). This school suggests that the limits
to human and organizational rationality relegate the
policymaker to the role of arbiter or reactor, ex-
ploiting openings as they occur amidst the furor of
political maneuvering in order to make incremental
steps toward some goal; it has even gone so far as
to suggest that good managers avoid articulating
policy decisions or goals altogether (Quinn, 1977;
Wrapp, 1967).
If one is to follow the dicta of most of these
schools, then one faces the prospect of having to sug-
gest that a management interested in influencing the
destiny of its organization may as well resign itself
to succumbing to the matrix of deterministic forces
presented by environmental, technical, and human
forces that impinge on its freedom of choice. At best,
management becomes a computational exercise. At
worst, it becomes a reactive waiting game, exploiting
contingencies only as they arise through political
forces. Although these views are indispensable for
empirical research purposes, it is argued here that
their inherent reductionism eliminates much of the
richness that characterizes the strategic management
process, and that they may constrain the advance-
ment of strategic management as an academic
discipline.
Deterministic Imperatives for Management
Determinism in Organization Theory
The organization theory literature is replete with
deterministic contingency theories in which the role
of human choice is relegated to a place quite secon-
dary to the imperatives of environmental turbulence
(Burns & Stalker, 1961; Lawrence & Lorsch, 1967);
technological processes (Perrow, 1967; Woodward,
1965); size and ownership (Blau, 1970; Pondy, 1969);
information processing requirements (Galbraith,
1973); or natural selection processes (Aldrich, 1975;
Hannan & Freeman, 1977). For example, postulated
relationships regarding "goodness of fit" considera-
tions between organizations and environment imply

586

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that the design of an organization follows more or
less automatically from the degrees of variation and
complexity presented by the environment (Dill, 1958;
tainty, perhaps humans need the variable-reducing
DuBick, 1978; Duncan, 1972a, b). What such theories
do is assume that these "contextual" constraints are
within the policy literature come explanations of firm
binding in their effects and dramatically reduce the
behavior in which managers seek to reduce the num-
range of organizational response alternatives to those
that will produce the proper "fit" with the indepen-
dent variable in question.
James Thompson summarizes this view quite suc-
cintly in the opening chapter of Organizations in Ac-
tion. He argues that "organizations do some of the
basic things they do because they must-or else!"
(1967, p. 1). Later on, he states that the "variables
controlled by the organization are subordinated to
the constraints and contingencies it cannot escape"
(p. 78, italics added). In contrasting closed-system
and open-system strategies for studying organiza-
tions, Thompson allows as how the latter lets in more
variables than a person can comprehend at one time,
resulting in unpredictability and uncertainty, and the
former gives the psychological comfort of assuming
determinacy. (Although Thompson was referring to
the uncertainties faced by an administrator, if one
looks closely enough, one notices the author's pur-
pose of reducing his own analytical uncertainty by
seeking determinacy among the conceptual and em-
pirical schemes available.)
Determinism is one characteristic of the organiza-
tional literature cited. Another is reductionism: the
studies tend to focus on one independent variable
(e.g., degree of turbulence) as it causes managers to
manipulate one dependent variable (e.g., structure).
(A sociology of science explanation for this will be
suggested below.) In addition, the theories generally
are derived from static, cross-sectional correlation
studies, which present problems of causal inference:
these types of analyses assume that the systems be-
ing studied are in equilibria. In one study that attemp-
ted to correct for both of these limitations, Dewar
and Hage (1978) sought theoretical synthesis by ex-
amining how rates of change of two independent
variables (size and technology) affect the rates of
change of two dependent variables (complexity and
structural differentiation). But even with a dynamic
analysis, they found that explanations for the effects
of the two contextual variables together could not
be developed. Thus, they were reduced to separate
causal models for each independent variable. As
argued below, perhaps the pursuit of deterministic
explanations forces this reductionism.
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Determinism in the Policy Process Literature
In the ubiquitous quest for the reduction of uncer-
function that deterministic theories provide. From
ber of contingencies and courses of action from
which they must choose to respond (Cyert & March,
1963). And although the rational-comprehensive
school of policy formulation posits the designing of
organizations as the rational process of implemen-
ting strategy (Bourgeois & Brodwin, 1984; Galbraith,
1977; Uyterhoeven, Ackerman, & Rosenblum, 1977),
organization structures themselves affect future deci-
sions and place constraints on subsequent strategy
formation. Dye's (1975) analysis of city government
presents an institutional model in which policy out-
comes are influenced by which administrative struc-
ture (mayor-council or council-manager) is used.
Thus, standardized operating procedures, institu-
tionalized roles, personal empires, and power rela-
tionships interconspire in such a way that only in-
cremental and marginal decisions arrived at through
negotiating and sequential attention to goals can suc-
ceed in initiating changes. Because massive
reorganization normally is regarded as impractical
from a cost standpoint, and is severely resisted
because of its threat to existing power bases and its
effect of renewing uncertainties inherent in the chang-
ing of formal relationships, structural inertia gives
rise to the incrementalism described by Lindblom
(1959). Similarly, competing coalition groups with
uncertainty-reducing standard operating procedures
promote sequentialism in goal attentiveness and serve
as stifling obstacles to comprehensiveness in strategy
formulation. The "political forces" effect on stra-
tegy so aptly described by Cyert and March (1963)
also function vertically within hierarchies to affect
policy outcomes by influencing the transmission of
information to the policymakers "Carter, 1971).
This "political process" view is deterministic in the
sense that policy outcomes are determined by forces
beyond the control or cognition of the policymaker;
outcomes conforming to prior intentions or proac-
tion are, at best, accidental. In a review of models
of "rational" choice, March (1978) made the distinc-
tion between models of calculated rationality, in
which personal intentions do guide individual (micro)
behaviors, and systemic rationality, in which inten-
tions are discovered or learned as organizational ac-
tion unfolds. In either case, outcomes are the prod-
uct of (sometimes random) group interaction, not
management. For example, one model of calculated
rationality is March's "garbage can" model of or-
ganizational choice (Cohen, March, & Olsen, 1972),
in which decisions are produced "by the apparent
tendency for people, problems, solutions, and choices
to be joined by the relatively arbitrary accidents of
their simultaneity rather than by their prima facie
relevance to each other" (March, 1978, p. 592). Now,
one implication of determinism is that there are cer-
tain scientific laws (cause-effect relationships) that
govern events. Those laws are discoverable through
experimentation, either by scientists or by practi-
tioners. In this spirit, one systemic model, adaptive
rationality, suggests that "if the world and prefer-
ences are stable and the experience prolonged
enough, behavior will approach the behavior that
would be chosen rationally on the basis of perfect
knowledge" (March, 1978, p. 592). In other words,
there are some (deterministic) laws at work which will
be discovered by managers as accumulated experience
permits them to be revealed.
The above policy literature tends to emphasize in-
ternal structure or political determinants of policy,
but other research maintains that strategy often is not
formulated (within the firm) but is negotiated with
external parties in the environment. This is especially
true in government-regulated industries (e.g., utilities)
in which the "zone of strategic discretion" for top
level corporate managers is being reduced (Murray,
1978). Following this "external constraint" view of
the policymaking process, the discovery of new op-
portunities and alternatives is not necessarily the pro-
duct of rational environmental scanning, as suggested
by proponents of strategic planning; these alter-
natives often are presented to the manager by ele-
ments in the environment itself. For example, Carter
(1971) suggests that not infrequently managers' at-
tention is called to strategic opportunities by sources
outside the firm; and this was the basis for Aharoni's
(1966) thesis that the foreign investment decisions
made the American multinational firms were the re-
sult of receiving proposals from hard-to-ignore
sources in their environments (such as foreign govern-
ments, clients, etc.), rather than from either infor-
mal or formal search (Aguilar, 1967). Conversely, a
"rational" approach to coaligning with the envi-
ronment, such as cooperating or merging with other
organizations, may be blocked, reversed, or other-
wise thwarted by governmental action.
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Following this trend of identifying the "forces
from without" that constrain strategymaking, an-
other recent line of research in strategic management
is represented by the use of industry economics in
analyzing the competitive behavior of firms within
particular industrial environments.
Determinism in the Strategy Content Literature
Industrial organization economics posits an in-
dustry "structure" (number and size of firms, level
of demand, etc.), which determines the inherent pro-
fitability of a particular industry. Strategic manage-
ment scholars have refined this orientation by at-
tempting to explain differences in performance of in-
dividual firms within industries. This research
assumes that a set of company actions (strategies) can
be matched to industry imperatives to achieve max-
imal performance. The Purdue studies of the beer
industry (Hatten, Schendel, & Cooper, 1978; Schen-
del & Patton, 1978) are prototypical of this orienta-
tion, which relies on the basic premise that there are
certain technological, legal, operational, and com-
petitive constraints on organizational activity once
a firm has entered into a particular competitive
environment.
The most articulate exposition of this argumenta-
tion was offered by Hofer (1975) in a provocative
paper entitled, "Toward a Contingency Theory of
Business Strategy." This paper drew on marketing's
product life cycle concept to hypothesize the op-
timality of situation-specific strategies, and it
represented an exponential increase in conceptual
rigor over the original attempts at situational pre-
scriptions for strategies initiated by Katz (1970). For
example, Katz proffered four universal "rules" for
corporate strategy (e.g., "always lead from
strength," p. 349) plus eight conditional "axioms"
that apply depending on company size relative to ts
industry (e.g., for large firms, "give up the crumbs,"
p. 362).
The product life cycle concept lays out operating
and strategic contingencies for each stage of the cy-
cle. Each of these stages usually is described along
a nominal scale, and each represents the competi-
tive/economic nature of an industry from its incep-
tion (invention and introduction of a new product)
through maturity and decline (the market has been
saturated and the product, through standardization,
begins to take on the characteristics of a commodity).
For example, at the growth stage, the environment is
composed of numerous potential consumers waiting
for the price to come down and of many competitors
striving for product standardization in order to
achieve the economies of scale necessary for cost
reductions. Given the competitive nature of the in-
dustry at this stage and the increasing price elasti-
city of the product, the environment of a firm at this
stage might be characterized as highly volatile and
uncertain. Note that the deterministic imperative here
emanates from classical microeconomic theory: in
order to survive the growth stage, the firm must seek
long run economies to scale; the manufacturing func-
tion must be emphasized in the allocation of finan-
cial resources and managerial attention.
Hofer's paper took the product life cycle concept
a step further by including a much larger number of
environmental variables than illustrated above (e.g.,
he includes the type of distribution system, nature
of customer motivation to purchase, frequency of
purchase, etc.), and it concluded with the bare begin-
nings of an inventory of hypotheses that posit the
"optimal" business strategy for a given configura-
tion of contingencies.
It is here that such a deterministic model runs in-
to difficulty. If the scholars in the field were to at-
tempt to develop fully this inventory of hypotheses,
they would still be writing them, for, if each of
Hofer's independent environmental variables were to
be considered in its simplest form-as a dichotomy
of extremes rather than a continuum-the number
of contingencies that would have to be accounted for
would be enormous (Table 1).
Table 1
Strategic Contingencies for PLC Stages
Number of Resulting Number
PLC Stage Variablesa of Contingenciesb
Introduction 6 64
Growth 13 8,200
Maturity 21 2,097,000
Saturation 26 67,109,000
Decline 17 131,000
aAdopted from Hofer, 1975.
bComputed by 2n, where n =number of variables.
If, as Einstein (1934) asserted, the "grand object"
of all theory is to explain as large a number of obser-
vable phenomena with as few concepts and laws as
possible, then any "contingency theory" of strategy
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has a few hurdles to surmount. (The irony here is that
Hofer, explicitly set out to reduce the number of "cir-
cumstances" from a potential of 18 x 1015.) The
foregoing is reminiscent of the criticism surrounding
the ultimate environmental determinism represented
by Skinnerian behaviorism; that is, it relies on the
premise that the controller must be in possession of
an exhaustive inventory of all the environmental
stimuli that serve as reinforcers to the subject being
controlled (Scott & Mitchell, 1972).
Limitations of Deterministic Views
There is a more fundamental conclusion to be
drawn from the foregoing analysis: the strategy of
a firm cannot be predicted, nor is it predestined; the
strategic decisions made by managers cannot be
assumed to be the product of deterministic forces in
their environments. Any such assumption would eli-
minate the very need for management because it im-
plies that the strategy of an organization follows
more or less automatically from a technical apprecia-
tion of its environmental situation. On the contrary,
the very nature of the concept of strategy assumes
a human agent who is able to take actions that at-
tempt to distinguish one's firm from the competitors.
This is the very foundation of Newman's "propitious
niche" (Newman, 1971; Newman, Summer, & War-
ren, 1972). (Even a literal interpretation of the prod-
uct life cycle model implies a "shakeout" from which
only a few dominant firms emerge; they must have
differed in some way from the failures!)
Not only must conceptual attempts such as Hofer's
reduce to purely situational theories of strategy, but
the empirical work out of Purdue points in the same
direction. As anticipated in their modeling of strategy
in the beer industry, it was found that strategies were
not homogeneous, but tended to occur in clusters or
"strategic groups" of companies (the groups tended
to reflect the national, regional, or local orientations
of the member brewers). However, from the original
sample of 13 firms emerged 6 groups: with an average
of little more than 2 firms per "group," the attempt
virtually resulted in a case-by-case description (Hat-
ten et al., 1978).
Similar results are produced by research using the
Profit Impact of Market Strategies (PIMS) data base
(Buzzell, Gale, & Sultan, 1975). Originally set up to
search for the "laws" that govern business profita-
bility, the only generalizable "law" is that the ma-
jor determinant of profits is market share. Most
PIMS-based research starts with reductionist and
deterministic goals, but usually ends up with studies
whose results can be conveyed only with reference
to long lists of variables or variable clusters, making
it difficult to accumulate knowledge from one study
to the next.
The primary limitations of deterministic theories,
then, are that they: (1) are reductionist, resulting in
losing the richness of both independent variables
(such as the environment) and dependent variables
(structure, strategy); (2) ignore reciprocal cause-
effect; (3) if pursued to their extreme, result in hyper- As the degree of empiricism climbs, so do the aspira-
contingency theories or studies of situational cases;
most important; (4) reduce managers to mechanistic
computers who must apply scientific laws to achieve
results; and (5) relegate managers to a passive role,
constrained by a variety of forces. These "forces"
are summarized in Table 2.
Table 2
Summary of Deterministic Views
Field Managers are Constrained by Reference
Organization Size and ownership Blau (1970);
Theory Pondy (1969)
Technology Perrow (1967,
1970); Wood-
ward (1965)
Environmental turbulence Duncan (1 972a,
1972b);
Lawrence &
Lorsch (1967)
Information requirements Galbraith (1977)
Natural selection Aldrich (1975)
Policy Existing strategy/structure Dye (1975);
Bourgeois &
Brodwin (in
press)
Internal political forces Cyert & March
(1963); Lind-
blom (1959)
External political forces Murray (1978)
Environmental impingement Carter (1971)
Strategy Product life cycle Hofer (1975)
Industry structure Hatten et al.
(1978), Schendel
& Patton (1978)
Market share Buzzell et al.
(1975)
Power of suppliers and buyers Porter (1979a)
Mobility barriers Caves & Porter
(1977)
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Origins of Deterministic Views
Given the management-process origins of these
fields, in which managers were seen as the planners,
organizers, leaders, and controllers of the firms
(Koontz & O'Donnell, 1964; Newman et al., 1972),
this development of the state of these administrative
theories is curious. How did this state of affairs come
about? A plausible speculation is that three streams
have converged. First, fields have advanced drama-
tically in their application of "scientific" methods
of measurement, observation, and statistical analysis.
tions of the investigators in obtaining scientific
"truth"; and in pursuing this ideal they have taken
on some of the values of the "hard" sciences that
they are emulating in the application of method. The
problem is, the physical science model chosen is close
to that of Newtonian physics, which represents the
ultimate in deterministic explanation for the world
as it is perceived (Sullivan, 1933).
A second stream is merely a reflection of the ideal
of parsimony in any theory. Under this law, a sim-
ple theoretical solution that explains a set of empirical
facts is preferable to a more complex explanation.
Ignoring for a moment that contingency theories, in
the main, were derived from correlational analyses
of structure rather than process and that the causal
explanations sought were available only through in-
ference, contingency models give, in fact, the simplest
theoretical solution that can support the data. This
parsimoniousness, of course, provides the psycholo-
gical security alluded to above in describing Thomp-
son's work.
The third stream involves the move from the
"micro" or individual behavior approach to study-
ing organizational behavior, to the more "macro"
or sociological approach, which takes the organiza-
tion-not the individual actor-as the unit of analy-
sis. As one abstracts away from the individual
towards the collectivity, one runs the risk of personi-
fying the collectivity; and even if that trap is avoided,
one has defined away the individual as the prime in-
fluencer of organized activity. With the individual lost
to the aggregate, the explanation of the behavior of
organizations in terms of "causal textures" (Emery
& Trist, 1965; Terreberry, 1968), "natural selection"
(Aldrich, 1975), or other abstract "forces" become
plausible.
The blinders imposed by this last stream are most
vivid in organizational sociology. For example, in his
590
review of Guest's (1962) study of two consecutive
plant managers (a poor one followed by a successful
one), Perrow (1970) reinterpreted Guest's data to
argue that the "good" leader succeeded primarily as
a result of having been granted autonomy from head-
quaters. That is, success was a function of
decentralization-a sociological variable-not just
managerial skill. In fact, this leader negotiated both
the autonomy and a plant-modernizing capital budget
at the time he took over. Perrow reports this, but he
argues that the most important factor was "the situa-
tion in which the two leaders... operated" (1970, p.
13, italics added). The net effect of this sociological
view downplays the ability of a manager to create
his or her own situation.
The Alternative to Determinism:
Strategic Choice
Thus, one comes full circle and notes that the prob- unless these goals are coincidentally identical for all
lem with many of these theories is that they downplayfirms the deterministic views break down. These
the role played by the human agent-that stubborn-
ly unpredictable human actor-who has the power
to direct the organization; they fail to acknowledge
the way in which organizational actors, in fact, make
strategic choices that determine how an organization
finds itself within a particular context in the first
place. This acknowledgement has been making its
stubborn infiltration into current thinking, sparked
initially by John Child's heretical voice in a sociology
journal (Child, 1972), but which subsequently has re-
ceived the enthusiastic attention of policy scholars.
The seeds for this refreshing challenge to deter-
minism can be found, interestingly enough, in
Thompson's (1967) work. For, in discussing "co-
alignment" as the basic administrative function, he
asserts:
We must emphasize that organizations are not simp-
ly determined by their environments. But if the
organization is not simply the product of its environ-
ment, neither is it independent. The configuration
necessary for survival comes ... from finding the
strategic variables... which are available to the
organization and can be manipulated in such a way
that interaction with other elements will result in a
variable coalignment (1967, p. 148).
That is, although there always are some constraints
present in any situation, whether they be external to
the organization (governmental, economic, indus-
trial, etc.) or internal (human needs, power struc-
tures, information systems, technological processes,
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etc.), the manager or the top management coalition
always retain a certain amount of discretion first to
select the situation, domain, industry in which he/she
or they choose to operate, and secondly-and more
importantly-to choose goals that are not optimiz-
ing or economically rational, but that merely allow
the organization to generate enough "slack" to
engage felicitously in what Simon (1957) would term
"satisficing" behavior. Once performance exceeds
this satisficing level, a sufficient margin of surplus
may have been generated to accommodate
managerial styles, organizational structures, or oth
courses of action that do not "fit" the prescriptions
of deterministically and rationally derived theories
of management. It is in this context that manage-
ment's values and preferences override any dicta. For
if, as in most definitions, strategy making includes
the choice of organizational goals, and to the extent
that these goals reflect managerial preferences, then
choices of goals, domains, technologies, and struc-
tural variables are what Child (1972) has referred to
as strategic choices. Given the power for these choices
to influence organizational contexts and performance
criteria, it is of no small consequence that the prop-
ositions of contingency theory have been found to
be less than faithful explainers of the empirical data
(Pennings, 1975).
The direct influence of industrial organizations in
shaping their own environments, of course, was the
central theme of John Kenneth Galbraith's New In-
dustrial State. Economists, like latter-day organiza-
tion theorists, are wont to posit environmental forces
under the rubric of the "market" or Adam Smith's
"invisible hand." But Galbraith dismissed the "myth
of the system... [in which] the market is a force of
transcendent power" (1971, p. 356.) Instead, the
market is steadily being replaced by planning, in
which output, prices, and consumer demand is in-
creasingly under the control of the corporations.
So it is contended that the top management or
dominant coalition always retain a certain amount
of discretion to choose courses of action that serve
to coalign the organization's resources with its en-
vironmental opportunities, and to serve the values
and preferences of management. As has been argued
elsewhere, this relegates the independent (usually con-
textual) variables of contingency views
to the status of elements which may, or may not, be
taken into consideration in strategic choice. In this
591
 view of things, the independent variables of con-
tingency theory comprise only one subset of the multi-
ple points of reference which constitute the total frame
of reference of decision makers. As such they act
merely as partial constraints which may potentially
affect decision making if the decision maker believes
they are important. Contextual factors are therefore
subsumed as premises within the more global process
of strategic decision making. The advantage of this
shift in the level of analysis is that it identifies other
important referents which enter and influence the
decision making process. Most significantly, it allows
for a consideration of the part played by premises
which reflect the goals and interests of those who
make the decisions. . . Viewed from this angle, the par-
ticular environment, size, and technology which en-
sue from these decisions are artifactual manifestations
of managerial policy, rather than immutable con-
straints determining what is possible (Bourgeois &
Astley, 1978, pp. 9-10).
Although the argument presented so far might risk
dismissal as a metaphysical discourse legitimizing the
role of management, one must consider the alter-
native: if organizational action is determined by im-
mutable forces, then the management of organiza-
tions may as well be abdicated to mechanics. Other-
wise, strategy is downgraded to the status of serving
merely to reduce managerial uncertainty by giving
managers "something to do" while they await the
contingencies to which they must respond.
The Role of Strategic Choice:
Determinism versus Free Will
As stated earlier, one possible source for deter-
ministic biases in theoretical schemes derives from
their methodology being modeled on that of the
physical sciences. Ironically, the debate between the
proponents of determinism versus free will began
among physical scientists two centuries ago when
biological developments (and biology was not yet a
''science") introduced the concept of "organism" in
opposition to the doctrine of materialistic mechanism
(Whitehead, 1925). The root of the conflict lies in
that theoretical physics was erected to explain and
predict the characteristics, properties, locations, and
motions of inanimate matter. It was not equipped
to handle the issue of "life." Likewise macro-orga-
nization and industrial economic theories are uneasy
with individual actors making the strategic choices
that give "life" to their organizations.
Whereas physics was designed to ignore concepts
such as life, a challenge to determinism emerged from
its own ranks, following the introduction of quan-
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tum physics, in the principle of indeterminacy:
This principle is the negation of the strict determinism
that has hitherto reigned in science. Until quite recent-
ly science has assumed that a knowledge of the pres-
ent is sufficient to enable us to determine the future.
We have hitherto believed that every event in nature
is an example of strict cause and effect. The possible
exceptions are provided by those of our own actions
which are, we say, the result of "free will." But many
have thought that the strict determinacy found in
nature would ultimately be extended to our mental
processes, and that our consciousness of free will is
an illusion. The principle of indeterminacy has pro-
foundly changed this outlook (Sullivan, 1933, pp.
69-70).
What, then, becomes of determinism?
It becomes a useless principle... A determinist may
say, as some of them do, that indeterminacy is un-
thinkable. Strict cause and effect, they may say, is
a necessity of thought. This is the old problem of free-
will and determinism... When Eddington says that
something analogous to free-will must be put at the
basis of physical phenomena, he means that the prin-
ciple of indeterminacy... belongs to as fundamental
a category of thought as does the notion of strict
causality. Both alternatives are equally possible. The
question is, which of these principles does nature
obey? And the answer we have obtained so far is that
the ultimate processes of nature are not strictly deter-
mined (Sullivan, 1933, pp. 71-72).
As in physics, so in social science. Economists,
psychologists, and organization theorists are all vic-
tims of linear thinking, in which the reduction of a
chaotically large number of phenomena into a one-
way sequence of cause and effect allows the
psychological security of the illusion of "prediction,"
but which disallows the strategist as a "cause" and
ignores the real possibility of a cycle in which cause
and effect are mutually interacting. But from its
Aristotelian roots, modern physics thinking has
emerged as dialectical, entertaining notions of mutual
causation between the factors under consideration.
If the theoretical development of the behavioral and
policy sciences is to continue to parallel that of the
physical sciences, it is suspected that the debate bet-
ween the believers in organizational "free will," or
the power to enact unique strategies, and the pro-
ponents of contingency views has just begun. It is
speculated, however, that any emergent theory of
organizational functioning will have to yield a cen-
tral position to strategic choice and to consider the
possibility of reciprocal causation among external
(environmental or "contextual") factors, strategic
decisions, and internal (structural, power and re-
sources distribution) factors. So, though environmen-
tal and internal forces act as constraints, strategy
making often selects and later mzodifies the sets of
constraints. Dialectical thinking will be required to
countenance this state of affairs, which might be
described as an interactive tension between the iner-
tia of environmental and internal forces and the
kinetics of strategic choice.
A recent approach that exemplifies this dialectical
thinking was proposed by Bourgeois (1980a), in
which "domain definition" and "domain naviga-
tion" are conceptualized as the more or less free-will
and determined components of strategic manage-
ment, respectively. In this view, the initial selection
and definition of domain, termed primary strategy,
constitutes the process through which managers
creatively "enact" (Weick, 1969) their environments
and define their own requisite levels of performance.
It is subsequent to the domain definition that
managers, in effect, set up administrative and
technological arrangements to "navigate" through
their chosen domains, presumably according to the
prescriptions of contingency theory or the dictates
of industry economics.
Implications for Research on
Strategic Management
Whereas the need for this type of dialectical think-
ing is clear, in order to enhance understanding of
strategic management, the implications for research
are less so. Those academic brethren who espouse the
"hard science" values of the physical sciences in their
choice of research methods will be uncomfortable
with such intractable notions as free will, en-
vironmental enactment, domain definition, creativi-
ty, and the like, and their influence on the evalua-
tion and choice of method is not insignificant. On
the other hand, no one would deny that it is the
experimentation and risk taking of creative entrepre-
neurs that provide the data through which the "laws"
are discovered in the first place.
Given both the limitations of deterministic theories
and their advantages (they do explain variance among
a wide array of variables and they do call attention
to some critical areas of inquiry), what research
recommendations might be made? Four are suggested
here: adopt the dialectical view argued above;
recognize reciprocal causality and deal with it in
research; combine research perspectives; and com-
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bine quantitative and clinical research methods.
Adopt a Dialectical View
Most strategic management researchers undoub-
tedly are sympathetic to the argument that it is the
"degrees of strategic freedom" that are important
rather than an absolute choice between determinism
and free will. Yet, research tradition frames think-
ing in deterministic logic. It is argued that a
philosophical stance should be adopted that allows
for free will and creativity when models are con-
structed from empirical data. An example of this kind
of inductive thinking is found in Burgelman's (1983)
work, in which he conceptualizes the (free-will) no-
tion of "autonomous strategic behavior" taking
place within (otherwise bureaucratic) firms.
This does not mean that dialectic logic should oc-
cur only within the minds of individual researchers;
it can and should proceed among strategic manage-
ment researchers whose training comes from different
disciplines (Jemison, 1981). As March reports, the
latter has precedent in the development of theories
of choice, in which "behavioral [descriptive] and nor-
mative theories have developed as a dialectic rather
than separate domains" (1978, p. 588).
Recognize Reciprocal Causality
Adopting a dialectic view should facilitate dealing
with reciprocal causality in research designs. There
are at least two ways of doing this. One is to let both
"causes" and "effects" (e.g., contexts, administra-
tive arrangements, strategies) vary together without
imputing any direction of causality a priori, as Miller
and Friesen (1978) did using the Q-factor method to
derive strategy archetypes. The other is to provide
dual-direction interpretations of correlational data
analyses when making causal inferences, as was done
by Bourgeois (1980b, 1982) in his studies of environ-
mental turbulence, goals and means consensus, and
economic performance.
Combine Research Perspectives
Both the recognition of reciprocal causality and a
dialectical view can be enhanced if research perspec-
tives are combined in designs. For example, Jemison
(1981) has suggested that strategy outcomes (content)
and process (decision behavior) be examined simul-
taneously. Although causal inferences are not drawn,
much of Mintzberg's historical research is of this
type: he traces both decisions and decision processes
over time (Mintzberg & Waters, 1982). Longitudinal
statistical techniques, such as cross-lagged correla-
tions, can aid in analyzing this type of data.
Porter (1979b) has suggested that perspectives from
industrial organization and strategic choice be com-
bined in aiding understanding of strategic manage-
ment. In a somewhat different vein, Van de Ven
(1979) suggested that strategic choice and environ-
mental constraints be treated as two separate dimen-
sions, each of which may vary on a unique con-
tinuum, rather than as polarities in a single scale. In
essence, Miles and Snow (1978) did this when they
examined organizations in four industries and inter-
preted why the strategic behavior of successful
organizations varied within industries or domains.
Another way to combine perspectives is to com-
bine data sources. For example, Bourgeois and Singh
(1983) combined economic (financial) and behavioral
(questionnaire) data to study organizational slack and
political behavior among top management. Because
slack has been hypothesized to facilitate creative (i.e.,
nondeterministic) strategic behavior (Child, 1972),
this method could be extended to study the mediating
effects of slack on environmental constraints and
strategic choices.
Combine Quantitative and Qualitative Research
Wherever possible, large sample "quantitative"
research should be combined with good historical or
clinical analyses. In this manner, the researcher can
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L. J. Bourgeois, III, is Assistant Professor of Business

Policy in the Graduate School of Business, Stanford
University.

596

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