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Content and process streams in strategic management theory

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Strategic management is not one theory but a collection of various concepts.

Specific and goal-directed ways of classification to systematize the field with regard to the posited research questions have to be found.

It is possible to systematize the variety of theoretical perspectives in the field in two streams: content and process.

Economic theories make up the content side of strategic management. Researchers belonging to this stream of strategic management try to follow the objective path.

They adopt rational perspectives and derive their strategic prescriptions for the most part from the findings derived from the analysis of markets.

These researchers ignore the subjective side of the coin, do not acknowledge the information interdependence between individuals, and do not take concepts like trust or cultural differences into consideration.

This area of inquiry has come to be dominated by modes of analysis which draw heavily on theories and traditions derived front economics.

While the “content” researchers investigate the field of development and strategy formulation, the “process” researchers are occupied with the implementation of strategic management.

This area of inquiry is more eclectic and less cautions. It derives its inspiration mainly from theories developed in psychology, sociology and organizational theory.

Because of the infusion of knowledge from several disciplines which adopt different paradigms and modes of inquiry, the explanations are more diverse and the structures less coherent and encompassing.

The content stream dominates the recent developments in strategic management. The economic concept of rents became increasingly dominant in strategic management theory. Rumelt et al. (1991) state, in this context:

The single most significant impact of economics in strategic management has been to radically alter explanations of success.

Where the traditional frameworks had success follow leadership, clarity of purpose, and a general notion of “fit” between the enterprise and its environment, the new framework focused on impediments to the elimination of abnormal returns.
(Rumelt et al., 1991: 9)

Yet, the dominance of the economic perspective is not uncontroversial because it gives less attention to the process of strategy (Foss, 1996: 1), which involves the problem of implementation.

Therefore first steps into the integration of the content and the process stream can be observed in the field of evolutionary theory (e.g. Nelson and Winter, 1982) or the resource-based view (e.g. Collis and Montgomery, 1995) as well as the dynamic capabilities view (e.g. Rindova and Fombrun, 1999; Rindova and Kotha, 2001).

These approaches do not suppress the process side as it) Itch as industrial organization approaches do (e.g. Foss, 1996: 3; Porter, 1981, 1985).

In summary, contemporary strategic management has evolved into relatively distinctive schools of thought which conduct their inquiries at different levels of analysis and concentrate on explaining business phenomena from different perspectives.

Two different but overlapping areas of inquiry have emerged in which various schools of thought are represented.

The first is concerned predominantly with strategy development and focuses on the content of strategy.

The second is again concerned predominantly with strategy implementation but focuses on the processes involved in implementing strategies effectively and identifying the various factors which facilitate or impede the implementation process.

With regard to the recent trend to integration of both perspectives, the literature a critical discussion about the usefulness of differentiating between content and process streams takes place (e.g. Barney, 1992: 57; Mahoney, 1992: 109). In addition, a clear differentiation between content and process streams becomes difficult for recent strategic concepts such as the resource-based and dynamic capabilities views.

By outlining particular firm capabilities as the source of competitive advantages the resource-based view must also include the control of the process (Schendel, 1992).

Therefore it seems that “the dichotomy of content and process, however useful for pedagogy is misleading if not useless for practice and research” (Schendel, 1992) For Barney (1992 56), “in the analysis of competitive advantages, process issues must always be integrated with content issues.”

The author of the current book also takes this view by outlining content and process streams only in order to give a first systematization of strategic management.

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