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Schools of strategic management

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Henry Mintzberg (1990) identified ten schools of strategic development. The classification of the ten different schools fell into the groups prescriptive, descriptive and configurationally.

While the prescriptive schools emphasize strategy formulation, the descriptive schools focus on strategy development.

The three prescriptive schools are distinguished by their fundamentally rational and objective nature, their efficiency and stability underpinnings, and the assumption that all available choices are known and can be acted upon through either rational analysis or planning or conceptual engagement.

The design school has been promoted by Selznick (1957) and Learned et al. (1965), who saw strategy formation as the achievement of an essential fit between internal strength and weaknesses, and external threats and opportunities.

No development of this school took place, but this perspective was integrated in other concepts, stating that “the process is not just cerebral but formal, decomposable into distinct steps, delineated by checklists and supported by techniques (especially with regard to objectives, budgets, programs and operating plans)” (Mintzberg and Lampel, 1999: 22).

Ansoff (1965) initiated the planning school. Porter (1980) was the founder of the positioning school.

Generic positions in this school are seen as main elements of strategy. These can be found by formalized analyses of industry situations.

The different descriptive schools give insights in strategy formulation. All strategy perspectives acknowledge the relevance of entrepreneurship.

However, the entrepreneurial school puts special focus on this subject. This school is extremely pragmatic and recognizes that vision may derive from rational analysis, from learning and from cognitive insight.

The power and cultural dimensions are assumed to be determined by the entrepreneur and may or may not facilitate the strategy process.

Intuition as well as entrepreneurial visions are seen here as relevant for strategy formation.

The cognitive and learning schools do not assume that all available choices are known or can ever be known. Cognitive and learning schools ate less deterministic than the prescriptive schools.

From this perspective, strategies develop either incrementally through learning or more radically through cognitive insight.

Concerns about efficiency may or may not be present, and organizations are usually seen in terms of effectiveness rather than efficiency.

The origins of the power and cultural schools that deal with strategy development lie in sociology, political science and organizational theory.

The political and cultural schools see organizations as power and cultural structures of relationships rather than as ecological systems.

In the strategy literature the power school has evolved into a resource-dependency perspective on strategy development (e.g. Pfeffer and Salancik 1978).

The environmental school is more appropriately treated as a subset of other schools in which ecological foundations guide explanation.

The special feature of this school is the assumption that the environment is deterministic, which implies that strategy development is nothing more than a response to the environment”

Mintzberg himself subscribes to the configurational school. Organizations are here seen as configurations, i.e. “coherent clusters of characteristics and behaviors” (Mintzberg and Lampel, 1999: 24).

This school wants to integrate behaviors, processes, structures and environments by combining elements of prescription and description which are relevant in different contexts under different contingencies.

This school represents an attempt at synthesis and integration which explicitly recognizes the complexity of strategy.

This perspective (e.g. Mintzberg and Lampel, 1999; Mintzberg and Quinn, 1996) shares many insights of the resource-based view, even though the two approaches derive from different origins and assumptions.

The differences between the schools mainly lie in the different assumptions about whether strategy development proceeds rationally, through learning or through cognition. Mintzberg’s system of classification is informative and gives further structure to the field.

However, advances in the strategy literature have blurred many of the distinctions between the schools which Mintzberg identifies; several of the schools have not advanced.

There is greater appreciation that strategy ultimately involves a comprehensive way of thinking which manifests itself in actions that have performance consequences.

Advances in the strategy literature have reduced the differences between the schools. For example, stakeholder analysis links the planning and positioning schools.

Research on strategic maneuvering (first-mover advantages, use of feints, for example by Porter) connects the positioning and power schools.

These advances lead to the recognition of the fact that reality clearly asserts the importance of all three processes and that the role of learning and cognition have come to assume a central role through the concepts of individual competencies and organizational capabilities.

The dynamic capabilities perspective (e.g. Eisenhardt and Martin, 2000l; Rindova and Kotha, 2001; Teece et al., 1997) and the resource-based view (e.g. Barney, 199]; Grant, 199]: Hamel and Prahalad, 1989: Prahalad and Hamel, 1990: Wernerfelt, 1981) are examples of the development to a more integrated perspective.

The dynamic capabilities view can be seens as a hybrid of learning and design schools or, as Mintzberg and Lampel (1999: 27) put it, “strong leadership to encourage continuous strategic learning”.

The resource based view can be seen as a hybrid of learning and cultural schools, in Mintzberg and Lampel’s (1999: 27) words as a school with the “focus on competencies rooted in the essence of an organization (namely, its culture).”

Therefore these concepts build the main theoretical pillar to explain competitive advantages realization with intangible web goods in this book.

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