On strategic trade-offs: does the principle of energy conservation explain the trade-offs law?

Matthias Thürer, Mark Stevenson, Roberto Sarmiento and Peter Gianiodis

Management Research Review, 2017, vol. 40, issue 11, 1163-1174

Abstract: Purpose - The purpose of this paper is to reaffirm the suggestion that there are at least two distinct types of laws of trade-off that affect all firms and, in doing so, to contribute toward resolving the persistent trade-off debate in the literature. Design/methodology/approach - Conceptual study using implicit deductive reasoning. Findings - Two types of trade-offs are identified: “internal” can be understood following the dictates of the law of diminishing returns, while “external” can be modeled using the principle of energy conservation. Research limitations/implications - New insights are provided by discussing the impact of both laws of trade-off on the resource-based view of the firm, on new capabilities such as sustainability and innovativeness and on key strategic choices. Practical implications - The study explains why trade-offs occur and outlines contextual factors that determine the “strength” of the trade-offs. Originality/value - To the best of the authors’ knowledge, no previous study has attempted to investigate the topic of strategic trade-offs on the basis of the principle of energy conservation.

Keywords: Cumulative capabilities; External trade-offs; Internal trade-offs; Law of energy conservation; Performance frontiers; Strategic trade-offs (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eme:mrrpps:mrr-09-2016-0214

DOI: 10.1108/MRR-09-2016-0214

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