Theory-Driven Strategic Management Decisions

Arnaldo Camuffo (), Alfonso Gambardella () and Andrea Pignataro ()
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Arnaldo Camuffo: Department of Management and Technology, Bocconi University, Milan 20136, Italy; and ION Management Science Lab, Bocconi and Utah University, Milan 20136, Italy
Alfonso Gambardella: Department of Management and Technology, Bocconi University, Milan 20136, Italy; and ION Management Science Lab, Bocconi and Utah University, Milan 20136, Italy
Andrea Pignataro: ION Management Science Lab, Bocconi and Utah University, Milan 20136, Italy; and ION Group, London EC4R 1BE, United Kingdom

Strategy Science, 2024, vol. 9, issue 4, 382-396

Abstract: This paper studies strategic decisions under uncertainty for which past data are not available. It provides microfoundations of the theory-based view of the firm by showing that the strategic problem starts with the selection of theories rather than choosing actions and that theories are selected through experiments. The value of experimenting with theories increases with the number of theories and with their uncertainty. Moreover, uncertainty makes theories superadditive—that is, experimenting with a more uncertain theory increases the benefits of experimenting with other more uncertain theories. The paper also shows that decision makers should experiment with more “surprising” theories because in this case experiments are more informative and enable more learning. A leading example helps to illustrate our concepts throughout the paper.

Keywords: decision problem; experiments; exploration; framing; strategy; theory; uncertainty (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:9:y:2024:i:4:p:382-396

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