The Theory of the Business, Falsification and Avoiding Managerial Unawareness

Doron Faran ()
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Doron Faran: Department of Industrial Engineering and Management Ort Braude Academic College of Engineering, Karmiel, Israel

Interdisciplinary Management Research, 2009, vol. 5, 89-101

Abstract: Organizational strategy is based, too often implicitly, on a theory about the organization's environment. Although the falsity of this theory puts the entire strategy at risk, managers are usually unaware of both the theory and the peril. The issue of theory falsification is mostly associated with the philosopher Karl Popper, but unfortunately the management literature identifies with his rival, Thomas Kuhn. The wish to apply Popper's doctrine in the managerial context faces another difficulty – the formation of the theory. Whilst Popper sketches a hierarchical structure of a theoretic system, managers hold a one-tier theory-of-action that harms falsification. An adaptation of the Popperian method for the managerial context is suggested and examined through Action Research. The findings indicate that a careful extraction of an upper-level theory from the theory-of-action and its testing through derivable scenarios enables early falsification, namely before the actions are taken.

Keywords: Organizational learning; Philosophy of science; Strategy; Theory-of-action; Unawareness (search for similar items in EconPapers)
JEL-codes: D81 L24 M21 M40 (search for similar items in EconPapers)
Date: 2009
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