Framing Strategic Decisions in the Digital World

Abstract

This paper develops a conceptual framework to analyze the impact of digitalization on firms. Algorithms release cognitive resources of decision-makers who can focus on low-frequency/high-impact strategic decisions, such as innovation decisions, M&As, capital structure, and the acquisition of talent. In a digital world, different ability to frame firm strategies represents a key source of competitive advantage: by adopting a scientific approach to decision-making firms can embrace rather than escape uncertainty and rely on owners as strategists. We show that the growth of knowledge ( D K) becomes the ultimate purpose of the firm, from which other purposes descend. We analyze some applications of the framework and conclude by suggesting a research agenda.