Fundamental Issues in Strategy: Time to Reassess?

The field of strategic management has developed with an implicit assumption that market economies are structurally more or less similar. In the past 30 years, though, the global economy has evolved. The Soviet Union collapsed, market-based orthodoxy spread, and now China is ascendant. These developments require changing our mental models from the Cold War era, in which two economic biases were quite distinct, to a bifurcated global economy of two engaged but incompatible systems: one side favoring transparency and the rule of law and the other part favoring opaqueness and strategic direction of the economy by government. China’s government uses a wide range of policies to support the development of domestic firms while hindering the activities of competitors from abroad and, directly or indirectly, misappropriating their technology when they can do so, which is often. To cope with this situation—as well as with political uncertainty elsewhere in the world—firms need to develop strong dynamic capabilities for formulating viable strategies to create and capture value under potentially adverse and volatile conditions, and to shape the business environment in more favorable ways through market and non-market activity.