Viewing global strategy through a microfoundations lens

By Farok J. Contractor, N. J. Foss, Sumit K. Kundu, Somnath Lahiri. Global Strategy Journal, 2018

153 citations recorded by the source corpus.

Academic Abstract The emerging microfoundations literature asserts that macro concepts and macro-outcomes, such as firm-level capabilities, performance and strategies, need to be understood in terms of the underlying actions, interactions and characteristics of micro-level entities, such as individual actors and managers. This literature has specific implications for the understanding of cross-level explanatory mechanisms; notably, it asserts that all relations between macro variables are mechanisms that involve micro variables. While the microfoundations literature has been influential in the general strategy literature, global strategy has been less impacted by it. This is paradoxical because the research challenges pointed to by the literature are often magnified in the multinational corporation and in a global strategy context. We characterize microfoundations, discuss their relevance to the global strategy, and show how the papers in this special issue fill important microfoundational gaps in the global strategy literature. For example, Google’s strategic decision in 2018 to reenter the Chinese market (macro-level analysis) is best understood through the thinking of decision-makers in the company, as well as opposition to the move from over one thousand of its employees. Managerial Summary For too long, studies of corporate strategies have focused on the firm as a unit of analysis, as if the firm could decide or think on its own, neglecting the fact that it is managers who think. The underlying motivations, interactions and characteristics of individual managers of companies have often been missing in explanations of global strategy formulation. This can especially be a lacuna in closely-held companies in emerging countries where decision-making is more concentrated in the minds of owners, top managers and family members. The microfoundations literature specifically tries to connect the thinking and backgrounds of individual managers with strategic decisions their firm makes. While the microfoundations literature has made some headway in the general strategy literature, the analysis of global strategy has been less impacted by it. This is paradoxical because the research challenges pointed to by the literature are often magnified in the multinational corporation and in a global strategy context. This introductory paper first refines and enunciates microfoundations theory, in its application to global business. It then also shows how the papers in this special issue fill important microfoundational gaps in the global strategy literature.

Subfields: Organizational Behavior and Human Resource Management, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/9ec7b62088e6cb79561b8898db442c4b8b0cc5ea

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In Organizational Behavior and Human Resource Management

In Strategy and Management

Citations in the corpus

Microfoundations in international management research: The case of knowledge sharing in multinational corporations (2019, background): “…affective states ofmindof individuals, andhowthese states influence individuals’ behaviors and interaction, but, in IM research, they aremore often treated (both conceptually and empirically) as country-level or firm-level concepts (for more examples and discussion, see Contractor et al., 2019).”