Natural laws and strategic trade-offs: implications for research and policy advising

Abstract

Contrary to what previous research has asserted, our investigation contends that there is no evidence refuting Wickham Skinner’s strategic trade-offs model. We arrive at this conclusion by analysing Skinner’s words in light of Karl Popper’s falsification theory of scientific knowledge. It is observed that the trade-offs model’s core principle has natural law-like characteristics, something which makes it deterministic. We also note that past research attempting to refute Skinner’s ideas have been, by and large, inadequate and erroneous. This is because those studies have been performed mainly on the basis of probabilistic hypotheses, methodologies and estimates. These hypotheses, methods and estimates are, strictly speaking, open-ended and imprecise, and, as such, void of empirical content. This means that there is an inconsistency between the nature of Skinner’s model and the characteristics of the theories, methodologies and evidence that have been proposed as more complete alternatives (e.g. cumulative capabilities model). Therefore, Popperian epistemology would deem as inadequate any attempt to refute a deterministic law/theory/statement by means of probabilistic models, methodologies and evidence. We also elaborate on a new approach and rationale to test the strategic trade-offs model’s main assertions. It combines deterministic and probabilistic approaches to analyse the data and interpret the results. Implications for research and policy advising are also offered.

Keywords:

• strategic trade-offs model
• cumulative capabilities model
• falsification theory
• strategic trade-offs law
• resource-based view
• deterministic analyses
• probabilistic analyses
• top performers/extreme cases
• philosophy of science
• epistemology
• Karl Popper

Notes

1. Popper’s ideas and concepts are not without criticism (e.g. O’Hear 1980; Kuhn 1996). Nevertheless, even in the face of such difficulties and questionings, the falsification process of a theory and its hypotheses is of value for the advancement of scientific knowledge. For example, Kuhn (1996) likens the role of the falsification process to the findings of anomalous experiences featured in his own ideas and concepts. Consequently, he states that ‘Popper’s anomalous experience is important to science because it evokes competitors for an existing paradigm’ (Kuhn 1996, 147).Popper’s ideas and concepts are not without criticism (e.g. O’Hear 1980; Kuhn 1996). Nevertheless, even in the face of such difficulties and questionings, the falsification process of a theory and its hypotheses is of value for the advancement of scientific knowledge. For example, Kuhn (1996) likens the role of the falsification process to the findings of anomalous experiences featured in his own ideas and concepts. Consequently, he states that ‘Popper’s anomalous experience is important to science because it evokes competitors for an existing paradigm’ (Kuhn 1996, 147).

2. ‘… the logical content of a statement or a theory a is the class of all statements which follow logically from a, while I have defined the empirical content of a as the class of all basic statements which contradict a’ (Popper 2002b, 315, his italics).‘… the logical content of a statement or a theory a is the class of all statements which follow logically from a, while I have defined the empirical content of a as the class of all basic statements which contradict a’ (Popper 2002b, 315, his italics).

3. Popper comments that in some cases (e.g. quantum physics), probabilistic statements can be used as falsifiable statements. He acknowledges the scientific importance of probabilistic hypotheses, and that is why he contends that scientists can arrive at ‘… the adoption of a methodological rule, …, which makes probability hypotheses falsifiable’ (Popper 2002a, 183).Popper comments that in some cases (e.g. quantum physics), probabilistic statements can be used as falsifiable statements. He acknowledges the scientific importance of probabilistic hypotheses, and that is why he contends that scientists can arrive at ‘… the adoption of a methodological rule, …, which makes probability hypotheses falsifiable’ (Popper 2002a, 183).

4. See for example Hoefer (2010), Hitchcock (2011) and Dienes (2008) for a discussion about deterministic and probabilistic theories of causation and how they can be tested. See also Sarmiento, Whelan and Sprenger (2013) for a discussion regarding deterministic and probabilistic hypotheses in strategic management research.See for example Hoefer (2010), Hitchcock (2011) and Dienes (2008) for a discussion about deterministic and probabilistic theories of causation and how they can be tested. See also Sarmiento, Whelan and Sprenger (2013) for a discussion regarding deterministic and probabilistic hypotheses in strategic management research.

5. Although perceptual measures of performance would be well-suited to assess a firm’s performance compared to its competitors (e.g. ‘best in industry in delivery reliability’), it could be possible that objective measures of performance (e.g. ‘100% delivery reliability’) could also be used, as long as the sample includes firms that are comparable and operate within the same industry and context so that appropriate comparisons with competitors can be made.Although perceptual measures of performance would be well-suited to assess a firm’s performance compared to its competitors (e.g. ‘best in industry in delivery reliability’), it could be possible that objective measures of performance (e.g. ‘100% delivery reliability’) could also be used, as long as the sample includes firms that are comparable and operate within the same industry and context so that appropriate comparisons with competitors can be made.

6. It has been stated that the trade-offs law extends to include all competitive criteria associated with the manufacturing function of a firm. However, this does not mean that the seven capabilities advanced by Skinner represent a static and unchanging set. New technologies and/or market forces could bring about new strategic criteria. At the same time, relationships between compromised criteria could change over time, but other trade-offs will emerge (see Skinner 1992, 1996a).It has been stated that the trade-offs law extends to include all competitive criteria associated with the manufacturing function of a firm. However, this does not mean that the seven capabilities advanced by Skinner represent a static and unchanging set. New technologies and/or market forces could bring about new strategic criteria. At the same time, relationships between compromised criteria could change over time, but other trade-offs will emerge (see Skinner 1992, 1996a).